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Longfor Properties unit seeks up to 5B yuan from rental housing bonds issuance

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Longfor Properties unit seeks up to 5B yuan from rental housing bonds issuance

Longfor Properties Co. Ltd. subsidiary Longfor Chongqing Enterprise Development applied to the Shanghai stock exchange to issue rental housing bonds, with hopes of raising up to 5 billion Chinese yuan to finance rental housing projects in China, Reuters reported Dec. 11.

Specifically, proceeds from the proposed offering will be directed towards seven rental housing developments in Shanghai, Nanjing, Chengdu and Wuhan, the publication noted, citing a preliminary offering.

The application of Longfor Properties' China-based subsidiary to offer rental housing bonds with maturities of up to 15 years is the first of its kind since the August launch of China's pilot program to build rental housing projects in 13 cities, including Beijing and Shanghai, in the mainland, Reuters said.

China's push for its rental housing sector, as part of its strategy to cool the housing market, prompted the company to apply for the special bonds. An unnamed debt capital market banker familiar with the proposed offering was quoted by Reuters as saying that the sector "is being given priority in terms of policy support," adding that regulatory approval is tipped to come faster for special bonds than for corporate bonds.

Citic Securities and China Securities will function as the joint lead underwriters of Longfor Chongqing's proposed offering, which also requires the approval of the China Securities Regulatory Commission, the report added.

Reuters noted that more developers, including China Jinmao Holdings Group Ltd., are also looking to raise funds using special bonds.

The increased interest in rental housing bonds comes as China's scrutiny of the domestic bonds market that begun September 2016 continues, deterring developers from issuing bonds, the report noted.

Developers' bonds financing fell 70% year over year in the first 10 months of 2017 to 327.5 billion yuan, according to figures from data provider Wind.

As of Dec. 11, US$1 was equivalent to 6.62 Chinese yuan.