Foreign investors who have bet on Chinese property developers’ dollar bonds may incur massive losses of hundreds of billions of dollars. The housing market crisis has delivered a hard blow to those who hoped to reap large profits in this sector. Now investors in Chinese property debt expect the total loss to be $130 billion. China’s housing sector has long been under pressure, with the crisis reaching its peak in 2022. Two-thirds of the outstanding dollar bonds issued by Chinese developers have lost nearly 30% in value. “We still believe defaults will continue through the rest of 2022, particularly for developers with large offshore debt maturities and weak sales,” said Cedric Lai, a senior credit analyst at Moody’s Investors Service. At the moment, many dollar bonds in the property sector are trading at a level that implies a very high risk of default. For example, one bond maturing on September 7 issued by Kaisa Group is priced at $0.09 on the dollar. This implies a loss of about $272 million. This year, Chinese real estate companies have missed payments on a record $31.4 billion worth of dollar bonds. Official data shows that home sales in China slumped by nearly 30% in the first half of the year.
