(Yicai Global) Dec. 8 -- Chinese property developers sold less bonds both at home and abroad last month as the cost of financing rises, the Securities Times reported today, citing a number of research institutes.

Developers issued CNY83.5 billion (USD12.8 billion) worth of bonds last month, 21.4 percent less than the same time last year but an increase of 20.7 percent from October, according to Beike Real Estate Research Institute. Figures from real estate data cruncher CRIC Research Institute put the amount at CNY100.6 billion (USD15.3 billion) by 95 developers, a fall of 19.1 percent from a year earlier and a drop of 10.2 percent from October.

Bond issuance in November fell short of expectations partly due to a slowdown in the foreign debt market as developers turned away from overseas markets because of the higher cost of borrowing there, Beijing-based Beike said. 

The amount of bonds sold in overseas markets plunged 52.9 percent last month from the year before to CNY28 billion (USD4.3 billion), a drop of 15.7 percent from October, Beike said. CRIC put overseas debt financing at CNY28.4 billion last month, a 21.1 percent year on year drop and 28.7 percent less than last month.

While the amount borrowed might be falling, the amount due is still growing, Beike said. Maturing domestic and overseas bonds amounted to CNY83.7 billion (USD12.8 billion) in November, 2.6 percent more than in October. Expiring debts are projected to reach CNY1.24 trillion (USD190.4 billion) next year, a year on year rise of 36 percent, it added.

Meanwhile, the cost of fundraising is on the rise. The average onshore coupon rate was 4.89 percent in November, up 0.13 percentage points from the month before, while the average offshore coupon rate was 8.04 percent, a big jump from October.

There was a wide range in overseas bond yields. Smaller developers such as Sunglow Group and Jingrui Holdings sold bonds with coupon rates of between 11.9 percent and 14.5 percent in November, while those of bigger players CIFI Group and Zhenro Group were between 5.25 percent and 5.45 percent.

Developers are also under pressure to rein in their borrowing as China’s regulators raise financing requirements in order to control the scale of debt of real estate companies, CRIC Research Center said. Some developers did not issue bonds last month at all due to the great fluctuations in the debt market, it added.

Developers still have another three to five years before there is a substantial reduction in pressure to repay maturing debts, based on the bond-issuing cycle in the last five years, Beike said.

Real estate firms are expected to focus on the domestic bond market for the rest of the year.

Editor: Kim Taylor