Chinese property developers’ bond financing dropped further in October, land buying declined significantly

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Chinese property developers’ bond financing continued declining in October and they become more cautious in land buying as the country’s housing markets cooled further.

Property developer’s bond financing, including those in onshore and offshore markets, reached 799.3 billion yuan in the first ten months of the year, according to data from Beike Research Institute. That’s 24 per cent or 246.3 billion yuan lower than the same period in 2020, accelerating from the drop in the first three quarters of the year, showed the data.

Their bond financing in the first ten months accounts only 66 per cent of the full-year bond financing in 2020.

Developers’ onshore bond financing reached 552.2 billion yuan in the ten-month period, sliding 13.4 per cent from a year earlier, and that accounted for 69 per cent of their total bond sales in the period, rising by 8 percentage points from the same period in 2020, according to the data.

In the offshore market, their bond financing in the ten months were worth 247.1 billion yuan, sliding 37.4 per cent from a year earlier, accounting for about 31 per cent of the their total bond issuance in the period.

Chinese property developers’ bond financing in Jan-Oct period from 2014 to 2021.
Chinese property developers’ monthly bond financing.

Separate data from the China Index Academy showed that property developers’ bond issuance reached 13 billion yuan in October alone, sharply down from 32.79 billion yuan in September. Their offshore bond issuance was 8.43 billion yuan last month, also significantly lower than the previous month.

The month of October, with fewer working days due to the National Day holiday, is a traditional low season for bond issuance, and meanwhile, some property developers’ debt issues have dampened investors’ sentiment, according to Beike.

In addition, property developer’s land buying declined significantly. In the first ten months of the year, the 100 major developers spent 2.25 trillion yuan in land buying, sliding 13.1 per cent from a year earlier, according to data from China Index Academy.

In October, 50 major developers’ spending on land acquisitions tumbled by 71.1 per cent year over year, sliding 68.7 per cent from the previous month, showed the data.