On July 27, the US dollar debt of Chinese real estate companies saw a general decline.
Sunac China (01918.HK), Agile Group (03383.HK), Zhengrong Real Estate (06158.HK) and many other Chinese real estate US dollar bonds fell sharply Record. Among them, Sunac China’s 2024 USD bonds have a record decline. The company’s 5.95% bonds fell 2.1 cents to 92.9 cents per US dollar. Agile Group’s U.S. dollar bonds due in May 2026 have experienced a record decline. The company’s 5.5% bonds fell 1.1 cents to 95.7 cents per dollar. Zhengrong Real Estate’s US dollar debt due in 2025 and Kaisa Group (01638.HK) US dollar debt due in 2026 also recorded record declines. New Town Holdings (601155.SH) US dollar bonds due in 2024 and Hongyang Properties (01996.HK) US dollar bonds due in January 2025 also fell 1-3 cents during the session.
At the same time, China Chengxin International issued an announcement on adjusting the outlook of China’s real estate industry from stable to negative.
In the report, China Chengxin International stated that based on the analysis of the impact of the overall operating environment of the real estate industry on the credit quality of enterprises in the industry, the overall creditworthiness of the real estate industry in the next 6-12 months The fundamentals were evaluated and it was decided to adjust the outlook of the Chinese real estate industry from stable to negative.
In the past two years, China’s real estate market has continued to be under a stricter regulatory environment. Since the introduction of the “three red lines” in the second half of 2020, the concentration management of real estate loans by banking financial institutions in early 2021, and the “centralized land supply” in the first half of 2021, Chinese real estate companies have faced more frequent policy changes.
Recently, eight ministries including the Ministry of Housing and Urban-Rural Development and the National Development and Reform Commission jointly issued the “Notice on Continued Rectification and Regulation of the Real Estate Market Order” and proposed the real estate market The goal of achieving a significant improvement in order in three years, as well as the specific scope, measures and mechanisms of rectification, is expected to continue to be tight in the real estate industry in the second half of the year. The trend will remain unchanged.
In the first half of 2021, the national real estate market as a whole maintained a rapid growth trend, and the national commercial housing sales increased significantly year-on-year, but under the influence of the bank’s real estate loan concentration management system , Mortgage loan issuance has slowed down significantly, and real estate companies’ sales collections have been negatively affected to varying degrees. The “centralized supply of land” policy may further reduce the profitability of real estate companies and pose greater challenges to their capital allocation and operational capabilities.
In addition, from the perspective of financing channels, the balance of non-standard financing such as real estate enterprise trusts has continued to show a downward trend; at the same time, affected by the weak investor confidence, some real estate companies Bond issuance has also been blocked to a certain extent. Recently, the prices of domestic and overseas credit bonds of some real estate companies have fluctuated greatly.
China Chengxin International believes that with the weakening of the low base effect in the first half of 2020 and the continued impact of regulatory policies, it is expected that the sales of commercial housing will grow faster in the second half of 2021. The first half of the year has slowed down, and real estate financial supervision will continue to be strengthened. The tight credit environment and insufficient investor confidence will further increase the refinancing pressure of real estate companies. The shrinking financing environment will also put greater pressure on debt concentration and maturity Of real estate companies are more likely to experience tight cash flow.