Author: Gordon Platt






Shares of Country Garden Holdings, a leading China-based real estate group, rose 37% in their debut in April on the Hong Kong Stock Exchange. More recently, the company postponed a planned $1 billion-plus global bond issue due to turmoil in the US credit market.

While China-based companies have been largely unaffected by the global credit squeeze, property companies have had some difficulty raising capital as a result of Chinese government efforts to restrain the surging property market.

Country Garden, China’s most profitable builder, was planning to tap the international debt markets for the first time, with a two-part issue totaling $1.5 billion in five-year and 10-year bonds. While Asian and European investors committed to purchase more than $800 million of the bonds, demand in the United States was low, despite yields of as much as 10%, prompting Country Garden to postpone the sale last month, most likely until early next year.

China’s central bank, the People’s Bank of China, last month raised the reserve requirement ratio for Chinese banks for the ninth time this year to a record high of 13.5%. So far, interest rate increases and higher reserve requirements have failed to control expansion of the country’s money supply.

Gordon Platt