September 11, 2013 / 10:28 AM / in 4 years

CSRC mulls reopening onshore funding for developers

HONG KONG, Sept 11 (IFR) - The China Securities Regulatory Commission (CSRC) has asked the Shanghai and Shenzhen Stock Exchanges to collect more information on listed companies’ property-related funding plans, according to a September 4 document seen by IFR.

The document calls for materials on any merger, restructuring or refinancing plans related to property development, confirming that the securities watchdog is once again reviewing fundraising proposals from the real estate sector.

A handful of Chinese developers have announced onshore financings in recent weeks, including Guangzhou R&F, which is planning to raise up to CNY6bn (USD980.4m) in the corporate bond market, subject to regulatory approval.

The CSRC document, however, is the first official sign that regulators are set to end a three-year freeze on local capital raisings from real-estate companies.

In order to curb soaring property prices, the CSRC stopped reviewing any fundraising proposals from Chinese property developers in early 2010, forcing many property companies to look to more expensive alternatives, such as overseas bonds or onshore trust financings.

A softer stance to onshore financings could have a wide-ranging impact, potentially improving the credit profile of property sector companies and reducing the supply of overseas high-yield bonds.

Rumours about the CSRC document yesterday had already buoyed stock of some of the Chinese developers that have shares listed in Hong Kong. China Overseas Development traded up 2.94%, China Resources Land jumped 3.22%, Guangzhou R&F Properties rose 4.67% and Yiuxiu Property gained 4.71% yesterday.

However, market participants expect any approvals to be on a case-by-case basis, and few are predicting a sudden flood of domestic bonds or shares from the property sector.

The CSRC document calls for details of recent activity and future plans in both the residential and commercial property sectors. The authorities will then check to see if the company has deliberately delayed projects in the past three years in order to sell its inventory at higher prices, the document showed.

On top of that, the document stated that proposals will also need to be checked by “related parties”, hinting that the government will retain the final say over the projects that win approval.

The CSRC is working with the Ministry of Land and Resources and Ministry of Housing and Urban-Rural Development, the document showed. (Reporting By Carrie Hong; editing by Christopher Langner and Steve Garton)

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