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More Chinese Developers Seek To Sell Domestic Bonds

Country Garden Real Estate Group, Chongqing Longhu Enterprise Development and China Overseas Enterprise Development plan to sell bonds to raise a combined 18 billion yuan ($2.83 billion)


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China tightened financing curbs on the real estate industry in the second half of this year, exacerbating problems at grossly indebted developers such as China Evergrande and triggering sector-wide liquidity stress that some fear could destabilise China's economy. Photo: Reuters.

 

Three Chinese developers, including the main operating platforms of Country Garden Holdings  and Longfor Group Holdings, plan to sell bonds in China to raise a combined 18 billion yuan ($2.83 billion), the official registration system showed late on Wednesday.

The news is evidence that Beijing is marginally easing liquidity strains on the cash-strapped sector.

China tightened financing curbs on the real estate industry in the second half of this year – exacerbating financial problems at grossly indebted developers such as China Evergrande Group and triggering sector-wide liquidity stress that some fear could destabilise China’s economy.

In recent weeks there have been signs that some financing channels are being marginally relaxed for developers.

According to the filing system of China’s interbank debt market, Country Garden Real Estate Group, controlled by Country Garden Holdings, plans to issue medium-term notes worth 5 billion yuan.

Chongqing Longhu Enterprise Development, the main platform of Longfor Group, plans to issue 3 billion yuan of debt.

Separately, the state-owned developer China Overseas Enterprise Development Group aims to issue three tranches of debts totalling 10 billion yuan, according to the registration filing.

There have been other signs of life in the domestic bond market for developers. Corporate bonds issued by real estate companies nearly tripled in November from the previous month, to 37.1 billion yuan, official China Securities Journal reported on Wednesday.

AF China Bond 50 Index

The AF China Bond 50 Index, above, has edged up in recent days but is down about 2% from July, when China Evergrande’s debt troubles resurfaced.

There are also signs of marginal lending relaxation. Last month, sources told Reuters that financial regulators had instructed some Chinese banks to issue more loans to property firms for project development.

But Chinese authorities have given no signal that they will relax the “three red lines” – financial requirements the central bank introduced last year that developers must meet to get new bank loans.

Analysts have said Beijing will continue its deleveraging campaign against developers despite the recent policy tweaks.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

 

China Bonds Dive as Third Evergrande Payment Deadline Passes

 

China Property Bonds Bounce Back, But Evergrande Misses Out

 

China Bank Bonds Resilient Amid Contagion Risk: Index Insights

 

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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