Developers' diversification worries creditors

Chinese property developers investing in new ventures outside their core business are hurting the market value of their bonds.

The notes of Sunac China Holdings Ltd and Dalian Wanda Commercial Properties Co may come under more pressure this year as the groups branch out into non-core businesses. Purchases by highly leveraged Chinese developers unrelated to real estate raise the "knee-jerk question" of whether they might be having problems with their existing business, said Bryan Collins, a fixed-income portfolio manager at Fidelity International.

Chinese builders face increased competition and tighter profit margins. Moody's Investors Service Inc expects government measures to slow sales growth in the property market this year after hitting a record high in 2016.