Moody's: China property sector

Moody's Investors Service said there is a negative outlook for China's property-development sector over the next 12 to 18 months as local developers face rising operating uncertainties, a tight credit environment and high regulatory risk.

China's rated property developers face critical challenges in the near and medium term, the agency said. Contractions in sales volumes, price declines and land purchases in the first half of the year have caused balance-sheet liquidity and financial profiles to deteriorate to such an extent that Moody's said it had to take various negative rating actions to companies over the past six months.

Although some developers have access to onshore financing that can partly mitigate the handicap of limited or no offshore credit, increased borrowing from domestic banks presents subordination risks for bondholders, the agency said.

As developers complete projects now under construction, the resulting rise in the supply of new housing will further depress the market, Moody's added.

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