According to market participants, financial institutions have made response, including: giving differential limits to the growth of interest bearing liabilities of four grades of customers, implementing differentiated risk control and new financing management. In particular, we should pay attention to the compliance inspection of disguised financing and increasing implicit liabilities, such as clear shares and real debts.
Domestic bond volume for three consecutive months
According to the data released by Kerry research, the total amount of bond financing of 95 typical real estate enterprises in September was 115.43 billion yuan, up 6.5% month on month and 3.8% lower than the same period last year. However, it is worth noting that the domestic bond financing was 80.341 billion yuan, up 6.4% month on month and 33.8% year-on-year. This is the high level of domestic bond financing of more than 80 billion yuan for three consecutive months.
Based on the difference of statistical caliber, the total amount of bonds issued by real estate enterprises in September was 92.2 billion yuan, but the data of domestic and foreign bond issuance showed the same trend. The amount of domestic bonds issued was 65 billion yuan, an increase of 47% over the same period of last year; the amount of overseas bonds issued was 27.2 billion yuan, a year-on-year decrease of 26%.
From the data point of view, the bond financing amount of domestic and foreign real estate enterprises in September showed a certain upward trend. According to Keruis statistics, in the first nine months, the amount of bond financing of real estate enterprises showed a blowout growth, with a cumulative bond issuance of 628.917 billion yuan, a year-on-year increase of 96.7%, including 328.344 billion yuan of domestic bonds, a year-on-year increase of 139.8%, and overseas bonds of 300.573 billion yuan, a year-on-year increase of 72.4%.
The increase in bond issuance is related to the appropriate easing of financing conditions since the beginning of this year, and also shows the urgency of real estate enterprises to rush for financing under the wind that the new financing regulations of three red lines will be implemented in early September.
In this regard, Kerry research review said: on the one hand, it may prepare for the debt repayment peak in the next November; on the other hand, the tightening of financing environment makes real estate enterprises pay close attention to issuing bonds and hoarding money.
On the three red lines indicators, namely, the regulatory level put forward: the asset liability ratio of real estate enterprises after excluding advance collection is 70%, the net debt ratio is 100%, and the cash short debt ratio is 1 times. According to the earliest information, it will be implemented in 12 real estate enterprises from September and extended to all scale real estate enterprises by the beginning of next year, while the lower ranking real estate enterprises will adopt the one size fits all approach of total amount control.
According to Guotai Junan data, by the end of June, there were 22 red file enterprises with three red lines exceeding the standard, including China Evergrande, Greenland Group, Zhongnan Construction, Jinke, Huaxia Xingfu, Fuli real estate, etc. It is worth noting that in the first half of the year, the growth rate of interest bearing liabilities of real estate enterprises declined significantly.
Real estate enterprises to hold fast to grain hoarding in the window period
There are still news that it is still uncertain how to determine the standard of three red lines. However, for real estate enterprises, it seems that there is a consensus to step up financing before the tight hoop is put on.
For example, country garden (02007. HK), the head enterprise, did not give up timely financing to supplement cash flow. According to the interim report data disclosed by the group, as of the end of the reporting period, the cash balance available was as high as 205.5 billion yuan, which was one of the cash rich companies in the same industry. However, in September alone, the company still had the highest amount of debt in the month with a total amount of 8.89 billion yuan, including HK $7.83 billion of convertible bonds and 2 billion yuan of corporate bonds.
Similarly, China Evergrande (03333. HK), which has stepped on three red lines and has a heavy debt burden, also ranked among the top three in the September bond issuance list with a total bond financing amount of 5 billion yuan.
No matter from the total amount of bonds issued by the industry or the specific cases of the head real estate enterprise bond financing, the financing door for the real estate enterprises was not immediately closed. Although some news shows that the approval of the amount of bond issuance has been 15% off, corporate bond financing is still more tolerant than when it was the most tense in 2019.
As for the large amount of bonds issued by real estate enterprises in China this year, a person from the investment banking department of a large state-owned bank confirmed to the first finance and economics reporter that in fact, there has been some relaxation in the issuance of domestic bonds by real estate enterprises recently. Specifically, when we help real estate enterprises to issue bonds, the process of registered issuance has been simplified..
Moodys told the first finance and economics reporter that based on the scenario assumption of strict regulation and control, once the new measures to control the debt growth of real estate enterprises are implemented, it is expected to improve the credit quality of real estate developers in the next two to three years, and most of the evaluated developers will still be able to borrow 5% - 10% of the new debt in the next 12 months.
With the large amount of domestic debt, the cost of issuing bonds of real estate enterprises has shown an upward trend. In September, the financing cost of real estate bonds was 5.53%, up 0.19% month on month; the domestic financing cost was 4.84%, which was the highest value in a single month since 2020. Kerry Research Center said that this was mainly due to the further tightening of financing environment in the third quarter, especially after the Forum on key real estate enterprises in August, reducing the debt of real estate enterprises has become an important task, and the new financing will be further supervised, and the domestic financing costs will further rise.
The differentiation of financing cost of real estate enterprises is also further intensified. For example, country garden, which only stepped on a red line, continued to maintain low interest rates on two U.S. dollar bonds issued in September. The coupon rate of five-year bonds was 3.125%, and that of 10-year bonds was 3.875%, which was not only significantly lower than the bond issuing rate at the beginning of the year, but also set a new low for its 10-year bond interest rate.
Analysts said that the current financing situation shows that country gardens financing capacity and corporate credit have maintained a high degree of recognition in the capital market.
During the same period, jiazhaoye (01638. HK), which issued $400 million of bonds, continued to maintain a high interest rate of 11.25%, while the interest rate of Huaxia Xingfu (600340. SH) US $330 million bond was 8.75%, which was higher than that of previous US dollar bonds.
Since October, SunPower Holdings (02103. HK) has issued $250 million of one-year notes with an interest rate of 9.5%. Dafa real estate (06111. HK) issued an additional $130 million note with an interest rate of 12.375%. Jiayuan International Holdings (02768. HK) issued a $200 million note with an interest rate of 12.5%.
Three major banks in charge of real estate enterprise lending business related people said to ifnance that at present, the loan line of real estate enterprises is tight, and the issuance of bonds also needs to give different ratings to enterprises in strict accordance with a series of indicators. In addition to the conventional financial indicators, new assessment standards will also be added according to the policy. The financing of real estate enterprises will be stricter at least in the past year and two years. From the perspective of banks, it is still more inclined to the real estate enterprises with state-owned enterprise background, high ranking and stable financial level.
In addition, there is also a head of real estate enterprises told reporters: recently, the amount of bank loans for real estate development has decreased, some banks have no line, and many private enterprise developers can not get loans.
Not only debt financing, but also equity financing of various enterprises has been speeding up since September, including rights issue and spin off of subordinate industries. R & F Properties (02777. HK) completed the placement of 257 million shares in early October and raised nearly HK $2.5 billion through the placement. The group said that the net proceeds from the placement will be used to repay the companys overseas debts. Last week, Evergrande announced that 260 million shares would be pre allotted, which is expected to receive HK $4.256 billion. The main purpose of this amount is to refinance existing debt. Prior to this, Evergrande obtained HK $4 billion and HK $23.5 billion strategic investment funds respectively through its corporate business and property sectors.
In the future, many real estate enterprises such as Evergrande, rongchuang China (01918. HK), China Olympic Park and other real estate enterprises will also spin off their property, cultural and tourism businesses and go public to realize the goal of equity financing. In the view of real estate enterprises, the advantage of equity financing is to increase shareholders equity immediately, so as to achieve the goal of reducing leverage ratio under the condition of unchanged total debt, which is conducive to enterprises to adapt to the new financing game rules. At the same time, the debt pressure of real estate enterprises also through stimulating sales, using their own funds to repay debt, reducing the absolute value of debt to optimize the report. For example, Evergrande said in the business announcement issued at the end of September that the companys interest bearing liabilities had decreased by about 53.4 billion yuan compared with the end of March, the financing cost decreased by 2.24 percentage points, and the due loans were returned in advance of 43.5 billion yuan. Source of this article: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931
In the view of real estate enterprises, the advantage of equity financing is to increase shareholders equity immediately, so as to achieve the goal of reducing leverage ratio under the condition of unchanged total debt, which is conducive to enterprises to adapt to the new financing game rules.