New | China’s developers take advantage of cheaper offshore debt
Reopening of domestic bond market to developers and interest rate cuts by the central bank has freed up liquidity and lured mainland property firms away from the offshore bond market to domestic market
Mainland China developers have seen offshore financing costs reduced significantly amid a relaxed domestic lending environment that has prompted more issuers to issue debt at home.
Mid-sized developer Powerlong Real Estate on Friday priced its US$200 million, three-year senior notes at 7.625 per cent, a 3 per cent saving from the rate on the senior notes it issued in 2014 -- the lowest rate the company has ever paid on offshore bonds.
The issuance was four times oversubscribed, the company said in a statement.
This month another developer, Future Land Development, issued its US$250 million offshore senior notes at a record-low annual interest rate of 6.25 per cent.
“The supply of offshore bonds declined a lot this year,” said Moody’s senior analyst Franco Leung. “The offshore market has sufficient liquidity right now .”
The reopening of the domestic bond market to developers last year and six interest rate cuts by the central bank over the past year has freed up liquidity and lured mainland property firms away from the offshore bond market to the domestic market.
In the first nine months of this year Hong Kong-listed Chinese property bond issuers’ onshore issuance surged to 115 billion yuan (HK$139 billion), from 11 billion yuan for the full year in 2014. In contrast, offshore issuance fell 55 per cent for the first nine months to 9 billion yuan.
