Chinese Property Firms Seek Offshore Funds as Local Investors Tire of Defaulters

Chinese Property Firms Seek Offshore Funds as Local Investors Tire of Defaulters

Zhou Ailin

Date: Mon, 06/11/2018 - 19:17 / source:Yicai
Chinese Property Firms Seek Offshore Funds as Local Investors Tire of Defaulters
Chinese Property Firms Seek Offshore Funds as Local Investors Tire of Defaulters

(Yicai Global) June 11 -- Chinese real estate firms raised CNY37.6 billion (USD5.9 billion) via offshore bonds in April, more than double the figure for the previous month as they looked to steer clear of the domestic market where investors are fed up of companies bailing on repayments.

Greater investor enthusiasm, lower interest rates and an easier issuing process are all drawing these companies to the offshore market, Ivan Chung, head of Greater China Credit Research and Analysis at Moody’s, told Yicai Global.  Official data shows more than 10 developers have issued offshore bonds within the past month.

“With deleveraging and tight liquidity on the mainland, overseas institutions that have sufficient funds are buying Chinese corporate bonds,” Chung added. “Even with their bonds at B1 and B2 ratings, real estate companies and financial institutions are still attracting investors.”

They are keen to pump their money into these companies because they have strong liquidity management, he said. Nearly 20 domestic bonds have defaulted this year to date, totaling around CNY20 billion.

“This increased risk is making investors pickier, and they’re demanding greater compensation for their risk,” Chung added.

The majority of these firms wrote in their quarterly reports that they didn’t have enough cash to cover short-term debts, he continued, saying real estate companies can cover those balances several times over.

The yuan remained the top currency for issues, followed by the American and Singaporean dollars, data from Shanghai-based real estate consultancy Tospur shows.

Editor: James Boynton

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Keywords: Debt Market, Offshore Financing, PROPERTY, Finance, Bonds, Bond Defaulters