China eases bond issuance curbs for property firms

China's 15 hottest property markets, mostly first- and second-tier cities like Beijing, remained stable last month as a city-based property policy continued to take effect, the National Bureau of Statistics says.
China's 15 hottest property markets, mostly first- and second-tier cities like Beijing, remained stable last month as a city-based property policy continued to take effect, the National Bureau of Statistics says.PHOTO: BLOOMBERG

Regulatory body lifts restrictions for those seeking funds in offshore, onshore markets

HONG KONG/SHANGHAI (REUTERS) - China has relaxed curbs on property firms seeking funds in offshore and onshore bond markets, people familiar with the matter say, a move that could allow fresh capital into a sector that has struggled to refinance after a slew of tightening measures.

Since late last year, regulators had made it harder for developers to sell onshore corporate bonds in a bid to help cool an overheating property market.

The National Development and Reform Commission (NDRC), the regulatory body that approves offshore corporate debt sales, had also stopped granting new quotas for offshore dollar bond issuance in the second quarter of the year.

But sources told Reuters that last month, NDRC lifted the curbs on offshore bond issuance by developers. A number of developers have already issued into the offshore market in recent weeks.

Other developer sources said they can once again apply for onshore issuance with the China Securities Regulatory Commission (CSRC), the agency responsible for onshore bond oversight.

The new regulations governing many land auctions and setting limits on home prices in some Chinese cities were threatening many developers' business models, which in turn was hurting their cash flow.

The regulations had a significant cooling effect on home property prices in China, with official data showing yesterday that prices in Beijing fell for the first time in more than two years last month, while Shanghai further declined and Shenzhen stalled. Nationwide, home price growth in smaller cities maintained rapid growth.

Prices in Beijing fell for the first time in more than two years last month, while Shanghai further declined and Shenzhen stalled. Nationwide, home price growth in smaller cities maintained rapid growth.

People in the industry expect home price growth in China's largest cities to stay on a mild slowing trend for the next 12 months.

Last month, average new home prices in China's 70 major cities rose 10.2 per cent from a year earlier, decelerating from May's 10.4 per cent gain, according to Reuters calculations based on an official survey out yesterday.

On a monthly basis, new home prices rose 0.7 per cent last month, the same as the previous month's reading, Reuters calculations based on data issued by the National Bureau of Statistics (NBS) showed.

"China's 15 hottest property markets, mostly first- and second-tier cities, remained stable in June as a city-based property policy continued to take effect," the NBS said in a statement accompanying the data.

More than 45 cities, most of them top-tier cities with a sizeable population, have imposed varying levels of restrictions since October last year to curb fast-rising prices, with most of the latest measures introduced in late March.

These measures have started taking some heat out of the market, with sales and investment in property cooling slightly in the second quarter.

If liquidity continues to be tight, companies and analysts said the market might start to see bond defaults next year.

However, according to the NDRC's website, 10 property companies, including Longfor, Country Garden, CIFI and Greentown China have been given the green light for the bond issuances since June 23.

Five have already completed their issuance. Neither the NDRC nor the CSRC replied to a request for comment.

A version of this article appeared in the print edition of The Straits Times on July 19, 2017, with the headline 'China eases bond issuance curbs for property firms'. Print Edition | Subscribe