China tightens curbs on property firms raising money offshore

China said on Friday it is tightening restrictions on property companies seeking to raise funds offshore, in its latest move to reduce potential financial risks. The country's state planner said any new offshore bond issues by real estate firms must be used only to replace medium- and long-term offshore debt maturing in the next year. "This rule has a powerful regulatory impact," said Yan Yuejin, a research director with Shanghai-based property services firm E-House China R&D Institute. "In other words, property developers are now restricted from using overseas debt to repay domestic debt, to replenish liquidity, and to acquire land." The National Development and Reform Commission (NDRC) said in a notice that real estate companies also must contain foreign debt risks by holding a "reasonable position" in their foreign exchange reserves. They should improve information disclosure and specify how they will use the funds raised offshore in their bond prospectus, it added.