Although Chinese developers are facing increasing financing costs on the back of concerns over potentially more defaults by debt-ridden local players, Singapore firms with strong China exposure are unlikely to be affected by the credit squeeze.
This is because homegrown developers have strong credit-worthiness and diversified financing sources, media reports said.
“Singapore developers are larger, and have strong balance sheets. They have the benefit of financing locally in Singapore and they have the support of local banks,” said Ken Wong, Barclays’ Head of Bond Syndicate for Asia ex-Japan.
With the default situation in China, credit is being examined more thoroughly, he added.
In fact, there is now a clear differentiation on credit between small localised developers on the one hand, and BB-rated (non-speculative) and diversified national developers on the other hand.
Notably, the collapse of Chinese developer Zhejiang Xingrun Real Estate Co – which failed to repay its debt of 3.5 billion yuan – is considered to have greater impact compared to the onshore bond default by solar company Shanghai Chaori Solar Energy Science & Technology Co.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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