OVERSEAS-INCORPORATED Chinese property developers are joining the rush to issue Panda bonds in an effort to lock in more attractive funding costs in China’s onshore market.

    Hong Kong-listed Country Garden Holdings, incorporated in the Cayman Islands, led the way at the end of last year with an offering of 1 billion yuan (US$ 152.44 million) five-year onshore bonds via an offshore entity.

    Notably, the paper was issued on the China Securities Regulatory Commission-supervised stock exchange market, rather than the interbank bond market, where five previous Panda bonds, including a sovereign offering from South Korea, were printed after getting the nod from the People’s Bank of China.

    Country Garden also chose a private placement for its debut Panda offering. The format allowed swifter execution as it does not require regulatory clearance and is not subject to a debt cap.

    The China Securities Regulatory Commission removed many of the barriers to corporate bond financing last year. As a result, private placements of corporate bonds only require pre-registration with stock exchanges.

    The relaxation of fundraising restrictions and sustained monetary easing triggered a flurry of onshore bond issues from the property sector last year. Country Garden raised 14 billion yuan from bond offerings through one of its onshore subsidiaries, Zengcheng Country Garden Property Development, in 2015.

    The recent liberalization of Panda bonds reinforced the appeal of onshore financing for Chinese developers.

    (SD-Agencies)