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While talk of a trade war and the vulnerability of Chinese financial markets has dominated headlines in recent months, risks facing property developers have received less attention.

But economists at French investment bank Natixis, are warning that repayment risks in the real estate sector are one of China’s most obvious ‘gray rhinos’ – highly visible but largely ignored threats.

Among the top 100 developers in China, the research, published on Wednesday, found that 13% face “considerable” repayment risk.

Chart: Natixis

The analysis cited China’s “more adverse” growth environment and tighter regulations on borrowing as factors contributing to the risk, notwithstanding efforts by the People’s Bank of China to provide liquidity. Adding to the risk is the fact that developers are more reliant on US dollar-denominated bonds than in the past.

Chart: Natixis

“The reduction in different sources of borrowing channels comes at a time with a looming maturity wall. And Chinese developers are more reliant on USD bonds as the source of funding than ever. The proportion of USD and HKD bonds has increased from 15% in 2016 to 21% in June 2018. This is only going to be more challenging under a higher rate and risk adverse environment,” the economists wrote.

“Even though there is a new development in asset-backed securities (ABS) in securitization in the form of REITs, the new channel is still in the early developing stage and remains unlikely to fully substitute existing sources.”

But the report suggests that, for the moment, the repayment risk will be limited to individual firms rather than the broader sector.