China’s National Development and Reform Commission (NDRC) has instructed real estate developers planning to issue bonds to repay any outstanding debt first, reports Caixin.
In an official statement, the commission advised companies to use funds raised from new issuances to cross-cover existing maturing debt, holding back from further investment in new real estate projects or bolstering cash flow.
According to the NDRC, Chinese property firms have issued $99.2 billion in offshore bonds during the first five months of the year.
Real estate firms and local government financing platforms have become areas of particular concern for the government due to excessive increases in leverage over the past few years. The NDRC writes that borrowings have begun to outpace profitability, leaving key industries exposed should a sharper economic slowdown arise.