China's largest mainland-listed developer, China Vanke, is building residential units especially for wealthy Chinese in Singapore and raising debt in the city’s currency.
According to media reports, the move comes amid efforts by the Chinese government to rein in property prices and minimise the risk of a bubble that could destabilise its financial system.
Last week, Vanke sold S$140 million of four-year notes with a 3.275 percent coupon, revealed data from Bloomberg.
This translates to an average premium of 1.8 percent coupon for Chinese bonds in the currency. The data also showed that the company's yield on five-year US dollar bonds fell 54 basis points in June to 4.14 percent on 5 November.
With mainland Chinese topping the list of foreign buyers of residential property in Singapore, Vanke partnered with Keppel Land to develop the 726-unit The Glades at Tanah Merah.
In recent years, mainland builders have been ramping up projects overseas as many Chinese continue to seek access to healthcare, education and citizenship abroad, property consultancy Savills noted.
“Chinese developers have been looking offshore for funding for many years now but there’s more impetus to do it now after the government turned the credit taps off,” said James Macdonald, Shanghai-based head of research at Savills China.
“Being able to turn to overseas bond markets is important to Chinese developers as these markets are not tied to government policy and prices are dictated by the market.”