HONG KONG, June 1 (Reuters) - Chinese property developers Country Garden and Hopson Development this week dropped their plans to issue onshore bonds as regulators tighten access to credit in the overheated sector, sources with knowledge of the matter said on Friday.
Country Garden, the nation’s leading property developer by sales, dropped its application to issue 20 billion yuan ($3.12 billion) of corporate bonds on Monday, filings to the Shanghai Stock Exchange showed.
Country Garden, which is incorporated overseas, had intended to issue so-called panda bonds - yuan-denominated debt securities sold to local investors.
Guangzhou-based Hopson Development dropped its application on Wednesday to issue 3.1 billion in corporate bonds via private placement, another filing to the exchange showed.
One of the sources, who did not want to be identified because he is not allowed to speak to media, said bond underwriters were told by regulators that corporate bonds would not be approved unless the proceeds were intended to develop homes for rent, a market segment that Beijing supports to help meet demand for affordable housing.
Two other sources said authorities were specifically preventing developers from issuing panda bonds as part of official efforts to tighten domestic credit. Overseas-incorporated companies can borrow offshore without obtaining official approval.
The cancellations underscore the difficulties Chinese developers have had in refinancing debt via the onshore bond market since the authorities tightened rules for property-related issuance in 2016, though there have been signs this year of some relaxation in approving bond issuance via private placement.
Country Garden said its application was actually for an 11.2 billion yuan bond sale, and it was cancelled because of the company’s plans to change how it would use the proceeds. It would apply again after details of the planned sale were confirmed, it noted.
Hopson Development declined to comment.
Stock exchange data showed other developers were still waiting for approval of their plans to issue corporate debt.
$1 = 6.4042 Chinese yuan renminbi Reporting by Clare Jim; Editing by Eric Meijer