(Yicai Global) Nov. 17 -- Chinese real estate developers have issued more bonds in the past week than in the whole of October. But industry insiders say the companies involved are all state-owned enterprises, suggesting that any policy easing will be restricted.

Twenty-five developers and urban construction and investment firms have raised CNY28.8 billion (USD4.5 billion) in the interbank market since Nov. 25, according to data from the CRIC Research Center. While statistics from the Beike Research Institute showed that builders issued 25 bonds in the Chinese mainland last month, worth about CNY20.3 billion, down 51.1 percent from a month earlier 43.6 percent from a year ago.

As recently as Nov. 9, China’s National Association of Financial Market Institutional Investors held a meeting with representatives from real estate companies, where a number of participants revealed plans to issue debt-financing instruments in the interbank market.

Changes in the funding environment do not imply a large-scale loosening of policies, industry insiders noted. They are aimed at meeting the reasonable capital needs of developers, they said, adding that banks are stringent on risk appetite, which means that better-qualified builders still tend to benefit.

“The current bond-issuing entities are all urban investment companies or state-backed firms with relatively higher credit ratings and they mainly use government credit as endorsement for their bonds,” CRIC said. “Whether the scope of bond-issuing entities can be expanded to include other types of firms in future or not remains to be seen.”

‘Urban investment companies’, short for urban construction and investment firms, are investment and financing platforms for city governments in China, whose business is often related to the realty market.

Little Policy Easing

CRIC said that property developers’ liquidity problems have yet to bottom out and policies on regulation of funds for property pre-sales are quite strict, suggesting that builders still face layers of restrictions. Current policies are intended to maintain stability, so there will not be much of a policy relaxation. Developers should proactively pare debt to increase the return of cash and ensure the capital chain, it added.

Real estate financing will continue relatively smoothly in the fourth quarter, with no sharp rebounds, according to Liang Nan, an analyst at the Zhuge Zhaofang Data Research Center.

The improvement in the real estate financing environment is aimed at protecting reasonable demand for financing and the need for credit from groups with rigid demand, Liang told Yicai Global. The fundamental purpose is to promote the healthy and stable development of the housing market.

Fundraising by private developers is also gradually breaking ice, representatives told Yicai Global, adding that short-term commercial paper and medium-term notes will hopefully be available to these builders in future.

“Different developers are now facing totally varied financing environments, so we cannot be too optimistic about this now,” another securities sector insider said.

Editors: Xu Wei, Peter Thomas