At the end of February, many real estate enterprises, including Zhongjun, Rongxin and Xuhui, issued announcements on early repayment or repurchase of bonds. Previously, many real estate enterprises took the initiative to show their “family background” and convey confidence to the market. At the same time, many cities have implemented policies to stabilize the property market. Insiders believe that since this year, all entities in the property market have been trying to restore confidence, but judging from the current market sales situation, it will take some time for the market to recover completely
real estate enterprises actively repay debts and repurchase
On February 28, Zhongjun announced that the company had remitted the outstanding principal and accrued interest as of the maturity date to the 2022 US dollar bond trustee for repayment on the maturity date. The 2022 US dollar bonds will expire on March 10, 2022 and issue 5.875% of the total principal amount of US $500 million of senior notes. So far, together with the US dollar bonds that Zhongjun announced to buy back and cancel in the open market, Zhongjun has no other US dollar bonds due within one year.
Before February 25, Zhongjun has repeatedly announced that it has bought back a certain amount of 2022 notes on the open market as of February 25, Zhongjun has repurchased 2022 notes with a total principal of US $153 million, equivalent to 30.6% of the total principal of 2022 notes originally issued.
Zhongjun told the reporter of China Business Daily that under the complex and changeable market environment, Zhongjun’s early repurchase initiative and the arrangement of early remittance of US dollar bond repayment funds have injected strong confidence into the capital market and won the recognition of the market and investors.
On February 25, Rongxin also said that it had remitted funds to the overseas repayment account for repayment of US $263 million of senior notes due on March 1, 2022 and US $239657 million of accumulated unpaid interest, totaling about US $287 million. So far, the US dollar debt of Rongxin in the first half of 2022 has been fully paid off.
On the same day, Xuhui also announced that from February 8 to February 24, 2022, the company had repurchased and cancelled 29 million yuan of senior notes due in April 2022 with a coupon rate of 6.7%. According to the previous announcement on January 19, the company has repurchased 20 million yuan of the bill, and a total of 49 million yuan has been repurchased and cancelled.
When talking about why to repurchase bonds, Yang Xin, CFO of Xuhui, said: “Xuhui has always adhered to the daily operation of living within its means and proactive debt management. We have made proper arrangements for subsequent cashing, reducing leverage and stabilizing expectations with practical actions.”
In addition to paying debts in advance and repurchasing bills in the capital market, recently, many real estate enterprises have taken the initiative to show their performance and convey confidence to the market it is understood that on February 24, ten real estate enterprises took the initiative to disclose their business conditions, mainly including sales, bond issuance, solvency and the overall strategic arrangement of the company. Among these real estate enterprises, there are not only Poly Developments And Holdings Group Co.Ltd(600048) , Jinmao, shoukai and other central state-owned enterprises, but also Seazen Holdings Co.Ltd(601155) , Xuhui and other private real estate enterprises.
market confidence has recovered
What is the intention of real estate enterprises? Wang Mingliang (a pseudonym), an insider of a real estate enterprise, told the China Business Daily that 2022 is the peak period for the cashing of US dollar bonds of real estate enterprises. The active debt repayment of company not only proves the adequacy and stability of cash flow, but also reflects the importance attached to capital credit at present, the company operates steadily and has excellent soil storage. It is full of confidence in guaranteed delivery and confirmed payment, and will continue to safeguard the interests of investors in the future.
at present, many real estate enterprises are actively working to improve their debt situation for example, Oct adheres to the principle of “fixed investment based on income”, adheres to the matching relationship between the speed of “de transformation” and the expansion of high-quality projects, and maintains a healthy and positive net cash flow under the condition of large return of contracted sales amount.
Insiders of a Zhejiang real estate enterprise told the China Business Daily that in terms of debt payment, no real estate enterprise is willing to “lie flat”, and everyone is actively solving the difficulties. Under the “black iron era” of the real estate market, for real estate enterprises, what they can do in the future is to do a good job in products and services.
Lu Wenxi, an analyst at Centaline real estate market in Shanghai, told the China Business Daily that the positive actions of real estate enterprises such as early debt repayment on the one hand, are intended to tell the capital market that the company’s own debt is OK , so as to convey confidence to the market on the other hand, it is also a gesture, in the context of the current market warming, cities have successively announced land acquisition plans. Real estate enterprises want to show their strength through these actions, or they can get some benefits in land acquisition. These are the foreshadowing and services for the follow-up market.
“The initiative of real estate enterprises is intended to convey the positive trend of their own business status to the outside world and enhance the confidence of investors and the market. This way, including optimizing the debt structure and expanding sales channels, will improve the capital liquidity of real estate enterprises to a certain extent, accelerate the delivery speed of the real estate market and give confidence to the real estate market at the supply side.” Guan Rongxue, an analyst at Zhuge housing search data research center, told China business daily.
Wang Mingliang revealed that according to his observation on the front line of the market, the number of visits and transactions in many cities have changed significantly after the Spring Festival. At present, the industry is more optimistic about the performance of the real estate market in March.
real estate enterprises are still under pressure in the short term
Although the main bodies of the property market are taking positive actions and the confidence of the property market is gradually restored, but it still takes time for the market level to recover completely, which can be seen from the transaction data of the property market from January to February.
According to the report released by Kerui, a real estate research institution, in February, the top 100 real estate enterprises only realized a sales trading amount of 401.58 billion yuan, 24% lower than that in January and 47% lower than that in the same period last year, more than 10 percentage points higher than that in January and 57% lower than the average level in 2021. According to the data of China Index Research Institute, from January to February, the average sales of top 100 real estate enterprises was 10.3 billion yuan, a year-on-year decrease of 34.0%; Among them, there are 30 real estate enterprises with sales of more than 10 billion, a decrease of 24 compared with the same period last year.
Wang Mingliang admitted that the overall performance of the real estate enterprises in which he is located is better because the company’s real estate is mostly located in the first and second tier cities, while the transaction performance of the real estate market in the first and second tier cities is relatively good. However, in fact, the liquidity problem of real estate enterprises has not been fundamentally alleviated, especially the pressure of private enterprises. At present, the mainstream of land acquisition is still state-owned enterprises and central enterprises
Another insider of a real estate enterprise also admitted to the reporter of China Business Daily that even if the market warms up, the liquidity problem of real estate enterprises is difficult to be fundamentally solved. The debts that real estate enterprises should repay still need to be repaid. For many private real estate enterprises with debt repayment difficulties, they still think more about survival and have no time to worry about development problems such as land acquisition.
Guan Rongxue told reporters that from the market level, the debt maturity of real estate enterprises is still a lot in the short term, the financial pressure is still there, and it is not easy to speed up the delivery process of the real estate market.
At the same time, the de commercialization of products has not been significantly improved, resulting in the recovery of the real confidence of the market in the delivery of the real estate market and the capital level, but it is not obvious.
Lu Wenxi also admitted that at present, the confidence of real estate enterprises is recovering, but it will take time for them to recover completely real estate enterprises are under pressure not only at the level of debt repayment, but also under the influence of covid-19 pneumonia, the construction of many local real estate markets is also limited, and some real estate projects may face delayed delivery. These are the problems faced by real estate enterprises.
regulatory policies are more precise and coordinated
since this year, the central and local governments have been issuing policies to stabilize the property market Minister of housing and urban rural development Wang Menghui said that the real estate market should operate smoothly in 2022. Maintain the continuity and stability of regulatory policies and enhance the accuracy and coordination of regulatory policies.
Zhang Dawei, chief analyst of Zhongyuan Real estate, told China Business Daily that the real estate regulation policy continued the policy direction of the fourth quarter of last year. From January to February this year, various policies to stabilize the real estate market were introduced frequently. From the perspective of policy content, in addition to reducing the mortgage interest rate and adjusting the subscription standard of the first house, it also involves increasing the amount of provident fund loans and reducing the proportion of down payment from the perspective of the market, with the emergence of the bottom of the policy, the market transaction is gradually approaching the bottom
It is noteworthy that on March 1, Zhengzhou, Henan Province issued the notice on promoting the virtuous cycle and healthy development of the real estate industry. Zhengzhou became the first big city to cancel “recognizing both houses and loans”. Market analysis believes that this will substantially reduce the purchase cost, stimulate and improve the market demand for house replacement, and will also play an exemplary role in other cities and help improve market expectations.
Citic Securities Company Limited(600030) report shows that with the rapid decline of mortgage interest rate and the introduction of policies one after another, it is expected that March 2022 will be the bottom of the annual sales of the real estate market, and the sales of the real estate market will recover from the second quarter
Pan Hao, senior analyst of Shell Research Institute, told China Business Daily that the intensive release of urban real estate market policies since the beginning of the year is transitioning from low-level cities to medium and high-energy cities. The whole national real estate market is also in the process of bottoming. It is expected that the “little spring” of the real estate market will appear in many places.
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