The aggregate net foreign exchange losses for 24 of the top 30 mainland listed Chinese developers by contracted sales before the COVID crackdown in 2020 totaled 21.25 billion yuan ($2.75 billion) for the first six months of this year, according to research by Nikkei Asia.

The foreign exchange losses are on paper only and the actual loss or gain depends on the exchange rates of the respective due dates. But the figures act as a gauge of exchange rate risks involved with the foreign currency-denominated debts of distressed property developers, especially when the yuan dipped to a 16-year low against the dollar on Sept 8.

Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, views the yuan depreciation as a result of increased liquidity due to cuts in reserve requirement ratios and interest rates by the People's Bank of China, which is under stress from the real estate sector.

"Both, together with the now negative portfolio flows into China, have weakened the yuan," she said. The weak yuan is seen as a byproduct of assisting distressed developers, but it is apparently adding to the financial burden for those highly exposed to dollar debts.

While Yango Group was forced to delist from the Shenzhen exchange last month and Hong Kong-listed CIFI Holdings Group failed to announce its midyear earnings report by the Aug. 31 deadline, four companies did not explicitly disclose and a few said such losses are included in a wider category of "finance losses." The actual losses by yuan depreciation could be larger.

China Evergrande Group topped the list with a net forex loss of 4.14 billion yuan, or 12.5% of the 33 billion yuan net loss for the first six months. Among the 625 billion yuan of total borrowings at the end of June, 26.3% was denominated in U.S. dollars and Hong Kong dollars, where the value of the latter is pegged to the former.

Since the yuan depreciated almost 10% over the year until then, the value of Evergrande's debts borrowed in the two foreign currencies are inflated when converted to the Chinese currency.

Country Garden Holdings reported over 3 billion yuan in net foreign exchange loss, contributing to a record half-year net loss of 48.93 billion yuan. Global investors have been closely watching the Guangdong-based developer, as it initially missed a total of $22.5 million in interest payments to two of its dollar-denominated bonds last month.

Even though the company has recently been able to negotiate the redemption deadlines for certain domestic bonds -- part of its 257.9 billion yuan borrowings -- management stated in its midyear report that it is "facing more difficulties in obtaining financing through the issuance of new domestic corporate bonds and overseas senior notes due to the difficult and challenging debt financing environment."

Sunac China Holdings, which has already defaulted on onshore and offshore bonds, said it has recorded a similar loss of 3.24 billion yuan during the first half of the year. The Tianjin-based developer has not repaid 129.23 billion yuan, or over 40% of what it owes to creditors and bankers, as of the end of last month.

Cedric Lai, a Hong Kong-based analyst at Moody's Investors Service, said on Thursday that funding access for privately owned developers in general "will remain restricted amid dampened market confidence" as he downgraded the overall credit outlook for China's property sector to negative from stable.

Despite a slew of recent support measures, he expects a further decline in property sales nationwide as homebuyers' concerns linger, especially as a negative credit development at Country Garden Holdings "has amplified their risk aversion."

But a number of state-owned developers are less affected by the depreciation, as they are finding more domestic funding to stabilize their financials while diluting their foreign currency positions.

Li Xin, chairman of China Resources Land, said the company has "actively reduced its non-[yuan] net debt exposure" during the first half of the year. Foreign currency exposure at the end of June was 8.5% of its total outstanding borrowings of 231 billion yuan, down 8.3 percentage points from the end of 2022.

The company -- a unit of China Resources Group, one of the 98 elite "central companies" under the direct control of Beijing -- was able to issue six onshore bonds to raise 10 billion yuan with coupon rates between 2.16% and 3.39% during the period. "[Yuan] exchange rate fluctuations will not have a significant impact on the group's financial status," Li said.

The impact of the fluctuating greenback has been easing for Poly Developments and Holdings Group, the largest listed developer by contracted sales and an entity connected to the People's Liberations Army. Dollar-denominated bonds and short-term loans stood at slightly over $1 billion, down from $1.5 billion a year ago.

Longfor Group Holdings, one of the few mainland private developers with investable corporate ratings from the three global agencies, is trying to manage currency fluctuation risks by hedging and gradually cutting back on debts denominated in U.S. and Hong Kong dollars. The ratio of foreign currency-denominated borrowings is now 21.6%, down 5.4 points from three years ago, with 97% of them covered by rate swaps as of the end of June.

Despite the pessimistic outlook in the real estate sector, it is unlikely the central bank will take on much more risk subject to exchange rate fluctuations.

"I believe U.S. dollar-denominated debt from property developers is no longer a consideration for the PBoC in terms of currency," Ju Wang, head of greater China forex and rates strategy at BNP Paribas, told Nikkei Asia. "Even though the foreign exchange losses are quite large, the issue remaining is now only for a few distressed ones. Many others have been decreasing their positions or hedging their foreign currency exposures."