Developer Xinyuan to issue onshore bonds to cut funding costs
Xinyuan Real Estate's George Liu talks about plans to raise a dollar fund to finance new developments in the United States, and the opportunities and challenges he faces there
Less than half a year into his new job as the chief financial officer of Xinyuan Real Estate, George Liu had 40 meetings last month in New York with global investors, to address concerns including the company's finances and China's economic slowdown.
A Cornell University MBA graduate, Liu previously worked as chief financial officer in Asia-Pacific for global property consultancy Savills.
His plan for Xinyuan, an early adventurer in Chinese developers' rising overseas expansion, is to raise a US dollar fund to capitalise on its good track record in the US real estate market, operating all alone instead of as joint ventures with local partners.
Another step is to issue bonds onshore to cut funding costs, which may take a while, as the queue for regulatory approvals now is long.
We are also planning to, but we haven't submitted an application yet. We need to get domestic credit ratings and work out our financials. The ceiling is 40 per cent of net assets. We will make our best effort. The queue is already long. And it seems regulatory approvals are now slowing down. The window is not open forever.
Now interest rates for onshore bonds are much lower, so offshore bond yields may also be reduced in the future. Otherwise, there will be no new issuances. If that's the case, it's not a bad idea to refinance our maturing US dollar debts in 2018.