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Business · Real Estate
Chinese home builders are turning to offshore bond markets due to the government’s clampdown on credit.
2019/07/11 10:20:42
property market, Chinese developers, offshore bond market

Jul 11, 2019 (China Knowledge) - Mainland property firms have issued overseas bonds worth over USD 4 billion in the first 10 days of July, already more than the total amount in June. More Chinese developers are flocking to the offshore bond market, which has been one of the few fundraising channels available since the government’s clampdown on credit.

“Developers, particularly those aggressive in land purchases, are hungry for money, " said Yan Yuejin, a research director at E-House China R&D Institute, a Shanghai-based property services firm. “Onshore financing has been tightened recently, pushing them to look for opportunities overseas.”

In May, the China Banking and Insurance Regulatory Commission banned direct financing to developers with incomplete certificates or real estate projects that had not properly secured their full capital needs. The ban was later expanded to include indirect financing through equity investments and bond subscriptions to developers, aiming at responding to the overheating property market.

Regardless of the high cost, Chinese developers need to turn to the overseas market as they had to refinance in onshore and offshore debt maturing in the second half. When onshore trust and loan financing have been tightened, more home builders are expected to take advantage of the offshore bond market in coming months, according to market observers.

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