Property firms feeling relaxed over curb ease

China slackens bond issuance regulations to permit fresh capital

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 itself after a slew of tightening measures.

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

Separately, the National Development and Reform Commission ( NDRC) stopped granting new quotas for offshore dollar bond issuance in the second quarter of this year.

However, a bond underwriter said that in June, the NDRC, the regulatory body that approves offshore corporate debt sales, lifted the curbs on offshore bond issuance by developers.

A number of developers have already issued into the offshore market in recent weeks.

The underwriter declined to be named as he was not autho- rized to talk to the media.

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

If liquidity continues to be tight, companies and analysts said the market might start to see bond defaults next year, when many bonds are due to reach maturity, especially in the onshore market.

According to the NDRC’s website, 10 property companies, including Longfor, Country Garden, CIFI and Greentown China, have been given the green light since June 23. Five have already completed their bond issuance.

Neither the NDRC nor the CSRC replied to a request for comment.

However, one of the developers that applied to issue offshore said that the amount approved was less than what the company had sought, a sign regulators are still keeping a tight rein on financing in the property sector.

In the cases of onshore bonds, developers such as China Vanke and Shanghai Shimao announced the sale of corporate bonds earlier this month, although both were using a 2015 quota and therefore required fresh approval from the CSRC for issuance.

Chinese developer Agile Group also sold 3 billion yuan worth of bonds on July 12.