Sino-Singapore Jingwei, January 19 (Xue Yufei) "Among the commercial bills circulated between intermediaries, real estate companies issue a relatively high proportion. Since several real estate companies have difficulty in payment in 2021, many people are now afraid to accept the business. Even if it is accepted, the annualized interest rate is relatively high, and the average annualized interest rate is 36%." Andy, who is engaged in the information service business of bill acceptance, told Sino-Singapore Jingwei.
The commercial bills mentioned above, especially commercial acceptance bills, are bills issued by the drawer and entrusting the payer to unconditionally pay a certain amount to the payee or bearer at sight or on a specified date.
It can be simply understood as an IOU issued by a company to a partner with a time limit, agreeing to pay at a certain time in the future.
In the past, real estate companies have issued a large number of commercial tickets to suppliers by virtue of their dominant position in the industry chain.
Some commercial bill intermediaries privately purchase unexpired commercial bills from suppliers, often with double-digit annualized interest rates, making it a lucrative business.
However, in 2021, with the tight capital chain of real estate enterprises, there will be a phenomenon of non-payment of expired commercial bills. Whether the commercial bills in the hands of suppliers and bill intermediaries can be turned into cash is full of variables.
Today, commercial bills in the intermediary market are greatly discounted, and many interviewed business leaders and bill intermediaries said that they dare not accept commercial bills anymore.
payment difficulty
A commercial ticket issued by a project in Chengdu, a top ten real estate company A.
Source: Photo courtesy of the interviewee
Mr. Lin is a timber supplier for a project in Chengdu, a top ten real estate company A. At the end of 2020, he received a commercial acceptance bill with a face value of 1 million and a term of one year from the general contractor of the project. Both the drawer and the acceptor are Real estate company A's project company.
According to regulations, after the commercial bill expires, the drawer and the acceptor need to "pay unconditionally at the due date".
Mr. Lin told Sino-Singapore Jingwei that when the general contractor of the project paid him, part of it was settled in cash, and about 30% of the money was given to commercial bills. According to his understanding, other suppliers also received commercial bills from real estate company A. "The real estate market was not bad at that time. The scale of this company was so large, so naturally, I didn't think much about it. I just waited for the commercial bill to expire and went to the developer to pay it."
But in the second half of 2021, individual housing companies have defaulted on their debts, and suppliers who often deal with developers have become nervous.
Mr. Lin said that from 2021, they will not accept commercial tickets issued by developers, and they are worried that they will not be able to pay.
Before the above-mentioned commercial ticket expires, he still has a commercial ticket issued by a TOP30 real estate company that expires, but the amount is not large and the loss is small.
Before the commercial ticket of housing company A was about to expire, he and other suppliers had heard that the commercial ticket might not be paid on time. For this reason, they negotiated with the developer, but to no avail. Sure enough, by December 28, 2021, this million-dollar commercial ticket could not be honored. He said: "Many of the commercial bills issued by the Chengdu project company of real estate company A have not been paid, and the overall outstanding amount is not small."
Commercial ticket issued by a real estate company in Kunming.
Source: Photo courtesy of the interviewee
Because the partner was unable to repay the arrears, Mr. Liang had no choice but to collect a commercial bill with a face value of 500,000 yuan and due on December 17, 2021. The drawer and acceptor of the commercial bill were a real estate development company in Kunming. The company Real estate company B affiliated to Henan.
It has been nearly a month since the commercial bill expired, and the real estate company B has not paid, and the bill status is displayed as "overdue reminder payment and refused to pay".
On January 14, Sino-Singapore Jingwei called the acceptor's financial department. The relevant person said that the company's funds have been relatively tight recently, and they have been cashing in one after another, and strive to pay the commercial ticket before the Spring Festival.
Recently, the Shanghai Commercial Paper Exchange announced the latest list of continuously overdue bills. The list includes more than 3 overdue payments from August 1, 2021 to December 31, 2021, and has been overdue as of December 31, 2021. Acceptors with overdue balance or payment in the month of December 2021, a total of 484 enterprises.
Judging from the company names, these 484 companies are mainly concentrated in retail, real estate, construction, trade and other industries. Among them, there are more than 90 companies with the words "real estate" and "home ownership" in their names.
Among the overdue acceptors, there are many well-known enterprises such as Greenland, Sunshine City, Zhongnan Holdings, Tiantian Express, and Evergrande New Energy Vehicle.
Interest rates soar
As a delayed payment tool, commercial bills can be circulated in the market before expiration. Some bearers who are anxious to use cash will discount them in advance, and the commercial bill intermediary will make discounts according to the acceptor's credit and the remaining period.
For example, if the discount rate is 10% annualized, it means that the bearer transfers a commercial ticket of 1 million yuan with a remaining term of 1 year, and the cash in hand is 900,000 yuan.
After the commercial bill intermediary receives these bills, it will either find the acceptor to pay and earn the difference when it expires, or continue to transfer it.
It should be pointed out that the discount of commercial tickets needs to be based on the real transactions between the two parties. Therefore, although there are many behaviors of privately transferring commercial tickets to intermediaries or ticket dealers, it is not compliant.
Andy is the operation director of a bill acceptance information service company in Shanghai. In an interview with Sino-Singapore Jingwei, he said that among the commercial bills circulating between intermediaries, real estate companies issued a relatively high proportion, and between 2018 and 2020. During the time, the private real estate company’s private discounting business of commercial tickets is very popular, and many companies are established specifically to acquire the commercial tickets of a leading real estate company.
The company founded by Mr. Jiang has acquired a large number of commercial tickets issued by real estate companies in the past few years.
According to him, before 2020, depending on the credit of private real estate companies, the annualized interest rate for discounted commercial bills will be between 15% and 25%.
But since the second half of 2021, the commercial tickets of private real estate companies have become hot potatoes. Mr. Jiang said that since the second half of last year, some housing companies have refused to pay commercial bills, which has dealt a great blow to the market. Almost no one dares to accept commercial bills from private housing companies. 1 to 50% off the purchase amount. "As far as the commercial ticket of real estate company A is concerned, its situation is not so bad, and it may be delayed for a few days before redemption, but the market price is now 50% off, or even less than 50% off." He said.
Andy also said that the entire commercial ticket market has been greatly affected by the refusal of commercial bills by real estate companies, and the acceptance of commercial bills issued by non-real estate companies is also declining, while real estate commercial bills are hardly accepted. The price is also very high, with an average annualized interest rate of 36%. "Many housing companies' commercial bills are no longer calculated at the annualized interest rate. Regardless of the expiration time, they are purchased at 20% to 50% off the face value. A fold."
Zhang Mingliang is the head of a glass manufacturer in Langfang City, Hebei Province. He has been supplying to a large housing company C in Hebei for a long time. In the past few years, he has often received commercial tickets from housing company C.
He remembered that before September 2021, some intermediaries also purchased commercial papers at an annualized interest rate of about 10%, but after that, the discount was very severe, with 20%, 30% or even more.
From the second half of 2021, he will no longer collect commercial bills issued by enterprises.
The sharp rise in the discount rate of commercial bills has put the suppliers holding the commercial bills of real estate companies in a dilemma. On the one hand, if they are privately transferred to the intermediary, they will face huge losses; Mr. Lin said: "We can't afford to transfer it. For a ticket of 1 million yuan, we can only get a few hundred thousand yuan from the intermediary, so we can't afford it."
However, although the commercial bills of private real estate enterprises have suffered a big blow, Mr. Jiang said that the scale of commercial bills of state-owned enterprises and central enterprise real estate enterprises is not large, the discount rate has not changed significantly, and the annualized interest rate has remained at 5%-10%.
Andy said that the annual interest rate of commercial bills of state-owned enterprises and central enterprises will remain below 10%, and the credit will be 4%-6%.
Litigation
Today, for suppliers and intermediaries who hold commercial bills from private real estate companies and have not paid them when due, they are busy suing acceptors and endorsers, and also struggling to cope with being sued.
According to the "Negotiable Instruments Law of the People's Republic of China", if a bill of exchange is refused payment due, the bearer may exercise the right of recourse against the endorser, the drawer and other debtors of the bill of exchange.
When the electronic commercial bill is transferred, all the bearers will be regarded as endorsers, which means that once the commercial bill cannot be redeemed, the final holder of the bill can initiate a lawsuit against all the enterprises that have handled the commercial bill. , hold them accountable.
Mr. Jiang has rarely purchased commercial papers. His main energy is to face various lawsuits, acting as both the plaintiff and the defendant. At present, he has 30 million yuan of commercial bills that have expired but not paid, which are basically acquired one after another at an annualized interest rate of about 20%. The endorser initiates a lawsuit. At the same time, he is still an endorser on commercial bills that have been handed over to other intermediaries in the past and have not been honored, and he is also being sued by the bearer. Because he became a defendant, Mr. Jiang now has several million yuan of funds frozen by the court.
Zhang Mingliang has successively transferred the commercial tickets that he had handled before to his suppliers. So far, there are several million yuan of unpaid commercial tickets.
So, as an endorser, he is being sued by the holders of the commercial paper, and some funds are frozen.
"Commercial ticket lawsuits are still relatively clear. The bearer will basically win the lawsuit, and the court will ask the drawer, acceptor, and endorser to repay the money. In some lawsuits in which our company is the defendant, the plaintiff has won the lawsuit, but we will choose to appeal to Hebei Langfang Intermediate Court." Zhang Mingliang said.
According to reports, all judicial cases of Real Estate Enterprise C are designated to be under the centralized jurisdiction of the Langfang Intermediate Court.
Wu Xiqi, director of the legal affairs department for bill disputes at Jingshi Law Firm, told Sino-Singapore Jingwei that the drawer, endorser, acceptor and guarantor of the bill of exchange are jointly and severally liable to the bearer for payment, and the bearer may not pay the bill according to the debtor of the bill of exchange. The order of recourse shall be exercised against any one, several or all of them (special note: here is joint and several liability). After the recourse is paid off, the recourse may be exercised against other debtors of the bill of exchange.
regulatory tightening
As early as January 1, 1996, the Law of the People's Republic of China on Negotiable Instruments came into effect.
Zhang Li, senior analyst of the financial business department of Oriental Jincheng, told Sino-Singapore Jingwei that the advantage of commercial paper is that, as a means of deferred payment, it does not occupy the current cash flow. Compared with direct cash payment, it puts more pressure on the acceptor's funds. Relatively small.
At the same time, compared with bank loans and issuance of bonds, the threshold and issuance cost of commercial paper financing are lower.
As for why real estate companies like to issue commercial tickets, Qiu Yilin, a researcher at the Bank of China Research Institute, analyzed that real estate companies involved many construction units and suppliers in the process of project construction. The construction period was long and the investment amount was large. Under the influence of two aspects, Real estate companies are facing considerable pressure on account payment and cash flow turnover.
Commercial bills have a certain payment period, generally about half a year or a year, which greatly eases the cash flow pressure of housing enterprises.
In addition, after 2020, the regulatory authorities will delineate "three red lines" for the financing of real estate companies, mainly limiting the increase in the scale of interest-bearing liabilities.
Bill financing is not included in interest-bearing debt, therefore, Shanghui is a better financing option.
According to data from Essence Securities, the scale of bills payable by TOP50 real estate companies at the end of 2020 was 401.35 billion yuan, a year-on-year increase of 33.8%, of which commercial acceptance bills accounted for more than 80%.
However, the frequent use of commercial bills for financing by real estate companies also has hidden risks.
Huaxi Securities said, first, if real estate companies frequently default on commercial tickets, the subsequent issuance of commercial tickets will face greater impact and pressure, and the credit of the entire real estate industry and even other financing channels will be impacted.
Second, in the current transaction orders of downstream building materials, light industry and other industry suppliers, housing companies and other companies generally account for a large proportion of orders. If housing companies default too many commercial tickets, it will also affect the capital turnover of downstream suppliers.
On January 14, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued the "Administrative Measures for the Acceptance, Discounting and Rediscounting of Commercial Bills (Draft for Comment)", in order to clarify the qualification requirements for acceptance and discounting, strengthen risk prevention and control, and shorten the longest payment. new requirements in terms of deadlines.
This was interpreted as a tightening of regulation on the commercial bills market.
The revised content proposes that acceptance and discounting should have corresponding qualifications and meet regulatory requirements.
The acceptor should be in good operating and financial condition and have the ability to pay when due.
The bearer applying for discount shall have a real transaction relationship.
The maximum acceptance balance of bank acceptance bills and finance company acceptance bills shall not exceed 15% of the acceptor's total assets, and the deposit balance shall not exceed 10% of the acceptor's deposit size.
The payment term for commercial drafts starts from the date of issue to the due date, and the longest shall not exceed 6 months.
Zhang Li believes that the introduction of the above-mentioned consultation means that the supervision will further regulate the commercial acceptance bills, which will help prevent and control the risks of commercial bills from the source. The shortening of the bill period in the measures can improve the speed of corporate payment and reduce the cost of small and medium-sized enterprises. Small burden, and at the same time play a role in avoiding risks.
Cai Hao, head of the fixed income research group of Sinolink Securities, said that the commercial paper market should be hit the most. The qualification constraints of issuing companies and the supervision of discount banks have both been strengthened, which may help boost the credit of the future commercial paper market. The legitimate rights and interests of downstream enterprises.
In addition, the new regulations also propose that the discounter of commercial bills should be a "legal person legally established within the territory of the People's Republic of China and qualified for loan business".
Andy said that this should be something that commercial ticket intermediaries are more worried about, but how much impact it will have depends on the implementation rules and landing date.
(Sino-Singapore Jingwei APP)
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