Sep 9, 2023 - Economy

The rise and fall of Chinese property developers

Data: Risky Finance; Chart: Axios Visuals

The world's investors are falling out of love with China in general, for reasons Axios' Matt Phillips limned recently. But there's one part in particular they wish they had never gotten involved with — the foreign bonds of Chinese property developers.

Why it matters: In the three years to mid-2020, Chinese property developers issued some $160 billion in dollar-denominated bonds; by June 2020, they had a market value of $173 billion in aggregate. All of those bonds were sold to foreign investors wanting to get in on a fast-growing industry.

  • Then, the companies started defaulting.
  • Today, less than $35 billion remains in the asset class, according to Risky Finance. That's the market value of all the outstanding Chinese property bonds that haven't defaulted and left the iBoxx index.
  • Bonds issued by China Evergrande, one of the largest developers, are trading at just 3 cents on the dollar.

The bottom line: Often, the sectors that need the most cash in boom times are precisely the sectors you shouldn't be investing in.

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