After more than half a year of tight cash flow, a number of real estate companies successfully initiated bond issuance.
Since November 2021, the scope of developers' bond issuance has continued to expand, and the market is slowly recovering.
The bond-issuing enterprises are mainly state-owned enterprises and private enterprises with better financial indicators.
Industry insiders believe that future financing policies may gradually return to normal from the tightness of the previous period, which will benefit real estate companies with good credit ratings and risk conditions.
However, with a large amount of debt due in 2022, real estate companies are still facing tremendous financial pressure.
Financing starts again, many real estate companies start debt issuance
Since November 10, many state-owned real estate companies have intensively announced plans to issue inter-bank debt instruments, and real estate companies’ bond financing has shown positive signs of marginal improvement.
On November 22, Poly and China Shipping announced the issuance of domestic corporate bonds on the same day.
It is reported that the corporate bonds issued by Poly this time will be publicly issued, and the issuance scale will not exceed 9.8 billion yuan.
As for China Shipping, it plans to publicly issue 2021 corporate bonds (the fourth tranche), with a total issuance size of no more than 2.9 billion yuan.
On December 10, Longfor Group issued an announcement that Chongqing Longfor Enterprise Development Co., Ltd., an indirect subsidiary of the company, had publicly issued the first phase of 2021 medium-term notes on December 7 and 8, 2021, with a scale of RMB 1 billion.
The coupon interest rate of the bill is 3.7%. Part of the raised funds is used to repay the bank loan and part is used to pay for the project.
On December 13, Xiamen C&D announced that it planned to issue 1 billion yuan of medium-term notes and Financial Street planned to issue corporate bonds of no more than 1.5 billion yuan; on December 6, Logan Group announced that it would launch assets such as CMBS and supply chain ABS in the near future. Supporting the issuance of securitization products; on December 5, Gemdale Group's "Great Wall Securities-Gemdale Group 2021 Phase 1 Asset-backed Special Plan No. 2" was approved for issuance, and it is planned to be listed in early 2022.
For most real estate companies that have been out of financing for several months, the successful issuance of debt by the aforementioned real estate companies is enviable.
GF Securities data shows that in November 2021, the scale of debt financing of A-share sample housing enterprises was 52.3 billion yuan, a year-on-year decrease of 18%, and the net financing outflow was 6.4 billion yuan.
From the perspective of financing channels, the proportions of credit debt, non-standard, other debt financing, and overseas debt were 47%, 16%, 33%, and 5% respectively in November 2021. Among them, the proportion of credit debt and other debt financing rebounded more than 10%, the proportion of non-standard and overseas financing has declined.
In the context of total control, qualified real estate companies adjust their debt structure by adding more domestic credit bonds with cost advantages.
The scale of financing rebounds and stabilizes demand as the main line of the future
Behind the moderate "relaxation" of real estate financing is the recent official statements that have been continuously released.
On December 3, the China Securities Regulatory Commission stated that it would launch REITs to support the development and transformation of real estate enterprises. At the same time, the financial market will continue to provide financing channels for real estate to meet reasonable real estate financing needs and promote a virtuous circle of real estate and finance.
On December 6, the Politburo meeting pointed out that it is necessary to promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the healthy development and virtuous circle of the real estate industry.
At the 2021-2022 China Economic Annual Conference, Han Wenxiu, deputy director of the Office of the Central Finance and Economics Commission, pointed out that “the real estate industry has a large scale, a long chain, and a wide range of issues. Institutional loans account for a very high share, which has an important systemic impact on economic and financial stability and risk prevention."
"This is a repair to excessive tightening of policies, but due to market inertia, the current downturn will continue for some time." Industry insiders analyzed.
People in the financial industry believe that the real estate financing is moderately "relaxed" to maintain stability, so as to avoid more risks arising from the expansion of the debt crisis of real estate companies.
As the margins for policy improvement continue to open up, the continuous release of financial policies means that the policy is clear, and high-quality real estate companies will receive more policy inclination.
Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, believes that the current unwinding is in line with expectations, but it also requires a process.
In the actual operation process, banks will also take an evasive attitude towards real estate companies with poor operating conditions, and other companies will also have relevant risk control operations, depending on the credit rating and risk status of the real estate companies.
In terms of mortgage loans for home buyers, it will tend to relax to ensure reasonable demand for home purchases.
From the perspective of 2022 trends, stabilizing demand and stabilizing corporate funds will be the main policy line for a period of time in the future.
With the addition of credit support after the overall RRR cut, the environment for mortgage and development loans will continue to improve.
However, with a large amount of debt due in 2022, real estate companies are still facing tremendous financial pressure.
Moreover, the market has not yet fully recovered, but there has been a phenomenon of speculation in housing prices in individual places recently, and we need to be vigilant.
The recovery of market confidence is expected after May 2022.
Chen Wenjing, deputy research director of the Index Division of the China Index Research Institute, analyzed that from the current set of tone, the central government insists on the positioning of "housing to live without speculation", and emphasizes strengthening anticipation guidance, exploring new development models, and supporting reasonable housing demand for commercial housing. Implementing policies based on the city to promote a virtuous circle and healthy development of the real estate industry.
Regarding the future direction of monetary and credit policies, Chen Wenjing believes that the central government emphasizes that macroeconomic policies must be sound and effective, fiscal policy will be exerted, and the orientation of sound monetary policy will remain unchanged, emphasizing the organic combination of cross-cyclical and counter-cyclical control policies.
From the perspective of short-term financing trends, the regulatory authorities have strengthened reasonable and sufficient credit funds, and various financing methods have gradually been unblocked. State-owned enterprises, central enterprises and leading private enterprises have taken the lead to benefit.
It is expected that in 2022 the sales area of the national property market will fall, the average sales price will run steadily, the newly started area will continue to decline, and the investment will grow at a low speed.
Text/Chen Jingsi