Chinese home builders ‘hunger’ for offshore bond markets after land spending binge prompts government clampdown on credit
- Mainland property firms have issued more debt in the first 10 days of July than in whole of June
- More home builders are expected to head for the offshore bond market in coming months, taking advantage of a good window for high-yield corporate issuance, experts sayChinese developers’
Chinese developers are flocking to the offshore bond market, one of the few fundraising channels available amid a government clampdown on credit, as prices for land at tender rise sharply.
Developers have issued overseas bonds worth more than US$4 billion in the first 10 days of July. That compares with a total of US$3.5 billion in bonds issued in June, according to financial data provider Wind Information.
Logan Property Holdings, which paid a record price for a plot in Shenzhen on June 24, said on Wednesday that it had issued US$400 million worth of bonds with a coupon rate of 6.5 per cent.
“Developers, particularly those aggressive in land purchases, are hungry for money,” said Yan Yuejin, a research director with Shanghai-based property services firm E-House China R&D Institute. “Onshore financing has been largely tightened recently, pushing them to look for opportunities overseas.”
Developers raised US$1.46 billion in May through four offshore bond offerings.
More home builders are expected to take advantage of the offshore bond market in coming months, according to market observers.