China reg­u­la­tor to tighten fi­nanc­ing rules for prop­erty

The Sun (Malaysia) - - SUNBIZ -

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

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