On May 20, Country Garden real estate completed the bookkeeping and filing of the first phase of corporate bonds in 2022. The bond, referred to as "22 bidi 01" for short, attracted many institutions including state-owned banks, joint-stock banks and securities companies to actively participate in the bidding. The final issuance process was successfully implemented with a coupon rate of 4.5%.
It is reported that this bond is the first batch of domestic credit bonds with credit protection tools and successfully issued by private real estate enterprises. The establishment of credit protection tools is a highlight of this issuance.
Industry insiders believe that the issuance of this bond is of symbolic significance, releasing a more clear and positive signal of stabilizing real estate, marking that the financing environment of private real estate enterprises is gradually warming up. Country garden won the first batch of "tickets" for private housing enterprises and was selected as a model housing enterprise. It took the lead in testing the water and financing through the scheme of "bond issuance + credit protection", which reflects the recognition of regulators on the fundamentals and sustainable operation ability of high-quality private housing enterprisesP align = "center" policy favorable continuous release
Huatai Securities Co.Ltd(601688) research points out that the recent favorable real estate policies are frequent, which reflects the policy's determination to resolve real estate risks. Under the policy intensive underpinning, the market confidence in real estate is expected to accelerate the recovery.
Since the second half of last year, the regulatory policy has tightened and the industry has entered a period of in-depth adjustment. In addition, affected by the fluctuation of the epidemic, China's economic development is relatively weak, coupled with the increasingly complex and severe external environment, full of uncertainty, and weak market confidence. Kerui real estate research shows that the cumulative performance scale of the top 100 real estate enterprises from January to April this year decreased by 50.2% year-on-year, and the overall performance of the market is sluggish.
In this context, the recent meeting of the Political Bureau of the CPC Central Committee emphasized the effective control of key risks, supported all localities to improve real estate policies based on local conditions, supported rigid and improved housing demand, and optimized the supervision of commercial housing pre-sale funds.
On April 11, the CSRC, SASAC and the all China Federation of industry and Commerce issued the notice on further supporting the healthy development of listed companies, which clearly proposed to support the transformation of real estate enterprises and the financing of private real estate enterprises. On May 5, the Party committee of Shanghai stock exchange held a special meeting, saying that it would continue to do a good job in serving the development of entity enterprises, serve the reasonable financing needs of private real estate enterprises, promote the expansion of the pilot scope of infrastructure REITs, and reasonably grasp the normalization of IPO and refinancing.
The CSRC said on May 11 that in order to implement the decision-making and deployment of the CPC Central Committee and the State Council on supporting the development of private enterprises and the working requirements of the government work report on improving the bond financing support mechanism of private enterprises, the exchange bond market launched a special support plan for private enterprise bond financing to stabilize and promote private enterprise bond financing. The special support plan for private enterprise bond financing will increase credit and support private enterprise bond financing with market, prospect, technical competitiveness and in line with the national industrial policy and strategic direction by cooperating with bond underwriters to create credit protection tools.
Subsequently, country garden, Longhu and Midea real estate were selected as "model real estate enterprises". They plan to issue RMB bonds one after another. At the same time, they will also issue credit protection tools to help private real estate developers gradually restore the financing function of the open market.
"This policy is more like releasing a positive signal. Only when enterprises are safe, stable and high-quality can they obtain policy preference." Yu Xiaoyu, research director of Yihan think tank, said that the three real estate enterprises have good fundamentals and high safety marginP align = "center" private real estate enterprise bond issuance window opens
Why support the bond financing of private real estate enterprises at this time Huatai Securities Co.Ltd(601688) believes that this is the policy requirement of "improving the bond financing support mechanism of private enterprises" in the early stage. "The use of credit protection tools to support bond financing of real estate private enterprises is a further implementation of alleviating the financing difficulties of private enterprises." According to the analysis of the securities firm, this round of policy moves quickly, the main body is clear, the measures are specific and the policy signal is clear, which directly improves investor confidence. In the policy, credit protection tools are set up for real estate enterprises for the first time to specifically support private real estate enterprises and help avoid the risk of default, which is more targeted. In addition, high-quality private enterprises take the lead in testing the water, and the demonstration effect is stronger.
As country garden, Longhu and Midea real estate were selected as "model real estate enterprises", the bond issuance window of private real estate enterprises was opened, and the regulators clearly released the support and encouragement for private enterprise financing to the market.
This time, country garden took the lead in testing the water and financing through the scheme of "bond issuance + credit protection", which reflects the recognition of regulators on the fundamentals and sustainable operation ability of high-quality private real estate enterprises.
For a long time, country garden has adhered to a stable business style, good debt structure and abundant cash flow. The latest financial report shows that by the end of 2021, the company's cash balance has reached 181.3 billion yuan; The total loan balance decreased to 317.9 billion yuan, of which the proportion of short-term debt decreased to 24.9%; The net debt ratio is only 45.4%; The cash short debt ratio is about 2.3 times. In addition, country garden actively repurchased bonds in the market adjustment cycle to further optimize the debt structure and safeguard the interests of investors. Since December 30, 2021, the company has repurchased the principal amount of senior notes totaling US $55.7 million.
Thanks to the good credit status of the enterprise, country garden has been recognized and supported by regulators and financial institutions. Since December 2021, the company has successfully issued corporate bonds, supply chain ABS, overseas financing and other direct financing covering different places and products at home and abroad, and obtained the issuance amount of 5 billion medium-term notes from the inter-bank market dealers association on March 1 this year. Based on this, more than 20 seller research institutions at home and abroad, including Morgan Stanley, UBS and GF, gave the company a "buy" rating. JPMorgan raised the investment rating of country garden to "overweight" in April and said that "the company's credit risk is very low and belongs to the ranks of excellent credit qualification among private real estate enterprises". At present, Moody's and Fitch also confirm to maintain the investment grade credit rating of country garden, and S & P maintains the existing "BB +" long-term issuer credit rating of country garden.
