Confusing bond sale rules are giving Chinese developers a ‘headache’
Homebuilders say they are baffled by the ‘arbitrary’ way the regulator is deciding which offshore bond sale applications to approve
Property developers say the seemingly arbitrary way in which regulators have been approving – and refusing to approve – offshore bond sales is causing them problems when it comes to fundraising.
Several homebuilders have told the South China Morning Post that the National Development and Reform Commission (NDRC), which approves corporate debt issuance, had blocked all sales of new bonds by real estate companies since April in an apparent bid to cool the property market by tightening liquidity.
The door seems not to be closed to all the developers, which is pretty confusing
But then it unexpectedly gave the green light to four developers – Country Garden, Longfor Properties, Gemdale Corporation and Fantasia Holdings – to issue bonds for the first time last Friday.
Other builders say they have been left in limbo by the lack of guidance on the criteria to successfully issue offshore bonds and how long they need to wait after applying.
“It’s a headache, its very difficult now,” said Jacky Chan Ka-yeung, China Aoyuan Property’s vice president.
The company raised US$250 million through the US dollar bond market in January by using the quota approved by the NDRC last year. But it has not been granted a fresh quota for this year. “Most developers ran out of their quota,” Chan said. “We’re applying to the authorities for the new quota and hopefully we can get approval as soon as possible.”