Embattled Chinese developer Country Garden faced a key test of investor confidence on Thursday as its creditors were due to vote on whether to delay payments for an onshore private bond, while Beijing rolled out more support measures for the property sector.
will have to overcome as it strives to avoid default amid a spiralling financing crisis and opposition from some creditors.
The property sector, which accounts for roughly a quarter of the economy and is now grappling with a debt crisis that has rattled global markets, has been on a downward spiral since 2021 after Beijing cracked down on debt accumulation by developers. While it did not specify the size of existing mortgage rate cuts, the central bank said the downpayment ratio for first-time home purchases should be no lower than 20%, and no lower than 30% for second-home purchases.
If the move was broadly implemented in large cities it "may provide a modest growth impulse to the property market", although the magnitude was likely to be measured, it said in the note.Adding to the property sector's woes, Moody's slashed the credit ratings of Country Garden by three notches to Ca from Caa1 on Thursday due to worries the firm could be on the brink of default.
Ng said that an in-house analysis had revealed 0.4% of China's corporate bonds were extended on a trailing 12-month basis, keeping the actual default rate low at 0.08% by the end of June.
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