Access to Offshore Dollar Bonds Dries up for Property Developers

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Chinese regulators have clamped down on the issuance of offshore dollar bonds by property developers as part of a bid to cool down China’s overheating real estate market.

 

Sources speaking to Reuters said that China’s National Development and Reform Commission, the body responsible for green lighting corporate debt issuance, has shut down the origination of new offshore bonds in the the second quarter.

Beijing had previously sought to slowdown domestic corporate bond issuance by real estates in the second half of 2016, prompting a shift to offshore dollar bond issuance in the first quarter of the current year.

Chinese property concerns have already issued $4.5 billion in corporate dollar this year, comprising 3% of the Asia-wide total, and not far from the total of $5.7 billion for last year.

Sources on the real estate sector expect the clamp down on dollar bond issuance to continue for the remainder of the year

Developers do not expect refinancing issues to arise in the wake of constrained dollar supply, due to the availability of credit via other channels such as bank loans and borrowing on the interbank market.

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