This is according to bankers and analysts, which they say is adding to a corporate debt burden already at its highest level since the global financial crisis.
Private placements in China jumped five-fold to $172billion.
(R2.1trillion) between 2013 and 2016, skirting regulators’ controls on initial private offerings and raising concerns that companies were raising too much money for inefficient or speculative purposes.
That prompted the China Securities Regulatory Commission (CSRC) to impose new rules last month limiting the size of such fundraising, regulating timing and excluding some sectors altogether.
The new rules limit placements to no more than 20 percent of a firm's share base and prohibit them within 18 months of a previous fundraising.
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In the 98 instances where companies have issued private placements since the beginning of 2014, around 10 percent raised more than 20 percent of share capital, Reuters calculations show.
The timing restriction could affect still more, with around 50 percent of recent cases occurring within 18 months of a previous refinancing.
According to local media reports, 46 companies have cancelled private placements since the rules came in, and Haitong Securities expects a drop of 20 to 30 percent in 2017.
That could please some investors, who say private placements can be used to inflate share valuations, but it could also cut off a lifeline to struggling companies.
UBS analysts say an increasing share of new credit is being used to service existing debt.
“Deleveraging will not happen as quickly as originally planned,” said Kai Hu, senior vice-president at rating agency Moody’s, predicting difficulties ahead for some borrowers.
Real estate firm Hubei Fuxing Science and Technology shelved plans to raise 3.3 billion yuan (R599.6 million) in a private placement a month after the CSRC unveiled the new rules.