Developers are defaulting, Beijing is imposing borrowing curbs and buyers are balking at high prices. The global implications look ominous.
by Mike ‘Mish’ Shedlock
Mish Talk
Please consider Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning.
As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good, according to economists at Nomura Holdings Inc.
That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan, the world’s third-largest economy, last year.
Asia’s junk-bond markets suffered a wave of selling last week. On Friday, bonds from 24 of the 59 Chinese development companies in an ICE BofA index of Asian corporate dollar bonds were trading at yields of above 20%, levels that indicate high risk of default.