High debt level: A woman takes photographs at a residential area in Beijing. While business has been booming, developers have also been piling on the debt. — Bloomberg
SHANGHAI: The financial results of Chinese developers this earnings season have been roundly impressive, but there is one metric that should give investors pause: Firms’ ability to service their debt is the weakest in three years.
Cash-to-short-term debt levels at more than 80 publicly traded real estate companies tracked by Bloomberg were 133% on average in the first half, the worst since the first six months of 2015 and down from 297% a year earlier. Almost a quarter of developers sport a ratio below 50%.
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