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S&P sees further downgrades for developers

By Sophie He  (China Daily)

08:21, September 21, 2012

Standard & Poor's is forecasting further downgrades for some Chinese mainland developers over the next six months, as the slowing economy and government measures continue to curb property demand.

Its outlook for the Chinese property development sector remains negative, despite some improvement in the past six months from strengthening liquidity and higher sales volumes, said S&P credit analyst Bei Fu on Wednesday.

According to figures released this week by the National Bureau of Statistics, new home prices rose in August for the third straight month, though fewer cities showed gains.

Among the 70 major cities in China, new home prices increased in 36 cities in August, compared to 50 in July.

For the first eight months of this year, total property sales was 3.4 trillion yuan ($537 billion), increasing 2.2 percent from a year ago, of which, the total sales of residential properties increased by 2.3 percent.

"The credit outlook for Chinese property developers is less negative now than it was six to 12 months ago", she added, as a weakening economy limits the government's options and reduces its incentive to further tighten the screws on the property sector.

The liquidity of Chinese developers has been improving, thanks to loosening bank credit conditions, which have boosted the availability of mortgage loans to first-time buyers, and increased the finance available, at a lower cost, for construction projects.

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