3. Offshore bond issuance among developers to slow following the Kaisa incident
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The construction site of a residential property project developed by Kaisa Group was temporarily closed in Wuhan city, Hubei province, Jan 24, 2015. [Photo/IC] |
Offshore bond issuance among developers has significantly slowed since the beginning of this year, as the rating agency reported that only six issuers tapped the offshore bond market, while 20 made issuance for the same period last year.
Kaisa's financial troubles elevate risks for Chinese developers, said Moody's in the note, adding that it expects offshore funding costs to remain high over the coming months, potentially causing interest coverage ratios to deteriorate.
"Offshore markets remain an important funding channel for rated Chinese developers, accounting for an estimated 30 to 35 percent of total debt," said the report.
Total issuance among rated developers this year as of Mar 24 fell to $4.7 billion from $9.2 billion during the same period last year.
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