(Yicai Global) Dec. 6 -- The price of corporate bonds issued by Chinese real estate firms skyrocketed in the wake of market speculation that four state-owned banks will help some developers repay their overseas liabilities.

Cifi Group’s bonds closed up between 24 percent and 43 percent yesterday. Those of Shimao Property Holdings, KWG Group Holdings, Sino-Ocean Group Holding, Times China Holdings, and Country Garden also soared.

Online rumors said Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China will help China Longfor, Seazen Holdings, Country Garden, Midea Real Estate, and Cifi Group repay overseas debts using their domestic assets as collateral.

The prices of developers’ bonds have advanced in the past month because of market sentiment and favorable policies allowing builders to raise money overseas to repay debts, a fixed income analyst said.

Cifi’s Cifi 02 note more than doubled to CNY50 (USD7.17) yesterday from about CNY23 in the middle of November. US-denominated real estate bonds also jumped. Several US corporate bonds of Country Garden climbed to over USD60 yesterday, up from less than USD11 early last month.

Market enthusiasm for real estate bonds also arises from other government policies such as allowing banks to offer developers a large number of credit loans. About 25 banks had provided around 50 real estate firms with credit of more than CNY3 trillion (USD431.1 billion) in total as of Dec. 2, according to incomplete figures.

China resumed equity financing for real estate firms last month after a multi-year hiatus to enable them to restructure, go public, issue stock, buy real estate assets in cash, and raise money. The uptake among developers was stronger and faster than expected.

The market has been much less worried about the ability of developers to repay debts, investment analysts at Futu Holdings told Yicai Global. Real estate bond prices have surged also because of the eased financing pressure and market speculation that China will bring in more policies to boost demand and new home sales, they added.

Editor: Futura Costaglione