Investor demand continues to be robust for the U.S. dollar bonds of Chinese property developers including Greentown’s most recent US$450 million issue in mid July which was 13.3 times oversubscribed.  According to Moody’s, fundamentals for this sector have improved, with the number of negative outlooks declining slightly over the next six to 12 months.

Lured by these real estate companies’ stronger earnings and improving credit profiles, investor interest has supported new issuance and helped drive Asian high-yield issuance to a peak of $39 billion in 2017, about 60 percent of which is debt from developers.  The overall dollar bond market for Asian issuers excluding Japan is a year-to-date record of $193.6 billion, an 80 percent jump from the same period last year.

But while Chinese real estate bonds are finding favor with investors, they are not devoid of risk, as the experience with Wanda Properties and Greenland Holdings show.

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