A CHINESE regulator has suspended bond issuance from some of the nation’s developers in a bid to curb excessive fundraising by the sector, according to sources familiar with the matter.

The National Association of Financial Market Institutional Investors (NAFMII), a unit under China’s central bank, has since two weeks ago halted some builders’ debt sales via window guidance, said the sources.

The NAFMII regulates short-term commercial paper, medium-term notes and private placement bonds in China’s interbank market. The regulator declined to comment.

The move follows recent measures by China to keep the housing market in check by reining in excessive borrowing from property developers. Several builders that were found to have bid aggressively in land auctions saw their bond and other debt issuance plans in the exchange market suspended by regulators, people familiar with the matter said earlier this month.

As a result, local note sales by the developers have slowed sharply in June with just 15.8 billion yuan (US$2.3 billion) in offerings so far, down 44 percent from the same period in May. The year-to-date sales tally, however, is still a record.

Some of the developers are already canceling deals. Guangzhou R&F Properties Co. scrapped its plan to sell super short-term notes to control financing cost, the builder said in a statement last week.

Chinese authorities are also cracking down on builders’ offshore offerings. The National Development and Reform Commission has tightened offshore bond approvals targeting real estate developers looking to sell for the first time, people familiar with the matter said last month.

That’s amid price gains which are especially pronounced in so-called tier 2 cities (generally defined as provincial capitals and regional economic hubs like Hangzhou on China’s east coast and Wuhan in central Hubei Province), where they rose in May after a robust April.

“The slower supply since May was due to a combination of factors including front loading issuance, seasonal effect, a deteriorated risk sentiment and a tighter policy environment,” said Steve Wang, deputy head of research at BOC International Holdings.

“That may continue through summer and total second half volume is unlikely to surpass the record first half.” (SD-Agencies)