July 28, 2016 / 10:41 AM / 3 years ago

China to tighten fundraising rules for listed property firms - People's Daily

BEIJING, July 28 (Reuters) - China’s stock regulator is preparing to tighten regulation of listed real estate companies using refinancing tools to supplement cash flows and pay off debt, according to comments by an unnamed official quoted in the official People’s Daily.

The paper quoted an unnamed official from China’s Securities Regulatory Commission (CSRC) saying during an internal conference on Monday that real estate companies should only raise capital for construction, instead of buying land and paying back bank loans.

“With supply-side reforms going forward, the risk of company credit default and the downward pressure on the economy are rising,” the person was quoted as saying.

An analyst quoted in the paper believed that closer scrutiny of these companies could increase the relative cost of land purchases for these companies, discouraging them from the sort of speculation that has driven up real estate prices around the country, in particular in first-tier cities.

The CSRC official also said that funds raised by listed companies should not be used to pay off bank loans, and that those companies need to explain in detail where their raised funds are invested.

The CSRC did not reply to calls and faxes seeking comment. (Reporting by Yawen Chen and Pete Sweeney; Editing by Jacqueline Wong)

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