Property rules hit offshore bonds

Onshore note issues decline 94 percent in January year-on-year on speculation

Steps to cool China's property market are stoking speculation the good times are about to end for developers' bonds offshore.

The hangover would be big. Yield-starved fund managers around the world have piled into the $65 billion market for dollar-denominated notes sold by Chinese builders. Yield premiums for lower-rated US-currency securities from China, the majority of which are from real estate borrowers, dropped to the lowest level since 2007 this month, according to a Bank of America Merrill Lynch index. That leaves plenty of scope for pain among the holders of those bonds and the developers who need to raise financing.