Moody’s Goes Negative on China Credit Outlook and More Asia Real Estate Headlines

China’s decaying finances lead today’s review of real estate headlines from around Asia Pacific, with news that Moody’s is revising its outlook for the country’s credit. Singapore’s GIC also makes the list with a deal said to be in the works with Apollo and China Evergrande’s creditors are said to be regrouping in advance of a January court date.

Moody’s Cuts China’s Credit Outlook to Negative on Rising Debt Risks

Ratings agency Moody’s downgraded its outlook on China’s government credit ratings to negative from stable, expecting Beijing’s support and possible bailouts for distressed local governments and state-owned enterprises to diminish China’s fiscal, economic and institutional strength.

Moody’s though retained China’s “A1” long-term rating on the country’s sovereign bonds, while expecting China annual GDP growth to slow to 4 percent in 2024 and 2025 and average 3.8 percent from 2026 to 2030. Read more>>

Singapore’s GIC Said in Talks to Invest in Apollo’s Structured Finance Unit

Singaporean sovereign-wealth fund GIC is in talks to invest in Atlas SP Partners, the securitisation business that Apollo Global Management Inc bought from Credit Suisse Group AG, according to a person with knowledge of the matter.

Terms of the agreement, including the size of GIC’s planned investment in the platform, couldn’t be learned. Representatives of Apollo and Atlas SP declined to comment, and a GIC representative didn’t immediately respond to a request for comment. Read more>>

Evergrande Creditors Regroup as Liquidation Advocate Hesitates

China Evergrande Group’s chief agitator calling for its liquidation is suddenly backpedaling, but the line of creditors who may take up the torch doesn’t end there.

In Hong Kong’s insolvency system, liquidation lawsuits often start with a creditor’s petition. Top Shine Global Limited of Intershore Consult, one of Evergrande’s creditors, took up the petitioner’s role, only to surprisingly demur at what was assumed to be a final liquidation hearing Monday. Read more>>

Evergrande Gets Court Notice Regarding Unit’s $280M Recovery Claim

China Evergrande Group said on Tuesday it received notices from court of Guangdong Province over a claim by a unit of Evergrande Property Services for the recovery of about RMB 2 billion ($280 million) in deposit certificate pledge guarantees.

The proceedings brought by unit Jinbi Property Management Company are related to the enforcement of Evergrande Property Services’ deposit pledge of about RMB 13.4 billion. Read more>>

China Evergrande’s Crash Was Accelerated by Questionable Accounting

In January, more than 100 financial sleuths were dispatched to the Guangzhou headquarters of China Evergrande Group, a real estate giant that had defaulted a year earlier under $300 billion of debt. Its longtime auditor had just resigned, and a nation of home buyers had directed its ire at Evergrande.

Police on watch for protesters stood guard outside the building, and the new team of auditors were issued permits to get in. After six months of work, the auditors reported that Evergrande had lost $81 billion over the prior two years, vastly more than expected. Read more>>

Eastspring, Barings Shrink Hedge Fund Teams in China Pullback

Eastspring Investments and Barings LLC have been cutting jobs at their China hedge fund operations, highlighting the challenges global asset managers face in gaining a foothold in the RMB 6 trillion ($840 billion) local market.

Eastspring, Prudential Plc’s asset management arm, saw at least seven people, or almost a third of its onshore team, depart in recent months, according to people familiar with the matter. The company may shut some of its local hedge funds to focus on overseas markets, they said, asking not to be named because the matter is private. Read more>>

Chinese Homebuilders’ Sales Decline to Slow; Performance to Continue to Diverge

The decline in Chinese housing sales may slow in 2024, but the divergence in operating conditions and performance among different regions and developers may continue, says Fitch Ratings.

Fitch expects the operating environment for Chinese property developers to remain challenging in 2024. However, we see the decline in contracted sales slowing to 0 percent-5 percent, implying full-year sales of RMB 10 trillion-10.5 trillion. Read more>>

The Murky Uses of India’s Private Credit Funds

There are plenty of high-performing private investment vehicles in India, but it’s the few that are being set up for dubious purposes that may bring harsher regulatory scrutiny to the country’s most rapidly expanding asset class.

So far, the most egregious use of these so-called alternative investment funds has been by nonbank finance companies, several of whom have employed these bespoke structures for pure regulatory arbitrage. Read more>>

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