Chinese property developers' credit quality is improving, signalled by rebounding sales and the ability of companies to tap international capital markets to raise funds, ratings agency Moody's Investors Service said on Monday. China has waged a two-year long campaign to stamp out property speculation by restricting purchases and cool towering prices, putting a crunch on developer finances.
Property prices and sales, though, appear to have been revived by Beijing's recent moves to ease monetary policy to help shore up economic growth, creating a positive knock-on effect for capital raising. "Capital raisings in the offshore bond market are credit positive for some developers as they have accordingly managed to improve their liquidity and debt maturity profiles," Kaven Tsang, a Moody's Vice President, said in a news release on Monday.
Moody's said capital raising in the offshore bond market by Chinese developers reached $1.15 billion in October, up 35 percent from September's $850 million. It added that the total amount of bonds issued by Chinese developers reached $2.32 billion in July-October, increasing from $2 billion in the first half of this year. China's home prices are expected to experience mild year-on-year declines in the near-and medium-term due to increasing supply and continued government controls, Moody's said. The ongoing decline in prices and deteriorating balance sheet liquidity for some developers continue to exert near-term pressures, it added.
Home prices in China were broadly flat last month from August, calculations based on official data showed, halting two months of upticks in a sign that government efforts to maintain strict controls on speculative activity are working. Premier Wen Jiabao said earlier that the government will keep restrictions on the real estate market.