The funding stress for Chinese property developers is deteriorating:
There is a feedback loop underway between deteriorating developer balance sheets and counterparty risk:
At the end of June, the aggregate interest coverage ratio of 21 big Hong Kong-listed Chinese real estate developers fell to 0.94, the worst in at least a decade, according to Reuters calculations based on Refinitiv data. The ratio – of a company’s interest expenses to earnings before interest and tax – was 1.47 at the end of last year.