STANDARD & Poor’s said Friday the magnitude of yuan devaluation is not significant enough to cause a deterioration in the credit profile of Chinese property developers, as it expects the currency to depreciate only by a low single digit.

    China’s central bank devalued the yuan in a surprise move last Tuesday, driving the currency to a 4-year low and raising concerns over a spike in financing costs for developers with high overseas debt ratios.

    Analysts said around 40 percent of developers’ total debts were denominated in U.S. or Hong Kong dollars as of the end of 2014, with China Overseas Land & Investment and China Resources Land’s ratios at more than 70 percent.

    “Debt servicing will be more costly, but developers will not really suffer that much. Those with higher offshore debt exposure are also the stronger players in the sector and they have enough buffer, so there won’t be a big impact on their credit profile,” S&P’s corporate ratings senior director Christopher Yip told a telephone conference.

    Yip said increasing issuance in the onshore corporate bond market will help to alleviate some pressure on funding costs.

    S&P on Friday raised its forecast on China’s property sales growth to 5 to 10 percent on expectations the sector will continue to recover, supported by stimulus policies.

    The rating agency also revised up growth expectations on home average selling prices from flat to 5 percent in the next six to 12 months, on improved homebuyer confidence. The forecast on both sales and prices were both down 5 percent to flat previously.

    (SD-Agencies)