CFIC Introduction
Since September, a number of listed real estate companies have successively announced the progress of debt restructuring or financing actions. Judging from institutional statistics, the financing scale of typical real estate enterprises increased year-on-year in August. Institutional analysis believes that the current real estate financing coordination mechanism is accelerating the implementation of the effect, superimposed on the recent changes in the external environment, the liquidity pressure of real estate enterprises is expected to ease to a certain extent.
Progress has been made in the debt restructuring of some real estate enterprises
On September 20, Citychamp Datong disclosed a suggestive announcement on the full repayment of the debts of Oriental Assets, saying that Citychamp Datong issued the corporate bond "20 Guancheng 01" in July 2020. In September 2022, the company entered into business cooperation with Orient Asset Management on the "20 Champion City 01" bond, and the latter repaid the principal of 1.73 billion yuan of the "20 Champion City 01" bond. Subsequently, Citychamp Datong and Oriental Assets formed a new creditor-debt relationship, and with the consent of Oriental Assets, the company provided pledge guarantee for the debt with 95% equity of Taiyanggong Company and 79.08% equity of Datong New Material.
Citychamp Datong announced that as of June 30, 2024, the balance of the above debt was 858 million yuan. As of September 20, 2024, the company has fully repaid the above-mentioned debts to Orient Assets and the corresponding capital occupation fees, and the company's corresponding guarantee liability will be released, and the pledge will be released in the future. At the same time, Citychamp Datong said that the repayment of the debt will effectively reduce the company's asset-liability ratio and interest-bearing debt ratio, and is expected to reduce the company's financial expenses and enhance the company's ability to resist risks.
According to the latest announcement on the progress of debt restructuring and other matters announced by China Fortune on September 14, as of August 31, 2024, the cumulative amount of debt restructuring of financial debts in China Fortune's "Debt Restructuring Plan" through signing and other means is about 190.029 billion yuan (including the restructuring of domestic corporate bonds issued by the company and its subsidiaries and overseas dollar bonds issued by indirect wholly-owned subsidiaries), and as of August 31, 2024, the company has built a "happiness selection platform" with the equity of its subsidiaries and " The total amount of equity offset financial and operating debts of the "Happiness Preferred Platform" was approximately RMB16.935 billion.
China Fortune said in the announcement that from August 1, 2024 to August 31, 2024, the company and its subsidiaries did not have any new defaulted debts. As of August 31, 2024, the company has accumulated a total of 24.555 billion yuan of unrepaid debts as scheduled.
In addition, Hong Kong-listed companies such as Yuzhou Group, China Aoyuan, Sino-Ocean Group, and Zhenro Real Estate have also announced the progress of debt restructuring in recent years. Among them, Yuzhou Group's offshore debt restructuring plan has been approved by the majority of creditors.
The monthly financing scale increased year-on-year
In recent years, the net profit of listed real estate companies has continued to decline due to multiple factors such as high carry-over costs, rising expense ratios, stock destocking, and asset impairment. In the first half of 2024, the pressure on the sales side and the financing side will be transmitted to the balance sheets of listed real estate companies, and the monetary funds of some real estate companies will decline, resulting in an increase in debt ratios.
However, since the second half of this year, the financing of real estate enterprises has improved in stages. According to the financing data of real estate enterprises recently released by the E-House Research Institute, the financing scale of the 30 typical enterprises monitored increased year-on-year in August. In August, 30 real estate companies issued domestic bonds of 22.01 billion yuan, an increase of 68.8% month-on-month and 26% year-on-year.
In terms of financing channels, similar to the previous month, medium-term notes, general corporate bonds and ultra-short-term financing bonds accounted for 58%, 28% and 14% respectively. Due to the increase in bond issuance by private enterprises and mixed-ownership enterprises such as Midea Real Estate and Greentown China in the month, financing costs have risen, but financing costs are generally at a historically low level.
According to the analysis of the E-House Research Institute, in August, the total repayment amount of 30 real estate companies was 13.67 billion yuan, and the net financing amount was 8.34 billion yuan, which was the highest net financing month this year, second only to January and March, and the debt repayment pressure was significantly eased. In the same month, 11 out of 30 real estate companies issued new bonds, and the number of bond issuers increased compared with the previous month. It is worth mentioning that the interest rate of new bonds issued by Binjiang Group, Midea Real Estate and other enterprises is lower than the debt maturity rate, and the debt structure shows an optimization trend.
On August 21, at a series of press conferences on the theme of "Promoting High-quality Development" held by the Information Office of the State Council, the relevant person in charge of the State Administration of Financial Supervision said that the coordination mechanism for urban real estate financing has achieved phased results, and the coordination mechanism takes the city as the main body and the project as the center, and accurately supports the financing of real estate projects with the efforts of all parties. Among them, commercial banks have approved more than 5,000 "whitelist" projects, and the amount of financing approved is nearly 1.4 trillion yuan.
The reporter noted that since September, A-share listed real estate companies have continued to raise funds. On September 11, China Merchants Shekou announced that the company's public issuance of corporate bonds (Phase II) to professional investors in 2024 meets the listing conditions of Shenzhen Stock Exchange bonds and will be listed on September 12. Tibet Chengtou announced on September 6 that the company's registration application for public issuance of corporate bonds with a total face value of no more than 800 million yuan to professional investors was approved by the China Securities Regulatory Commission.
In addition, the prospectus (revised draft) of the company's issuance of A-shares to specific targets in 2023 disclosed by Pearl River Shares on September 6 shows that the number of shares issued by the company to specific targets this time does not exceed 256 million shares (including the number of shares), and the total amount of funds raised does not exceed 748 million yuan (including the number of shares), which will be used to replenish liquidity and repay debts after deducting relevant issuance costs.
The real estate financing coordination mechanism has shown results
"The coordination mechanism for urban real estate financing is effective in accelerating the establishment." Liu Shui, director of enterprise research at the China Index Research Institute, believes that in January this year, the Ministry of Housing and Urban-Rural Development and the State Administration of Financial Supervision jointly issued a document to guide the establishment of an urban real estate financing coordination mechanism in various localities. In June, the two ministries and commissions jointly issued a notice again, proposing a number of optimization measures to improve the efficiency and quality of the "white list" projects, so as to further play the role of the urban financing coordination mechanism.
Liu Shui further said that promoting projects that need financing support should be included to help more projects in related fields obtain financing support. For projects that need to obtain financing support through the "white list" but have not yet met the conditions and standards of the "white list", specific requirements have been made for the implementation of responsibilities in all links, such as the city coordination mechanism urges banks to put forward targeted opinions and suggestions, real estate enterprises should take measures to repair problem projects as soon as possible, and the city government should strengthen coordination and promote the inclusion of projects that meet the conditions and standards of the "white list".
Relevant analysts of CRIC Research Center also believe that with the advancement of the urban real estate financing coordination mechanism and the subsequent launch of the project white list in various places, the main body of financing support is sinking from enterprises to specific projects, which has alleviated the liquidity pressure of real estate enterprises to a certain extent.
The analyst pointed out that for real estate companies that can still operate normally, the top priority is still to grasp the existing policies to do a good job in debt continuation, such as through credit enhancement support policies, with the help of credit protection tools, joint and several liability guarantees and other credit enhancement methods through the issuance of new bonds to achieve "borrowing new to repay the old", but also through the issuance of ABS, REITs and other ways to revitalize operating properties, and actively try to use operating property loans to repay existing loans and open market bonds. In addition, real estate companies should also actively negotiate with financial institutions and creditors to appropriately extend the debt maturity and alleviate the current debt pressure.
The agency believes that the recent announcement of interest rate cuts by the Federal Reserve will have a positive impact on the existing US dollar bonds and the newly issued US dollar bonds. According to the analysis of the E-House Research Institute, for the stock of US dollar bonds, the holding risk of its investors will be reduced, which will also reduce the pressure on redemption. At the same time, for the newly issued US dollar bonds of real estate enterprises, the reduction of financing costs will also help high-quality real estate enterprises to further expand financing channels.
Source of this article: Economic Information Daily
Author: Gao Wei
WeChat editor: Guan Qiao
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