Global investors are lending money to Chinese property developers in record amounts this year, in spite of a deteriorating housing market and warnings from rating agencies over the state of the sector.
Offshore bond issuance from mainland property companies is on track for a record year, with $18bn of debt sold year to date, according to Dealogic – fast approaching the $19.5bn total for all of 2013. The year’s biggest deal came in July, when Sino-Ocean Land borrowed $1.2bn in the dollar bond market.
The rise in offshore borrowing has coincided with tighter credit conditions within China that have forced developers to look overseas for funding.
Beijing has been trying to reduce leverage in the domestic economy following a period of rapid credit expansion. As a result, banks have cut back on lending to certain sectors and the growth of alternative funding channels such as trust loans has slowed.
Falling housing sales have also hit the most important cash generator for developers. Sales have dropped 8.2 per cent so far this year by value, while price cuts introduced to entice buyers have dented margins.
Read more here : http://on.ft.com/1rc70Ey via @FT
Related Posts
- 73China's central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves, sources involved in internal policy discussions say. A cut would be triggered if growth slips below 7.5…
- 70The yuan will be able to trade as much as 2% on either side of a daily central bank reference rate, compared with the current 1%
- 66The Global Financial Crisis has increased the importance of the renminbi as an international currency. This column describes how the status of the remnibi has changed relative to that of the dollar and the euro. It also discusses what their future as future currencies would be. The author suggests that…
- 58For 31-year old Beijing resident Wang Yuanzhi, talk about a bubble in Chinese property is not something to be too concerned about. "If you look at the real estate market in China, it has already seen a golden decade of extreme fast growth. There will still be room for growth…
- 57Professor Shiller provides a description of the course, including its general theme, the relevant textbooks, as well as the interplay of his course with Professor Geanakoplos's course "Economics 251--Financial Theory." Finance, in his view, is a pillar of civilized society, dealing with the allocation of resources through space and time…