Chinese property developer KWG was downgraded to CCC+ from B- by Fitch on rising refinancing risks. KWG has RMB 10.2bn ($1.5bn) debt maturities still due in 2022, including RMB 1.8bn ($270mn) bonds that turn puttable next month and $900mn bonds due in September. KWG is currently in negotiations to get secured loans against its Hong Kong project and other assets in China. The company has secured some project refinancing, but the bulk of the required refinancing is still pending. Fitch noted that KWG’s liquidity has weakened after its sales declined 53% in H1 2022 and it used internal cash for repayment of onshore debt. The company’s contracted sales fell 55% YoY in June to RMB 4.68bn ($690mn). Fitch expects KWG to face difficulties in meeting its current year sales target of RMB 90bn ($13.3bn).

KWG’s dollar bonds are trading flat, at distressed levels of 13-25 cents on the dollar.

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