event:
On December 3, Evergrande announced that it was unable to fulfill its guarantee liability, and the bank and the two sessions made a heavy voice one after another. Evergrande announcement: in view of the current liquidity situation, the group is uncertain whether it has sufficient funds to continue to perform its financial responsibilities. On the date of this announcement, the company received a notice requiring the company to perform a guarantee obligation of US $260 million. In the event that the group fails to perform its guarantee or other financial liabilities, it may cause creditors to require accelerated maturity of debts.
Central bank: the risk of Evergrande group mainly comes from its poor management and blind expansion. The risk of individual real estate enterprises in the short term will not affect the normal financing function of the medium and long-term market. Recently, domestic real estate sales, land purchase and financing have gradually returned to normal. Relevant departments will provide support and convenience under the current policy framework for enterprises to remit funds to repay and repurchase overseas bonds.
CSRC: Evergrande group’s poor management and blind diversified expansion eventually led to risk outbreak, which belongs to case risk. At present, China’s real estate industry has maintained a healthy development in general, and most real estate enterprises adhere to their main business and operate steadily. The spillover impact of Evergrande group’s risk events on the stable operation of the capital market is controllable. Next, the CSRC will continue to give full play to the market financing function, support the reasonable and normal financing of real estate enterprises, and promote the stable and healthy development of the capital market and the real estate market.
Cbcirc: financial debt accounts for about one third of the total debt of Evergrande group, with a relatively decentralized structure and a small amount of financial investment. Therefore, this will not have any negative impact on the normal operation of Bank Of China Limited(601988) insurance industry. At this stage, we should focus on meeting the mortgage needs of the first house and improved housing according to different local conditions, reasonably issue real estate development loans and M & A loans, increase support for affordable rental housing, and promote the steady and healthy development of the real estate industry and market.
comment:
Five impacts of the debt crisis of large real estate enterprises on the industry
Affect sales. The current auction pre-sale system makes buyers worry about the uncompleted end, improve their risk awareness and wait-and-see when buying a house. Since August, the sales fatigue has appeared.
Affect financing. The risk appetite of financial institutions has increased, the cost of issuing bonds has increased, the amount of loans has decreased, and the credit has tightened, especially for private real estate enterprises. The deterioration of sales and credit crunch will accelerate the deterioration of cash flow of real estate enterprises.
Affect the commencement and completion, investment and upstream and downstream. As the difficulty of sales increases and the financing cost increases, real estate enterprises will pay more attention to cash flow, carefully take land and reduce new construction, and reduce investment expenditure. More seriously, the formation of a large number of upstream and downstream bills payable by real estate enterprises will significantly increase the operating pressure of upstream and downstream enterprises, and even fail to start construction.
Affect the industry pattern. Under the pressure of cash flow, private real estate enterprises are more cautious in taking land, which is good for state-owned enterprises. In addition, the delay in delivery caused by the debt crisis of many real estate enterprises has played a role in educating buyers, reducing people’s brand trust in private real estate enterprises, increasing brand trust in state-owned real estate enterprises, and dividing the sales market pattern.
Affect industry rules. The debt crisis of private real estate enterprises has changed the cognition of financial institutions to the industry, and the industry credit has shrunk as a whole, and is more inclined to state-owned real estate enterprises; The uncompleted project will shake the commercial housing pre-sale system and industry supervision rules.
If the credit risk of real estate enterprises is not handled properly, it will quickly lead to the deterioration of the asset quality of the financial system, increase the risk exposure of financial institutions, ten crises and nine real estate crises. Real estate plays a stabilizing role in the national economy. The government will never be absent, but it will dredge the crisis through marketization and legalization. However, in order to avoid the further expansion of the crisis, the timing of government intervention is very important. When there is a crisis in real estate enterprises, we should avoid the impact of the crisis from point to surface on the overall economy; We should find and solve problems as soon as possible, and use soft landing to resolve potential risks.
How do real estate enterprises deal with the crisis?
The crisis response process is actually a process of gradually restoring brand and credit guided by restoring cash flow.
Specifically, there are three ways to restore cash flow: one is to sell the project. Give priority to the transfer of project equity and non essential industrial investment, quickly bring large-scale cash inflow, and realize debt stripping at the same time. Second, price reduction and promotion, and exchange profits for cash flow. Such as China Fortune Land Development Co.Ltd(600340) transferring Visionox Technology Inc(002387) controlling shares, transferring Beijing ring projects and more than ten old reconstruction projects in Guangdong; Taihe transferred the equity of the project company to Shimao in large quantities. Third, sell assets. If necessary, it is necessary to transfer the equity of core assets and introduce war investment to restore cash flow.
Since September, Evergrande has taken a series of measures to save itself, which is still ineffective, and finally the local government intervened. After the overdue payment of Evergrande wealth in September, Evergrande itself took a series of measures to save itself, including selling the equity of Shengjing bank, Evergrande automobile allotment, selling Hengteng network shares, trying to sell Evergrande property, Evergrande Hong Kong headquarters building, etc., but it was still unable to reverse the situation, and finally requested the Guangdong provincial government to send a working group to the company.
“One line, two sessions” is a great voice. How to interpret the real estate policy in the future? Evergrande incident is just a case. “Most real estate enterprises stick to their main business and operate steadily”, “will not affect the normal financing function of the medium and long-term market” and “will not have any negative impact on the normal operation of Bank Of China Limited(601988) insurance industry”.
For the future real estate policy, “support the reasonable and normal financing of real estate enterprises, promote the stable and healthy development of capital market and real estate market”, “focus on meeting the mortgage needs of first house and improved housing, and reasonably issue real estate development loans and M & A loans”. In short, distinguish between real estate enterprises and projects, guarantee the delivery of buildings at the project level, issue development loans and personal loans, and standardize the withdrawal of funds from regulatory accounts, so as to realize the continuous construction of engineering projects and the payment of migrant workers’ wages.
The risk prompts the credit risk of private real estate enterprises, the risk that industrial policies are less than expected, the risk that the economic downturn is more than expected, etc.
