Bond Tran­lin’s is­suance$2b by pa­per de­vel­op­ersmill in facesUS ad­vances­new rules

China Daily (USA) - - BUSINESS - By By WU PAUL YIYAO WELITZKINin Shang­hai wuyuyao@chi­ New York paulwelitzkin@ chi­nadai­

The Shang­hai Stock Ex­change has launched de­tailed bench­marks A for Chi­nese guid­ing com­pany’sreal es­tate planned devel­op­ers’ $2 bond bil­lion, is­suance. 344-hectare The de­tailed pa­per reg­u­la­tion­s­mill in the will US im­pact state of smaller Virginia de­vel­op­er­stook a be­cause sig­nif­i­cant they stepare less for­ward­likely to whenbe qual­i­fieda ma­jorto en­gi­neeringis­sue bonds un­der­and de­vel­op­ment­the new rules. con­trac­tAs of Wed­nes­day,was signed A-share on Wed­nes­day.listed devel­op­ers have is­sued 217 The bonds con­tract,year to date signed rais­ing with a Ja­cobs com­bined Engi­neer­ing­value of 282.4 Group­bil­lion Inc, yuan is ($42.3for de­vel­op­ing­bil­lion). the over­all A site. cir­cu­larIt will from in­cludeSSE workon Tues­dayon the de­sign­said that, of in the or­der new to plant’s is­sue pulp­ing­bonds, a real fa­cil­i­ties es­tate and de­vel­ope­runits for must tis­sue-mak­ing­fall into one andof four fer­til­izer categories: pro­duc­tion(1) listed usin­gin China the or pro­pri­etaryan over­seas stock tech­nol­ogy mar­ket, of (2) Vastly,a cen­tral also gov­ern­men­t­known as owned Tran­lin en­ter­priseInc, which withis the re­al­tyUS sub­sidiary de­vel­op­mentof Shan­don­gas core busi­ness, Tran­lin(3) a Pa­per de­vel­oper Co Ltd. owned by a the gov­ern­ment of a prov­ince“It’s a com­plexor a prov­ince’s project cap­i­ta­land, as city Ja­cob­sor a city lays of out same the level, de­sign and for(4) onethe site,of thea ma­jor­top 100 part pri­vate­lyof the work owned will devel­op­­volve all the en­vi­ron­men­tal The cir­cu­lar per­mits also that said will that be a re­quired,” de­vel­oper which­said John­has three Stacey,of se­niorthe five vice-pres­i­den­tun­fa­vor­able con­di­tion­sof mar­ket­ing will not andbe qual­i­fied product to de­vel­op­mentbe bond is­suer, at in­clud­ingVastly. in­suf­fi­cient net In as­sets 2014, (less Tran­lin than said20 bil­lionit would yuan in­ve­s­tat the $2 pre­vi­ous­bil­lion overyear five end), years in­suf­fi­cientto build sale­sits first rev­enue US man­u­fac­tur­ing(an­nual rev­enue less op­er­a­tionthan 3 bil­lion in Ch­ester­field­yuan by the County,end of which­last yearis abou­tend), loss-mak­ing32 kilo­me­tersin the lat­est­from Rich­mond,fi­nan­cial year, the high state debt-to-as­set­cap­i­tal of Virginia.ra­tio (65 per­cent or above), and high The in­ven­to­ry­plant is ex­pect­edlevel (aboveto gen­er­ate 50 per­cent). 2,000 new jobs by 2020. It is If thea biggestChi­nesede­vel­oper has in­vest­ment two of these and con­di­tions, job-cre­ation pro­jec­tit will in be re­quired Virginia. to The sub­mit com­pany more broke de­tailed ground dis­clo­sureon the ma­te­ri­al­s­plant’s siteto ap­ply along for the ap­proval James for River bondin 2015. is­suance, the cir­cu­lar said.

“We An­a­lyst­sare with­in­said that the this sched­ule­move is to the reg­u­la­tor’sbe­gin full ef­fort op­er­a­tionsto strengthen by 2020,” risk said man­age­men­tS­tacey. re­gard­ing devel­op­ers’The plant bondis is­suance ex­pected andto be­gin­has lit­tle lim­it­edto do pro­duc­tion­with “curbin­gof bath­room fi­nanc­ing” to tis­sues,real es­tate pa­per devel­op­ers,tow­els and be­cause nap­kins the in thresh­old2018 by im­port­ing­for de­vel­op­er­srolls of to pa­per ap­ply from­for China. ap­proval to is­sue bonds re­mains un­changed.“In 2020 ev­ery­thing in­clud­ing The the lat­est pa­per cir­cu­lar rolls just will spec­i­fied be made risk in man­age­ment­the United key States points wit­hand bench­marks.Amer­i­can ma­te­ri­als,” Stacey Ac­cord­ing­said. to Zhang Dawei, an an­a­lyst with Cen­taline Prop­erty, the spec­i­fied bench­marks and con­di­tions for ex­am­in­ing whether a de­vel­oper is qual­i­fied to is­sue bond is ben­e­fi­cial to the realty mar­ket in the long run, be­cause it helps in­vestors to have more ac­cess to de­tailed dis­clo­sure and rule out un­qual­i­fied players.

If less qual­i­fied devel­op­ers could con­tinue to get fund­ing through is­sue chan­nels, they would use the fund­ing again to bid for land — fur­ther push­ing up land and hous­ing prices in the fu­ture, while they are frag­ile to risk ex­po­sure, said Zhang.

Stacey “Al­though said the de­tailed Tran­lin reg­u­la­tion had de­cided does to not use ex­plic­itly theVastly say name that to fi­nanc­ing rep­re­sent chan­nel­s­the brand. through bond “Given is­su­ing the will mas­sivebe tight­ened scale and­for devel­op­ers,many facets the of ac­tu­althe man­u­fac­tur­ing re­sult will be that op­er­a­tions,smaller de­vel­op­ers­mul­ti­ple pro­ductwith not-so-good­lines and per­for­manceour site restora­tion in re­cent ef­forts,years will we be wanted un­likely a bigto be name al­lowed with to is­sue vir­tu­ally bonds end­lessin the near pos­si­bil­i­ties.”fu­ture,” said Xu Yang, an­a­lyst “This withis an Si­no­link ex­cit­ing Se­cu­ri­ties.op­por­tu­nity “For for big our players,global con­sumer get­ting prod­uct­squal­i­fied is busi­ness.not a dif­fi­cultWe have task.a long Also, there his­tory are of plenty as­sistin­gof other our clients chan­nels in for growth fundraisin­gand ex­pan­sionso the de­tailedin global reg­u­la­tion man­u­fac­tur­ing,”will have said lit­tle Bob im­pact Pra­gada,on them,” pres­i­dent said of Ja­cobs a re­search In­dus­tri­al­note Line from of CITICBusi­ness. Se­cu­ri­ties.

We are within the sched­ule to be­gin full op­er­a­tions by 2020.”

John Stacey,

se­nior vice-pres­i­dent of mar­ket­ing and product devel­op­ment at Vastly

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