(Yicai Global) Nov. 9 -- Chinese property developers recorded year on year increase in their nonbank financing, including the issuance of bonds and asset-backed securities, for the first time this year last month amid declining borrowing costs.

The value of financial support through firms that have no banking licenses rose by 16 percent to nearly CNY55.7 billion (USD7.7 billion) in October from a year ago as funds raised via bonds almost tripled due to a low base of last year, according to statistics released by the China Index Academy. However, the headline sum was still 27 percent lower from September.

After the early stages of a downward cycle, the sector's financing capabilities have shown signs of recovery, said Liu Shui, research director at the CIA. 

Borrowing costs declined as the average interest rate was 3.48 percent in October, down by 2.39 percentage points year-over-year. For bonds, the average rate was 3.12 percent, down from 4.12 percent last year, marking the biggest decrease among different types of financing options.

An increasing share of money came through notes. From January to October, the portion of domestic bonds in the total jumped to nearly 54 percent, up from 31 percent during the same period last year. Meanwhile, the share of asset-backed securities surged to 33 percent from 23 percent. Trust and overseas bonds were less popular as the portion of financing via trusts declined to 10.9 percent from 28.9 percent while that of offshore bonds slid to 2.3 percent from 16.9 percent.

Liu predicted that it will become more difficult for developers to issue new offshore notes in the future because of several defaults over the past year.

Those that have been successful in raising money are mostly state-owned enterprises as their share among bond issuers this year rose to 87 percent as of Oct. 31, up from 73 percent. Private firms could become a new driving force in the sector’s financing with a series of new policies issued recently, Liu added.

Developers are not out of the woods yet as the balance of debts about to mature during the last two months of this year tally around CNY123.1 billion (USD17 billion), indicating a new repayment peak. Moreover, in January, another CNY119.4 billion will expire.

Editors: Tang Shihua, Emmi Laine, Xiao Yi