China regulator to tighten financing rules for property

BEIJING: China’s securities regulator is looking to tighten rules for listed real estate firms to issue bonds and offer private placements, in a move to curb excessive capital flowing into the property market, the official Shanghai Securities News reported yesterday.

The Shanghai Stock exchange, directly administered by the China Securities Regulatory Commission (CSRC), is planning to raise the bar for real estate companies to issue corporate bonds, the report said, citing multiple sources close to the matter.

Among the requirements are issuing companies must be AA rated and fulfil one of the four conditions, the newspaper said, citing an initial draft. But the report didn’t specify the conditions.

A wave of restrictions imposed on housing markets in major Chinese cities last week have unnerved some buyers and developers, cutting the area of new homes sold in places such as Beijing and Shenzhen by more than half.

More than 20 cities have imposed measures, including higher mortgage downpayments, to cool hot property markets that have raised official alarm in Beijing and fresh concerns about China’s ballooning debt.

The Shanghai Securities News said that property bond issuers will be assessed and categorised according to their risk levels, with high-risk enterprises set to face restrictions.

The CSRC has also been increasingly vigilant about real estate enterprises’ private placement requests for purposes of paying off bank loans and supplement cash flows, the report said.

Earlier in July, the official People’s Daily reported that the CSRC was planning to tighten regulation of listed real estate companies using refinancing tools to supplement cash flows and pay off debt, as it might discourage them from the sort of speculation that has driven up real estate prices around the country. – Reuters