THE WALL STREET JOURNAL
China’s property firms sell debt at home
Published: June 28, 2015 11:55 p.m. ET
Monetary easing, regulatory shift reduce borrowing costs to below levels offshore
Customers look at a model of a new residential compound at a showroom in Hangzhou, China in this file photo.
By Fiona Law
HONG KONG—Monetary easing in China is offering local companies that face trouble raising capital overseas another option.
A unit of Evergrande Real Estate Group Ltd., one of China’s largest property developers, this month sold five billion yuan ($806 million) in local-currency bonds at a 5.4% yield, less than half what it had to pay to borrow outside China just months ago. The sale is likely to spark a new wave of financing by other cash-starved developers, analysts say.
In February, Evergrande had to pay 12% to issue $1 billion in U.S. dollar bonds offshore. Last month, the developer, which has large borrowings and is faced with a tepid Chinese property market, sold $600 million worth of new shares on the Hong Kong exchange, but was forced to slash the issue price because demand was lackluster. Its Hong Kong-listed shares have tumbled 32% since then.
The company’s brighter fortunes onshore reflect China’s monetary easing, which is aimed at propping up an economy that is suffering in large part because of sluggish housing demand. Beijing has been loosening mortgage lending and unwinding home-purchase restrictions, while the People’s Bank of China has cut benchmark interest rates four times since November.
An expanded version of this report appears WSJ.com.
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