Ratings agency Fitch on Thursday downgraded property giant China Vanke’s long-term foreign- and local-currency issuer default ratings for the third time this year as a debt crisis continues to weigh on China’s real estate sector.
Fitch lowered its rating to “B+” from “BB-“, with a negative outlook.
The downgrade reflects ongoing pressure on China Vanke’s liquidity due to lower-than-expected sales and cash flow generation in the first half of 2024, the ratings agency said, adding that the company’s liquidity buffer was diminishing.
China’s property sector has been in a rough spell since 2021 as a regulatory drive on developers using excessive leverage caused a liquidity crisis, with its top developer Country Garden undergoing an offshore debt restructuring after defaulting on its multi-billion dollar bonds last year.
“We expect China Vanke to continue limiting its land acquisitions to prioritize liquidity for capital-market debt repayment,” Fitch said.
Ratings agency Moody’s had also downgraded China Vanke’s corporate family rating in August, while S&P Ratings cut its credit rating to “BB-” last week.
Source Homevior.in
