(SINGAPORE) China's biggest developers are borrowing record amounts in Hong Kong, taking advantage of lower interest rates to circumvent a lending crackdown at home. While banks demand at least 5.2 per cent in annual interest for three-to-five year money in China, the cost of credit in Hong Kong dollars has fallen to the least since November 2004, according to data compiled by Bloomberg.
China Overseas Land & Investment agreed to an HK$8 billion (S$1.4 billion) loan in February that pays 1.45 per cent at current market levels, the data show.
'For property developers to keep growing in what is an extremely fragmented and competitive market they have to go offshore' for funds, said Brayan Lai at Credit Agricole CIB in Hong Kong. 'It's one way to circumvent tight onshore credit.'
Syndicated borrowing by Chinese developers in Hong Kong dollars jumped to HK$37.3 billion this year, the most since Bloomberg began compiling the data in 1999, from HK$3 billion in the same period of 2009. Total lending in the city rose six-fold to HK$63 billion from HK$8.7 billion as Chinese banks' share of the market fell to 21 per cent from 29 per cent, while yuan-denominated lending to Chinese developers dropped by 25 per cent. -- Bloomberg
Source: Business Times, 7 May 2010
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