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China's property market most at risk of a cash squeeze

China Focus

China's property market most at risk of a cash squeeze

Bloomberg Published on Fri, Jun 22, 2018 / 8:11 AM GMT+8

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HONG KONG/BEIJING (June 22): A mad scramble by Chinese property developers to build up their land banks is taking its toll on the industry’s creditworthiness, with builders singled out as having the highest risk of default as channels of credit tighten.

The Bloomberg Default risk model, which tracks metrics including share performance, liabilities and cash flow, shows a 0.87% average probability that builders will renege on its obligations in the next 12 months. While the proportion may look small, it’s triple the likelihood of delinquency in the technology industry. About three-quarters of developers have seen their default risk climb over the past year, Bloomberg data show.