Charlene Chu, famed among #China watchers for warning about a debt bubble when at Fitch Ratings, says that pain is only just beginning for credit extended to Chinese #property.
In the wake of #Beijing’s sweeping crackdown on leverage built up in #realestate, China #Evergrande Group and others have defaulted on a slew of bonds. Chu, a senior analyst at Autonomous Research, a division of Sanford C. Bernstein & Co., estimated that “we have 30 companies who’ve defaulted with total liabilities of around $1 trillion.”
While banks have the safeguard of collateral for their loans to developers, “where things could start to get a lot more ugly” is if lenders start revaluing that collateral lower, Chu said in a June 15 interview with the One Decision podcast.
“We’re just so early in this process of these defaults happening, and restructurings usually take quite a long time,” said Chu, who was known at Fitch for warning in the early 2010s over debt risks in the shadow #banking sector. “We haven’t really gotten to the point of saying, ‘OK, well, what really is going to happen with that building?’”

https://www.bloomberg.com/news/articles/2022-07-07/china-property-slide-early-in-game-after-1-trillion-defaults #finance #crisis #economy