(Reuters) – Moody’s cut its outlook on China’s crisis-hit property sector from stable to negative on Thursday, saying the ratings agency said sales would weaken despite government support.
Moody’s expects contract sales in China to decline by 5% over the next six to 12 months, and said the impact of government measures to boost asset purchases may be short-lived and disproportionate.
The downgrade in outlook comes amid several debt defaults by cash-strapped developers. At the center of the crisis is China’s Evergrande Group, the world’s largest debtor.
China’s biggest private property developer, Country Garden Holdings Co., has been struggling to avoid default after the crisis got approval from lenders this week to extend the maturity of several offshore bonds.
The credit pressure on Country Garden, with Moody’s rating a negative outlook, has strengthened investors’ risk aversion, Cedric Lai, an analyst at the agency, said in a statement.
(Reporting by Dimple Gulwani; Editing by Jacqueline Wong and Jamie Freed)
