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18 Mar 2014
Large Chinese property developer at risk of bankruptcy
FXStreet (Bali) - In a note written by Zhiwei Zhang, Economist at Nomura, who makes reference to a piece of news from the Economic Daily News, a large property developer in Ningbo (China), Xingrun Properties, is at risk of bankruptcy.
As Zhang notes, citing sources from the Econ Daily News: "Its total debt stands at RMB3.5bn, of which about RMB2.4bn are bank loans. It is experiencing a severe cash-flow problem and cannot pay its debts. The local government has set up a working group to deal with the debt problem, while owners of the company could be prosecuted for illegal fund raising."
Zhang adds: "This news supports our view that property sector overinvestment is currently China's top risk. As far as we know, this is the largest property developer in recent years that is at risk of bankruptcy." The economist concludes by saying: "We believe more property developers will face similar pressures as transaction volumes slow and cash flow conditions tighten, and expect this problem to be more severe for unlisted developers in third- and fourth-tier cities with limited access to financing."
As Zhang notes, citing sources from the Econ Daily News: "Its total debt stands at RMB3.5bn, of which about RMB2.4bn are bank loans. It is experiencing a severe cash-flow problem and cannot pay its debts. The local government has set up a working group to deal with the debt problem, while owners of the company could be prosecuted for illegal fund raising."
Zhang adds: "This news supports our view that property sector overinvestment is currently China's top risk. As far as we know, this is the largest property developer in recent years that is at risk of bankruptcy." The economist concludes by saying: "We believe more property developers will face similar pressures as transaction volumes slow and cash flow conditions tighten, and expect this problem to be more severe for unlisted developers in third- and fourth-tier cities with limited access to financing."