Rumored Rongxin is trying to fight a “turnaround war”.
At noon on February 25, Rongxin disclosed to the outside world that the company had remitted funds to overseas accounts to repay the existing 10.5% senior notes due on March 1, 2022.
Affected by negative events such as the collapse of Zhengrong’s share price and seeking debt extension, Rongxin’s capital security was once questioned by the outside world. To some extent, the repayment progress of the dollar debt has become a “touchstone” to test the safety of the company.
Frequent action
On February 11, Zhengrong’s share price suffered a diving decline after the afternoon opening, during which it fell by more than 80%. On the same day, Rongxin’s US dollar bonds due in March also recorded the largest one-day decline since their issuance in 2019.
At that time, there was news in the market that the sharp decline was either due to market rumors that the company was discussing the renewal of the US dollar debt with securities companies.
Subsequently, Rongxin refuted the rumor, saying that the company did not default or delay the payment of principal and interest, and there was no significant adverse change in its solvency. In the future, it will try its best to ensure that the surviving corporate bonds can pay the principal and interest on time and in full.
A few words have limited soothing effect on the market. In the following days, the bond price continued to decline.
On February 15, another voice came from the market, saying that Rongxin had hired Guotai Junan Securities Co.Ltd(601211) , nyinda law firms to help solve the problem of overseas bonds, and the three parties had set up a project team to carry out a package restructuring plan for multiple bonds. Among them, for the US dollar bonds due on March 1, the company tends to carry out an exchange offer.
Rongxin did not respond positively to this remark, but three days later, news about the cancellation of the US dollar debt came one after another. The company disclosed the information on repurchasing and cancelling the US dollar debt on February 20, February 22 and February 24 respectively, and repurchased about US $194 million three times, accounting for 38.78% of the total principal of the notes.
The reporter of the international finance news noted that the US dollar bond was issued in 2019 with a total principal of US $500 million, which is the highest coupon rate among the existing US dollar bonds of Rongxin.
Or considering the high interest rate, in 2020, the second year after the issuance, Rongxin began to repurchase the US dollar debt. There were five repurchases between 2020 and 2021, but the repurchase amount was not large.
In addition to trying to convey confidence to the market, another consideration is to save costs. However, after repeated repurchases, the outstanding balance of this US dollar debt has been reduced to about US $263 million, and this part of the balance has also been cashed in the near future.
On February 25, Rongxin 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 company’s US dollar debt in the first half of this year has been fully paid off.
Collective “bright family background”
It is not just Rongxin that started the war of dollar debt repurchase.
Since 2021, the real estate market has been regulated continuously, the financing channels have been tightened, the sales side has been under pressure, some developers have fallen into a liquidity crisis, the industry confidence is extremely fragile, and even some more stable enterprises have suffered a “manslaughter”.
In order to boost the market, a number of real estate enterprises, including Zhongliang, rongchuang, Jinke and Jianye, set off a wave of dollar debt repurchase, trying to send a signal of healthy capital to the outside world.
In addition to this way, using the information disclosure system of the securities market to actively disclose the operating conditions of enterprises and put their own debt situation in the “sunshine” will help to improve investors’ understanding of enterprises and convey confidence to the market.
On February 24, Longhu group, Poly Developments And Holdings Group Co.Ltd(600048) , Seazen Holdings Co.Ltd(601155) , New Hope Liuhe Co.Ltd(000876) real estate, Xuhui group, Huafa Industrial Co.Ltd.Zhuhai(600325) , Gemdale Corporation(600383) , China Jinmao and other enterprises took the initiative to disclose their business conditions, mainly including sales, financing and strategic development.
On the whole, all developers have incorporated the promotion of sales, withdrawal and confirmation into the company’s strategic planning, and even some enterprises have frankly said that they will adhere to the balanced development of profit and scale.
For example Gemdale Corporation(600383) , by the end of June 2021, the company had 4.046 billion yuan of short-term borrowings and 34.487 billion yuan of non current liabilities due within one year. With other payables (interest payments) and other current liabilities included, the company’s short-term interest bearing liabilities amounted to 39.444 billion yuan.
In 2021, Gemdale Corporation(600383) completed the issuance of two issues of corporate bonds, with a cumulative issuance scale of 4.995 billion yuan, and all issues of bonds were cashed on time. Frankly speaking, in the future, the company will adhere to the strategic idea of balanced development of profit and scale, strive to improve the quality of operation and management, enhance the ability to resist risks and maintain the sustainable development of the company.
Huafa Industrial Co.Ltd.Zhuhai(600325) also said that it would control the reasonable scale of liabilities, promote sales and payment collection, and seek benign development space. By the end of 2021, the balance of domestic corporate bonds and asset-backed securities (consolidation criteria) existing in the exchange market was RMB 17.364 billion (excluding subordinated bonds). Among them, 780 million yuan will expire within three months, and the scale due within one year is 1.599 billion yuan. “The company will make every effort to take measures such as self financing, borrowing new and returning old, accurate cashing and so on, and repay the information of open market bonds in full and on time”.
New Hope Liuhe Co.Ltd(000876) real estate also explained its liabilities. As of January 31, 2022, the balance of its existing domestic corporate bonds and asset-backed securities was 6.195 billion yuan, and no overseas debt was issued. The company’s debt due within one year is 10.866 billion yuan, and the scale of corporate bonds and asset-backed securities is 1.524 billion yuan. “The company’s interest bearing liabilities are repaid on time”.
