There is a breakthrough in the financing of real estate enterprises! Government and private enterprises to issue bonds or become a new point of strength?

Recently, real estate enterprises financing policy warm wind blowing frequently.

November 8, Securities Times - brokerage China reporter learned that the Association of traders to continue to promote and expand the private enterprise bond financing support tool ("the second arrow"), support for private enterprises, including real estate enterprises, debt financing. It is expected to support about 250 billion yuan of private enterprise bond financing, and may be further expanded as appropriate.

On November 7, the National Development and Reform Commission announced the Opinions on Improving the Policy Environment and Strengthening Support for the Development of Private Investment, which proposes to improve the bond financing support mechanism for private enterprises, and to increase the support for the bond financing of private enterprises.

In the previous series of policy support, the scale of financing for real estate enterprises has also increased. in October, the scale of non-bank financing for real estate enterprises rose 16.4% year-on-year, the first positive growth in the year. Among them, the scale of credit debt increased 1.5 times year-on-year.

Industry insiders believe that the first year-on-year increase in the scale of financing in a single month in October, compared with the industry's entry into the early stages of the downward cycle, the industry financing has shown signs of repair. At the same time, the impact of policy support is expected to private enterprise financing will have a breakthrough.

Financing scale first positive year-on-year growth

According to the real estate industry's overall financing trends monitored by the CII, real estate enterprises' non-bank financing totaled 55.68 billion yuan in October, up 16.4% year-on-year, with the financing scale showing positive growth for the first time in a year.

From the viewpoint of financing structure, the scale of credit debt accounted for 57.4% in October, overseas debt accounted for 0%, trust accounted for 4.9%, and ABS financing accounted for 37.7%.

Specifically, credit debt financing in the real estate industry rose 155.7% year-on-year, down 17.5% sequentially; trust financing fell 72.1% year-on-year, down 46.5% sequentially; and ABS financing rose 22.2% year-on-year, down 35.3% sequentially.

The CII believes that in October, financing for real estate enterprises showed positive growth year-on-year for the first time, and compared with the early stage of the industry's downward cycle, the industry's financing has shown signs of repair. Among them, credit bond issuance rose sharply year-on-year, mainly due to a very low base period value.2021 Starting from September, the first batch of out-of-risk enterprises defaulted, which had a great impact on the market, leading to a rapid decline in investor confidence and a significant drop in bond issuance capacity. Since this year, the credit bond market has entered a retracement phase, and has been strongly supported by the policy for many times, becoming one of the fastest repair financing methods among all channels.

It is worth noting that offshore bonds have been three consecutive months without new issuance, only real estate enterprises exchange offer success reissued on the market. According to CII, a number of headline companies have recently announced the suspension of overseas debt repayment or applied for debt rollover, and it is expected that new issuance of overseas debt will be even tougher in the future.

Cumulatively, from January to October, the total non-bank financing of real estate enterprises amounted to 753.55 billion yuan, a year-on-year decline of 51.4%. From the financing structure, credit bonds accounted for 53.5%, up 22.4 percentage points year-on-year; overseas bonds accounted for only 2.3%, down 14.6 percentage points year-on-year; trust accounted for 10.9%, down 18.0 percentage points year-on-year; ABS accounted for 33.3%, up 10.2 percentage points year-on-year.

In addition, from the financing rate point of view, the comprehensive average financing rate in October was 3.48%, a year-on-year decline of 2.39 percentage points, and a year-on-year increase of 0.01 percentage points. By the policy end of the continued relaxation of real estate financing, real estate enterprises financing costs fell further.

Debt issuance by private enterprises may become a new financing point

It is worth noting that recently, the financing of real estate enterprises has been further supported by the policy.

November 8, the Securities Times - broker China reporter learned that the Association of dealers to continue to promote and expand the private enterprise bond financing support tool ("the second arrow"), support for private enterprises, including real estate enterprises, debt financing. It is expected to support about 250 billion yuan of private enterprise bond financing, and may be further expanded subsequently depending on the situation.

It is understood that in 2018, in response to the financing difficulties encountered by some private enterprises, approved by the State Council, the People's Bank of China, in conjunction with the relevant departments, has adopted a policy combination of "three arrows" from three financing channels, namely, credit, bonds, and equity, to support the expansion of financing for private enterprises. Among them, the private enterprise bond financing support tool for the "second arrow".

Recently, the Association of Dealers has organized the China Debt Enhancement Corporation (CDEC) to actively carry out the work of credit enhancement for the bond financing of some private real estate enterprises, which has achieved good results. The Association of Dealers pointed out that, subsequently, the relevant work will be incorporated into the support tools to promote the overall. In the future, with the expansion of the scope and scale of support for private enterprise bond financing, the role of the support tool will be further brought into full play, which is conducive to boosting investor confidence, and is particularly conducive to stabilizing and expanding the financing of private enterprises.

On November 1, the Association of Dealers and the Real Estate Industry Association, together with the China Debt Enhancement Corporation, convened a symposium of 21 private real estate enterprises, including Jinhui, New Hope (13.34 -0.97%, diagnostic shares) Real Estate, Dexion China, Dahua Group, Yanlord Land, and Agile. Participating enterprises said that the symposium made it clear that China Debt Enhancement Corporation will continue to increase its support for private real estate enterprises to issue bonds, and is currently promoting more than 10 real estate enterprises to issue bonds with credit enhancement, involving an amount of about 20 billion yuan. This symposium is the third time since August that the Association of Dealers held a symposium on private real estate enterprises.

It is understood that since August, the bond enhancement company *** to promote more than 10 single real estate enterprises credit project, support for the new city holdings (14.75 0.07%, diagnosis), the United States of America real estate, Longhu expansion, Biyueyuan, Xuhui Group, excellence group and a number of private real estate enterprises to issue debt financing of 8.368 billion yuan, a cumulative total of private real estate enterprises to issue debt financing of 15.5 billion yuan. Longhu, Midea, Xincheng, Biyuyuan, Xuhui Group, Excellence Group and other enterprises are promoting the second round of credit-enhanced issuance projects, Jinhui, New Hope, Agile and other private real estate enterprises projects are also in active preparation.

On October 30, the State Council's report on the financial work situation pointed out that it is necessary to maintain stable and orderly real estate financing, meet rigid and improved housing demand, support the protection of the delivery of buildings, stabilize people's livelihoods, and promote the establishment of a new model of real estate development.

At the end of October, Pan Gongsheng, vice governor of the central bank, went to China Debt Enhancement Corporation (CDEC) to carry out a special research and study, and affirmed that CDEC supports the bond financing work of private real estate enterprises and pointed out that "we should increase the support for the bond financing of private real estate enterprises".

Liu Shui, head of research at the Enterprise Division of the China Index Research Institute, believes that, from the perspective of recent policy support, the bond financing of private real estate enterprises will continue to receive regulatory support, and the scope and scale of the main body of debt issuance will be able to expand the bond issuance by private enterprises will become a new financing point for the industry.

Ding Zuyu, executive director of the Shanghai E-House Real Estate Research Institute, also believes that the policy will continue to moderately improve the financing environment for real estate enterprises, and increase the financing support for private enterprises; financial institutions will merge and reorganize high-quality enterprises out of the risk of enterprises or projects to provide financing support; at the same time, it will also be differentiated between the project risk and the risk of enterprise groups to support the quality of the project financing and mergers and acquisitions, and to help accelerate the industry to clear.