China debt market is back as Kaisa troubles deemed company-specific
Lower rates at home likely to see high-yield issuers switch to onshore market, while investment-grade players to keep focus abroad
High-yield debt issuers from the mainland's property sector will switch onshore this year as China cuts interest rates, while those developers rated investment-grade will stay abroad as they are less affected by the still unfolding Kaisa crisis, say analysts.
"Investors see the Kaisa incident as more company-specific rather than sector-wide," said Standard & Poor's corporate ratings director Christopher Yip. "New issuance has restarted and some have been taken up quite well."
Despite a slow start, offshore issuance will probably catch up later with the full-year amount likely to match last year's, he told the South China Morning Post.
Mainland developers raised a record US$20.96 billion in overseas debt markets in 2014, with US$13.9 billion at the sub-investment grade, according to London-based real-time data provider Bond Radar.
So far, four developers, including Shimao Property and Greentown China, have issued a total of US$3.18 billion in offshore debt, 39 per cent of the amount raised in the first two months of last year, shows Bond Radar data.
The market closed for a while after Kaisa, reportedly embroiled in an anti-graft probe, missed a coupon payment on January 8. It squared the dues this month towards the end of a 30-day grace period.
"The pace of recovery will depend on how soon the Kaisa problem will get resolved and whether authorities will give investors a clear answer as to why they banned sales of Kaisa projects in Shenzhen," Moody's senior property analyst Franco Leung told the Post.