Fresh curbs loom on developers' bonds

Two years ago, China lifted a ban on property developers' selling bonds inside the country, helping stimulate the economy and reduce swelling foreign debt. Now there are calls for some kind of limits to be restored.

S&P Global Ratings said surging leverage may prompt authorities to curb onshore note sales by builders to cool an overheating real estate market, while CITIC Securities Co said the government should strengthen controls on such financing. Total debt for 119 listed developers rose 30 percent to a record high of 2.8 trillion yuan ($420 billion) at the end of June from a year earlier, Bloomberg-compiled data show. Their sales of onshore bonds surged to 458 billion yuan this year, exceeding the 443 billion yuan for all of 2015.

"Chinese developers' debt has grown in parallel with their aggressive land acquisitions," said Christopher Yip, an analyst at S&P Global Ratings in Hong Kong. The government "may curb developers' debt financing if they continue to take advantage of easy access to cheap credit for buying land, pushing up home prices and making the market more overheated."