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Original title: The size of the domestic bond market financing has shrunk significantly
The latest report released by the Shell Research Institute shows that in the week of November 16 to November 22, real estate companies issued 19 domestic and foreign bonds, 5 fewer than the previous week. The amount of the financing (including plans) was approximately 22.22 billion yuan. The amount of the loan decreased by 19.8% compared to the previous week.
In particular, the size of the domestic bond market has shrunk significantly: during the period, real estate companies issued 12.66 billion yuan of domestic bonds, a decrease of 30.1% from the previous month. The foreign bond market was relatively stable and the scale was essentially the same as in the previous week. Seven foreign bonds were issued last week, with a bond issuance scale of approximately RMB 9.56 billion, a slight 0.2% decrease from the previous month.
Pan Hao, senior analyst at the Shell Research Institute, said the domestic bond market was primarily affected by the default of related bonds and the domestic bond market was subject to short-term shocks. Last week, the real estate sector was canceled or deferred to issuing 5 domestic bonds, including 4 canceled and 1 The number of deferred, canceled or deferred bond issues increased by 3 compared to the previous week.
Zhuhai Huafa Group stated that due to the recent volatility of the bond market, in order to reasonably reduce the issue interest rate and control the company’s financing costs, the issuer, principal underwriter, lawyers and all investors have agreed to cancel the original program on November 19, 2020. Daily Renewable Corporate Bonds (fourth tranche), originally planned issuance scale does not exceed RMB 2.5 billion. Beijing Urban Construction’s third phase of 1.5 billion very short-term financing projects was also canceled.
On the one hand, the pressure on debt repayment remains high, on the other hand, supervision continues to strengthen. Indeed, Jinke Real Estate, which has undergone registration, will publicly issue corporate bonds (third tranche) to professional investors in 2020. On November 9, the status of the project was updated from previous approval to rejection. In response, the head of Jinke Real Estate replied that the exchange requested that the previous 630-point report be updated with 930-point data. Luneng’s announcement also showed that the third meeting of the Luneng Group’s first board of directors and the issuer’s controlling shareholder, State Grid, approved the issuer’s statement that the issue amounts to no more than 4 billion yuan. 3.4 billion yuan in corporate bonds. Greenland’s announcement also showed that the February 26 draft filing was expected to raise 18 billion yuan, but the latest envelope released in November showed that final funding was set at 17 billion yuan.
The pressure on real estate companies to repay debts has not abated. Jinke’s announcement shows that the issuer intends to arrange the redemption of the corporate bond redemption obligations or resell the principal or interest. Luneng said that after deducting the issue costs, all proceeds from the bond offering will be used to redeem the company’s corporate bonds that are due or exercised over the next two years. Greenland Holdings has stated that it intends to redeem the bonds due to be redeemed on December 10, 2020. The issue amount is 10 billion yuan and the proposed use of the funds raised to redeem 9.413 billion yuan; at the same time, the issue amount redeemed on January 21, 2021 is 10 billion yuan. Yuan bonds, the proposal to use the funds raised to repay 8.587 billion yuan.
According to industry experts, with the tightening of supervision, the financial pressure of real estate companies is difficult to reduce and how to stabilize the capital chain in the future will become the top priority of real estate companies. It is expected that in the context of the implementation of the “three red lines” policy, in addition to further increasing funding, project sales and the introduction of strategic investments could increase.
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