China’s bourses suspend bond sales by some property companies ahead of tighter rules from regulator
Qualified property companies will be categorised into normal, special and risky for different bond issuance conditions, draft rules from the CSRC show
In a move that signals a wider crackdown on bond sales by Chinese property companies, Shanghai Stock Exchange has suspended bond raising applications from developers that would be disqualified from issuing corporate debt under new guidelines expected to be issued by the securities regulator, industry sources said.
Some smaller real estate companies have failed to receive final approval for bond sales on the Shanghai exchange even after going through the required paperwork, an investment banker with a Shanghai based mid-sized brokerage told the South China Morning Post.
The 21 Century Business Herald reported on Wednesday morning that China’s stock exchanges have suspended final approval for property companies applying for bond sales.
“It seems the regulator will soon introduce new rules regulating property bond sales, and the bourses are proactivelyadopting tighter measure ahead of that,” said the brokerage source.
According to an official document outlining the draft rules that was circulated among investment bankers and obtained by the Post on Wednesday, companies should first be rated AA or above by a ratings agency and fulfil one of four conditions laid down by the regulator before they can qualify to issue corporate bonds.
Bond issuers must be one of the following types of company: China or overseas listed companies; a central government owned company with real estate development as its core business; property companies owned by local government above the provincial capital level; other privately-owned property developers ranked within the top 100 compiled by the semi-official China Real Estate Research Association.