Moody's: Chinese developers unaffected

Moody's Investors Service said its ratings on Chinese property developers are unlikely to be affected by a recent Chinese government directive that restricts onshore real estate companies or projects from taking on new foreign debt.

At the same time, Moody's said this latest development highlights the ongoing regulatory uncertainty faced by property developers in China.

The primary effect of the decision will be to end the use of cross-border shareholder loans as a means of either injecting or extracting capital from property firms or projects, Moody's said. Those developers that rely on foreign debt to directly fund their investments in China could be affected, the agency said.

However, the measure is not expected to materially and negatively exert a credit impact on rated developers since most have historically relied mainly on registered capital to fund their projects in China, Moody's said.

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