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The China State Council held a policy meeting on Friday, which raised hopes of further state support for the troubled property sector. According to the Xinhua news agency, Li Qiang chaired the meeting where optimization of real estate policies were discussed to promote the healthy development of the housing market. Chinese authorities have undertaken several support measures like urging banks to provide financing for developers and easing rules for homebuyers, however the sector has shown little signs of turnaround. Many Chinese property issuers have defaulted on their debt payments and have been subsequently downgraded by the rating agencies.
For instance, one of the largest Chinese property issuers, China Vanke, was downgraded by two notches from BBB to BB+ by Fitch. Fitch also downgraded its subsidiary China Vanke HK and its senior unsecured notes to BB from BBB. The downgrade reflects Vanke’s weak operating performance and limited access to funding channels as a result of market volatility. Two weeks back, Moody’s had downgraded Vanke to HY level of Ba1. With this, Vanke is now rated at HY level at both Fitch and Moody’s, while S&P continues to rate Vanke at IG level of BBB+.
Vanke’s 4.2% 2024s traded flat at 94.6 cents on the dollar.