Curb your enthusiasm for China’s offshore property bonds

Growth strategy: Workers survey a construction site in Beijing. As land prices in China rise, developers are increasingly entering into joint ventures to reduce investment risks and financial burdens. — Reuters

CHINESE developers have been the talk of the town this year as their sales and share prices surged, and even the major rating agencies are starting to pay attention. Investors in the companies’ dollar bonds should rein in their enthusiasm, though.

Moody’s Investors Service now expects real estate firms’ credit metrics to improve over the next 12 to 18 months, while Fitch Ratings last week upgraded Country Garden Holdings Co to investment grade.