At a time when confidence is more important than gold, more and more real estate enterprises are trying to obtain understanding from the capital market by releasing positive signals.
Since March, many real estate enterprises, including Jiayuan International Holdings, Seazen Holdings Co.Ltd(601155) , Xuhui group, etc., have released their repayment information, and many of them have appropriated the funds in advance. While showing the solvency to the market and investors, it also expresses the enterprise’s own willingness to repay the debt, so as to increase information transparency and try to restore market confidence.
However, it is generally believed in the industry that a key prerequisite for the credit recovery of real estate enterprises is that sales return to normal levels, but at present, it still needs time.
active debt repayment
On March 10, Jiayuan International Holdings (02768. HK), a not well-known listed real estate enterprise, issued an announcement, saying that for a 13.75% senior note that will expire on March 11, 2022, all necessary funds will be arranged to its trustee’s bank account to repay the corresponding principal and interest.
Some market participants call Jiayuan international a “trustworthy real estate enterprise”. In fact, there are not a few real estate enterprises with similar performance recently.
On March 9, Xuhui holding group (0884. HK) announced that the principal used to repay the “18 Xuhui 01” 800 million yuan corporate bond and the interest accumulated to the maturity date had been fully deposited into the designated bank account.
According to public information, the bond was issued in 2018 with a coupon rate of 6.5% and will expire on March 21, 2022. This also means that Xuhui actually repaid the bond more than 10 days in advance.
Xuhui said that after the payment of corporate bonds arrives in advance, there is only one RMB overseas bond due on April 23 to be paid in the open market in 2022. According to the information previously disclosed by Xuhui, for the overseas RMB bonds, it has repurchased a total of 119.4 million yuan in advance, accounting for about 7.46% of the total principal.
Similarly, on the 9th, Seazen Holdings Co.Ltd(601155) ( Seazen Holdings Co.Ltd(601155) . SH) also disclosed the information of prepayment. According to the announcement, Seazen Holdings Co.Ltd(601155) overseas subsidiaries issued an unsecured fixed rate bond with a total amount of US $200 million and an interest rate of 7.5% in 2018, which will expire on March 20.
Seazen Holdings Co.Ltd(601155) decided to redeem in advance and cancel it. “The source of funds for this redemption is the company’s own funds.” Seazen Holdings Co.Ltd(601155) said in the announcement that during the reporting period of bond redemption, investors reported about US $160 million of US dollar bonds in total. On February 18, they paid the principal and accrued unpaid interest according to the original price of the bond face, and cancelled the redeemed us dollar bonds on the same day in accordance with relevant regulations and bond terms.
“As of the date of this announcement, the remaining principal of the current US dollar bonds is US $40.492 million, and the company will complete the cashing of the above remaining principal and interest on March 20, 2022.” Seazen Holdings Co.Ltd(601155) indicates.
At the end of February, Zhongjun Group Holdings (01966. HK) also released the information of early allocation of funds to repay domestic and foreign debts. It is disclosed that the 5.875% senior note with a total principal amount of US $500 million actually expired on March 10.
It is worth mentioning that on March 4, Jiangsu Zhongnan Construction Group Co.Ltd(000961) ( Jiangsu Zhongnan Construction Group Co.Ltd(000961) . SZ) announced that it would pay the annual interest of “20 Zhongnan 01” and “20 Zhongnan 02” on March 7, and pay the principal of “20 Zhongnan 01” bonds effectively declared for resale of 798 million yuan.
Just before the announcement, the holder of the above-mentioned bonds said that he would honor it after receiving the notice from central and southern China. The total amount of the above-mentioned corporate bonds will be paid as scheduled, and the total amount of principal and interest will be RMB 390 million as of July 21.
Some insiders of real estate enterprises admitted that in the past, the bond market was paid less attention, the market operated stably and there were few transactions, but in the recent industry background, the market sentiment was relatively fragile, and timely action was the most effective way to convey confidence.
key lies in sales recovery
Some real estate enterprises actively repay their debts, which to some extent hedged the panic brought by defaulting real estate enterprises to the market.
Since the middle and late February, Zhengrong and Longguang, two real estate enterprises that were once optimistic about the market, have been exposed to liquidity pressure and problems in debt payment. During this period, the repeated statements of enterprises and external communication have weakened investors’ confidence in real estate enterprises again.
On March 9, the prices of many bonds under Longguang group fell sharply, “19 longkong 01” fell by more than 20%, and “21 longkong 01” fell by more than 19%.
During this period, Zhongjun’s bond “20 Zhongjun 02” also fell by more than 20%.
Insiders engaged in real estate bond investment told first finance that there was no information about Zhongjun on the news, and the decline of bonds was mainly affected, “the market as a whole is not good”.
“The premise of credit repair of real estate enterprises is sales recovery.” Citic Securities Company Limited(600030) research report points out that before sales recover, it is difficult for enterprises lacking market-oriented borrowing capacity to win the trust of creditors.
“Although the regulators have relaxed the credit policy, the fundamental improvement of the financing environment of real estate enterprises, or the general improvement of financing of real estate enterprises, ultimately depends on the reversal of the expectation of the real estate market.” Xizheng capital also said that for real estate enterprises with liquidity problems, at present, everyone still maintains a non touch or wait-and-see attitude, unless there is a sharp rebound in the property market.
However, the recovery of sales is difficult to achieve overnight. The sales amount of the company reached a record high of 4.05 billion yuan, which was only a few months lower than that of the company in 2021 and even 4.05 billion yuan in February.
Insiders of an East China real estate enterprise also disclosed to China first finance and economics that as far as the enterprise itself is concerned, due to its good credit, mortgage loans and development loans have returned to normal. The issuance cycle of cities with fast mortgage loans is within 10 days, but the key to the problem is that “it is difficult to restore the confidence of buyers, so we don’t buy a house”.
Kerui Research Center believes that although there is a trend of easing and improvement in the current policy, the downward pressure on the market is still large in the short term, and it remains to be seen whether the market can recover in March and April.
The positive signal is that the market has warmed up recently. A relevant person in Zhejiang market of a real estate enterprise said, “the overall situation is not particularly good, but there may not be many visits before, or they just look and don’t buy, and now there can be a transaction”. Yihan think tank expects that by the third quarter of this year, the sales data is expected to become positive year-on-year.
