Chinese real estate developers find themselves squeezed by government curbs on bank lending that aim to deflate the housing bubble, as well as a regulatory campaign to force the financial sector to deleverage and improve risk controls. According to Caixin, one by one, regulators have restricted the sources of funding available to builders – bond issuances, private equity and bank lending. Now, with even the costliest and riskiest form of borrowing – via trust companies – under scrutiny, companies are running out of options. The government began to restrict the flow barely a year after it opened the spigot in the second half of 2015, when it was making an effort to revive investment in property development following its collapse during the previous round of tightening. But issuances collapsed again this year – with just 152 billion yuan of bond sales as of June 15, down from 614 billion yuan over the same period last year, Wind data show.
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