Property developers restart overseas bond financing
Published: Feb 07, 2023 09:26 PM
real estate Photo:Xinhua


Chinese state-owned real estate companies restarted overseas bond issuances in January after five months of suspension, paving the way for a rebound of the industry.

Some leading state-owned developers are opening up overseas financing channels again, experts said, expecting more companies to follow suit to inject more impetus into the country's economic revival.

In January, the developers such as China Jinmao and Yuexiu Group took the lead in successfully issuing bonds in Macao, according to media reports, marking the resumption of overseas bond issuances five months after suspension. 

While the total non-bank financing of real estate enterprises amounted 50.85 billion yuan ($7.49 billion) in January, a year-on-year decrease of 33.1 percent, as data released by China Index Academy on Tuesday showed, things are taking a positive turn followed by the resumption.

Affected by the weeklong Spring Festival holidays, the total amount of non-bank financing in January decreased year-on-year due to the tough economic situation, but the decline narrowed year-on-year, China Index Academy said, suggesting that industry financing has entered a relatively stable period after a year of adjustments.

"The bond issuance in January made full use of favorable policies, with new breakthroughs on the basis of continuing the good momentum in December 2022," Liu Shui, director of corporate research at the China Index Academy, told, a Shandong-based media outlet, adding that under the continuous encouragement of policies, bond issuers have been significantly diversified.

The bond issuance came after five months of suspension due to the tough economic situation, during which many companies had no financing needs, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Tuesday.

"The resumption of bonds financing marks the next step, whether it is for companies in real estate, or other sectors, and it has brought rising certainty for property development," Dong said.

China Resources had the highest financing amount in January, totaling 3.5 billion yuan, with an average interest rate of 2.17 percent, according to media reports.

"The resumption of overseas financing by leading developers shows that confidence in Chinese real estate companies among overseas investors, and their credit level has also risen, reflecting the positive effect of a series of government support policies," Li Changan, a professor at the University of International Business and Economics, told the Global Times.

Most industry watchers are upbeat about the sector's revival, thanks a litany of policies centering on lowering interest rates and down payments.

"Gauging from the central government to financial institutions, it is believed that high-quality developers should be stabilized...and the policy orientation is beneficial to those with relatively good asset quality," Dong said.

While the sector's overall asset quality and liability structure will be optimized, the real estate industry needs to be transformed as well, experts said. 

"The developers ought to increase profits by optimizing their management of assets and existing properties, knowing that the highly leveraged development mode cannot sustain," Dong said.