Evergrande impact on rated construction companies is manageable – Fitch

The US-based Fitch Ratings is out with its latest report, assessing the impact of potential default by China Evergrande property developer group on rated Chinese construction issuers.

Key quotes

“The impact from a China Evergrande Group (CC) credit event on rated Chinese construction issuers will be manageable because they have limited exposure to Evergrande.”

“The scale advantage of Fitch-rated engineering and construction (E&C) companies mitigates their risk of a single customer default or project failure incident.”

“That said, E&C companies with material exposure to housing projects and property development business may be affected in the unlikely event that a default disrupts the broader property market.”

“We expect the potential effect of a slowdown in property market to be partially offset by a revival in the infrastructure business, which is a key instrument for government to support the economy.” 

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