Goldman Sachs raises China property HY 2022 default fee to 19% By Reuters


© Reuters. FILE PHOTO: The Goldman Sachs logo is seen on the trading floor of the New York Stock Exchange (NYSE) on November 17, 2021 in New York City, New York, the United States. REUTERS/Andrew Kelly

LONDON (Reuters) – Goldman Sachs (NYSE:) said on Thursday it now expects nearly a fifth of China’s lower-rated property companies to default this year, although it could be nearly a third in a more severe scenario.

The US investment bank increased its estimate of the base-case default rate to 19% from a previous 11% and its downside-case estimate to 31.6% from 25.4%.

“Although there haven’t been many instances of payment defaults in recent weeks, the stress is mounting,” Kenneth Ho wrote in a note to clients on Wednesday.

“China Property HY will experience high bond maturities in the coming months, with the potential for further maturity extensions/bond swaps and defaults.”

Goldman Sachs estimates high-yield companies will have $3.6 billion worth of bonds maturing by the end of the month, followed by $3.3 billion in March and another $3.7 billion in April.

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