China developers returning to onshore bonds

Hong Kong

CHINESE developers plan to eschew the offshore market and borrow more money onshore this year thanks to lower funding costs and improved liquidity on the back of government easing measures.

The move by Chinese property firms, which account for about one-third of the Asia high-yield market, coincides with interest rate cuts on the mainland and an expected hike in US interest rates later in the year. Expectations of a weaker yuan, which fell 2.4 per cent in 2014, had also been driving the trend, though last week's dramatic 1 per cent bounce in the currency has now split market watchers on the currency's outlook this year.