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China Said to Mull Curbs on Private Bonds Sold by Property Firms

  • Securities Association of China seeking opinions, people said
  • Authorities have taken other steps to restricting financing

One of China’s bond regulators is considering curbing property developers’ private note sales, people familiar with the matter said.

The Securities Association of China, which operates under the China Securities Regulatory Commission, is seeking opinions on the restrictions under consideration. Builders that aren’t qualified to sell public bonds regulated by the CSRC will be added to the association’s list of companies banned from issuing securities in private placements. Two calls to the general office of SAC went unanswered.

Regulators concerned about a bubble in real estate have succeeded in taking some of the froth out of the sector. Home prices increased last month in the fewest cities in a year. The nation’s onshore real estate securities may be the riskiest part of the local yuan-denominated debt market in 2017, according to the largest number of respondents in a survey of domestic analysts and traders conducted Dec. 22 to Dec. 26.

Authorities have taken other steps in recent months to restrict financing for industries including real estate. The Shanghai Stock Exchange raised the threshold for property developers and companies in sectors with excess capacity to sell exchange-regulated notes, people familiar with the matter said in October.

The SAC may also add to the list steel or coal companies that violate government policy on curbing capacity, according to the people. The list may also be expanded to include firms that have committed fraud in accounting documents in the past 24 months; the period was 12 months in previous rules.

The association compiles the list for private bond sales regulated by the CSRC. Reuters reported on the possible curbs on Friday.