Since May, the debts of the two real estate companies have exploded, and the "white list" financing still needs to be improved

The liquidity woes of real estate companies are still intensifying. First of all, Country Garden, a former demonstration real estate company, attracted widespread attention in the market due to the repayment of two medium-term ticket interest, and then Agile, which was known as the "tough guy" of the bond market in the past, also officially announced that it was out of danger, and at the same time, Sunac continued to promote the secondary restructuring of the extended debt.

At a time when sales receipts have been sharply reduced, the dependence of real estate companies on financing has increased significantly, and the continuous exposure of debt risks is precisely because the financing dilemma has not been effectively resolved. According to data released by CRIC, a third-party research institution, the total financing of typical real estate companies in the first four months of this year fell by about 6% year-on-year, and the financing scale in each month of 2024 is still at a low level in previous years.

Among them, the financing environment faced by private real estate enterprises is more difficult, and the proportion of bonds issued by central state-owned enterprises in the first four months of this year has reached more than 9%. For private real estate enterprises, whether it is direct financing in the open market or the implementation of relevant policies on the "white list", it is not smooth at present.

A number of insiders of real estate companies told the first financial reporter that the "white list" project, which is one of the key channels for financing real estate enterprises, has not made obvious progress recently. Industry views also point out that in the future, it is necessary to further improve the "white list" system for real estate projects, so that more projects can enter the white list, and at the same time, it is necessary to establish a "white list" push mechanism to operate on a regular basis and continue to support real estate project financing.

Debt risk continues to be exposed

On May 14, Agile announced that in view of the liquidity pressure faced by the company, the relevant interest on the 2020 notes had not been paid on the announcement date, and the grace period for the interest payment of the notes expired on May 13, 2024, and it was expected to be unable to meet all payment obligations under its offshore debts. At this point, Agile, the "tough guy" in the bond market, has also officially defaulted and will promote debt restructuring.

This is the second real estate company to default on its debt for the first time since May. Earlier than Agile, Dima Shares, the listed entity of Dongyuan Real Estate, a real estate company in the southwest, also announced a bond default, and "21 Dima 01" failed to repay the principal and interest in full on the maturity date of April 30. Previously, at the end of April, Landsea Green Management also exposed a debt default event for the first time.

Not only is the list of debt defaults growing, but some real estate companies have recently begun to carry out a "secondary restructuring" of debts that have been restructured before, and debt risks are still intensifying.

In September 2023, Country Garden completed the restructuring of about 14.7 billion yuan of domestic debt, and the maturity time of 9 domestic bonds was extended for 3 years. In April this year, Country Garden's "21 Bidi 01", "21 Bidi 02" and "21 Bidi 04" carried out a new round of rollover, postponing the interest or principal of the three bonds that had not been paid before September to September.

At the same time as carrying out a new round of extension, Country Garden has recently attracted widespread attention in the market due to two medium-term note interest. The medium-term notes "23 Country Garden MTN001" and "23 Country Garden MTN002" issued by China Bond Credit Enhancement Guarantee were originally due to pay interest on May 9, but Country Garden "actively raised funds and revitalized the mortgage assets through the efforts of the company and all parties", and finally completed the repayment within the grace period.

Sunac has also recently seen a similar situation, planning to adjust the redemption arrangements of four bonds, including "PR Sunac 01", "H Sunac 05", "H Sunac 07", and "20 Sunac 02", and plan to postpone the payment of principal and interest in June and September this year in the original overall extension plan to December this year.

When promoting the extension, Sunac mentioned that the time and extent of the current continuous pressure on its cash flow far exceeded the expectation when the overall extension of credit bonds was approved at the end of 2022.

There is also a lack of expectation of the pressure on the industry's operation and capital environment, as well as Fujian real estate enterprises Zhenro Real Estate. In mid-April, Zhenro, which is promoting the restructuring of its offshore debts, announced that it would cancel its upcoming hearings and intends to adjust its offshore debt restructuring plan. At that time, some industry insiders analyzed that Zhenro's previous restructuring plan did not involve debt reduction, and under the current industry situation, even if the restructuring plan was passed, it may have to face a second restructuring in the future.

Whether it is the new insurance of real estate companies, the promotion of the second extension, or the difficulty of raising funds, it highlights the current financial pressure of real estate companies.

Liu Shui, director of corporate research at the China Index Research Institute, told the first financial reporter that the due debts of real estate companies cannot be repaid, or the debts need to be restructured again, because their liquidity has not been significantly improved.

CRIC data shows that in April, the total financing of 65 typical real estate companies was 28.007 billion yuan, a decrease of 29.5% month-on-month and a year-on-year decrease of 56.5%; The total financing in the first four months was 124.7 billion yuan, a year-on-year decrease of 58%; Judging from the financing performance of each month in 2024, the financing scale is still at a historically low level.

Among them, the amount of bonds issued by central state-owned enterprises accounts for the majority. According to the data of the above-mentioned institutions, in the first four months, the bond issuance volume of state-owned enterprises and central enterprises was 65.5 billion yuan, the bond issuance volume of private enterprises was 3.5 billion yuan, and the bond issuance volume of mixed-ownership real estate enterprises was only 2 billion yuan; The proportion of bonds issued by central state-owned enterprises increased sharply to 92% in the first four months of this year, reaching a record high.

The "white list" policy still needs to be implemented

Judging from the recent information disclosed by various companies, there are very few private real estate companies that can still raise funds in the open market since 2024. According to the reporter's incomplete statistics, at present, only Midea Real Estate has completed the issuance of two medium-term notes and a supply chain ABS, with a total amount of about 2.34 billion yuan, and Binjiang has issued two medium-term notes with a total scale of 1.2 billion yuan. In addition, Vanke has also applied for loans from a number of banks, including the Postal Savings Bank, with a total of more than 8.6 billion yuan.

A person from the capital department of a private real estate enterprise that is still relatively safe said that at present, various financial institutions still have a very cautious attitude towards the real estate industry, and the financing access screening is strict, especially for private real estate enterprises; Even some financial institutions are in a situation where they do not have access to the real estate industry, and the predicament of the real estate industry is still difficult to improve significantly in the short term.

Even Vanke, the "top student" in the industry, is facing certain financial pressure due to the adjustment of the financing model. Since the fourth quarter of 2023, the regulator has been emphasizing support for the financing of real estate enterprises, and various localities have also focused on promoting the "white list" based on the real estate financing coordination mechanism. This financing model is a project-based system, which requires the implementation of collateral and the implementation of closed supervision of funds.

Vanke's management mentioned at the recent shareholders' meeting that in the past, Vanke's financing relied on the credit of the group's main body, and adopted a credit-based financing model with banks based on total to total and unified borrowing and repayment, but now with the change of financing policy, Vanke will gradually switch to a secured project-based financing model. This change has compressed the flow of funds back to the group, and the original cash reserves at the group level continue to be depleted.

However, CRIC said that with the recent advancement of the financing coordination mechanism and the launch of the project white list in various places, the financing support subject is sinking from enterprises to specific projects, releasing good information and alleviating the liquidity pressure of real estate enterprises to a certain extent.

The above-mentioned people from the Ministry of Finance also said that at present, under the active promotion of the "white list" mechanism of real estate coordination, there are signs of improvement in project-side financing, especially the projects included in the white list, and the banks have made some breakthroughs in the approval and delivery with policy support.

According to the Ministry of Housing and Urban-Rural Development and the State Administration of Financial Regulation, as of the end of March, a total of 1,979 projects on the "white list" had received bank credit, totaling 469.03 billion yuan, of which 1,247 projects had received loans, totaling 155.41 billion yuan. At the company level, Vanke has 59 projects that have applied to be included in the "white list"; CIFI has 68 projects on the "white list" of real estate projects, of which 29 projects have received financing support.

But for now, this financing model may be discounted. CRIC pointed out that even if the real estate projects submitted by real estate companies enter the "white list" of the housing and construction department, they still need to face the evaluation and screening of banks, and the follow-up effect of the policy remains to be seen.

Fitch, an international rating agency, also said that the qualification criteria for "whitelist" projects include normal development and construction, sufficient collateral, reasonable assets and liabilities, and guaranteed repayment sources, etc., which are very strict, which also means that some shortlisted projects may still be rejected by banks.

Insiders of East China real estate enterprises told reporters that the shortlisted projects are at the level of the housing and construction department, and whether they can get financing support still needs to be confirmed by financial institutions.

A number of interviewed real estate companies reported to reporters that the company's "white list" project financing progress is not ideal. An insider of an insurance real estate company revealed that his company has a total of 28 shortlisted projects, of which 3 project plans have been approved, and only 2 projects have been loaned.

For the current financing model of whitelist projects, Liu Shui believes that the relevant measures and systems are not perfect enough, such as the financing problem of projects that have not passed the loan approval, which is still difficult to solve, but the construction of these projects must continue, otherwise there will be a risk of ensuring the delivery of housing, and the closed loop of "push-feedback" should be strengthened.

Liu Shui said that in the future, it is necessary to further improve the "white list" system of real estate projects, so that more projects can enter the white list, and at the same time, it is necessary to establish a white list push mechanism to operate normally, promote the financing of subsequent batches of "white list" projects, and continue to support real estate project financing. At the same time, financial institutions should speed up the speed of lending, so that the approved loan funds can be implemented in the project as soon as possible, further implement the "due diligence exemption", increase the enthusiasm of loan issuance, and be able to lend to the fullest.

(This article is from Yicai)