LONDON, (Reuters) – Goldman Sachs (NYSE 🙂 stated Friday that it expects about one-third of China’s high-yield property companies to default by 2022. The stress on bonds is increasing through maturity extensions.

The bank discovered that all 22 Chinese high yield issuers of dollar bonds and bond swaps have been affected by the nation’s troubled property sector since the beginning of the year.

Kenneth Ho wrote to clients that, unlike previous years, “more issuers” have participated in bond exchanges. This raised his default rate forecast by 31.6%, from 19.%.

We see bond extensions and bond swaps as temporary relief for credit stress. They push bond maturities forward to a later time, but do not resolve credit problems.

Goldman Sachs increased its forecast of the China property-high-yield default rate to 15.5% (from 9.3% before) — not much different from the record 17.8% set in 2021.

About a year ago, China’s most important property sector was hit by a crisis. A debt market squeeze led to a second wave of defaults.