Trillions Of Debt To Top "Three Red Lines" And "Five Levels Of Housing Loans" To Seize The Financing Window Of The Beginning Of The Year

In January this year, the scale of bonds to be issued by real estate enterprises at home and abroad has exceeded 150 billion yuan, approaching the peak of last year.

2020 is still the "best year" for the real estate market. Even under the constraints of new regulations such as the "three red lines", the scale of the real estate market will still reach a new high in 2020. According to the data of the National Bureau of statistics, the national sales of commercial housing will reach 17361.3 billion yuan in 2020, an increase of 8.7%.

Real estate is a capital intensive industry. To a certain extent, the capital scale and cost that real estate enterprises can obtain directly affect their own development path. Behind the booming sales is the real estate enterprises' thirst for funds, and also the embodiment of their dependence on financial institutions. Over the past few years, they have "innovated" financing channels, boosting growth in scale and leaving behind huge amounts of debt.

According to a report recently released by the shell Research Institute, the maturity debt scale of real estate enterprises in 2021 (excluding the ultra short-term bonds to be issued in 2021) is expected to exceed 1.2 trillion yuan, a year-on-year increase of 36%, and a historic breakthrough of trillion yuan. "Three red lines" and "five grades of housing loans" control the financing end, the pressure of real estate enterprises is not small.

Obviously, it is particularly important to ride through the current "debt repayment difficulties" smoothly and safely. As a result, real estate enterprises set off a "financing spectacle" at the beginning of 2021. According to the statistics of 21st century economic report reporter, in January this year, the scale of bonds to be issued by real estate enterprises at home and abroad has exceeded 150 billion yuan, approaching the peak of last year.

The tightening of financing in the real estate industry is caused by the trend. It is tantamount to drinking poison to quench thirst only by "borrowing the new and returning the old" without exerting force in investment and sales. Signal sound approaching, is the real estate enterprise ready?

Seize the financing window

In the financing window period in January this year, we can clearly see the hunger and thirst of real estate enterprises for funds. In order to ease the current debt repayment pressure, real estate enterprises even choose to issue bonds with high interest rate.

One example is Fuli real estate. On January 26, 2021, R & F announced that its indirect wholly-owned subsidiary would issue US $500 million of two-year senior notes with an annual interest rate of 11.75%, and the proceeds would be used to refinance medium and long-term debt due within one year.

The annual interest rate is over 11%, which is a typical high interest rate debt.

However, the capital of R & F real estate is indeed tight, and its solvency is not optimistic. Even with high costs, it may not be a bad thing that capital markets are willing to pay. Judging from the semi annual report of R & F in 2020, by the end of June 2020, the asset liability ratio of R & F excluding advance collection was 70.22%, the net debt ratio was 177%, the cash short debt ratio was 0.48, and the "three red lines" were all stepped on.

Another real estate enterprise with frequent foreign debts at the beginning of this year is jiazhaoye group. In the morning of January 27, jiazhaoye announced that it proposed to issue additional US dollar preferred notes; on January 20, jiazhaoye announced that it would issue additional US $300 million preferred notes due in 2023, with a coupon rate of 10.875%.

Jiazhaoye is a real estate enterprise which is committed to "reducing debt". With the improvement of capital, jiazhaoye's bond cost has declined slightly.

This round of financing tide, borrowing new to repay the old is the common characteristics of real estate enterprises. In addition to the real estate enterprises, small and medium-sized real estate enterprises have also seized the window period and pushed forward the financing plan at the beginning of the year.

For example, Yuzhou group announced on January 5 that the company intends to issue $562 million of guaranteed green preferred notes due in 2027, with a coupon rate of 6.35%. The company intends to use the net proceeds mainly to refinance the existing medium and long-term overseas debt due within one year.

In contrast, leading real estate enterprises are more leisurely, more flexible in financing nodes, more diversified financing channels, and significant advantages in financing costs.

China Shipping real estate, a well-known real estate enterprise, announced on January 18 that its subsidiary China Shipping Enterprise Development Group Co., Ltd. issued the first phase of medium-term notes in 2021 on January 13, with an actual issuance amount of 1.5 billion yuan, an interest rate of 3.35%, and a maturity of three years.

In addition, on January 19, Vanke Enterprise Co., Ltd. announced that in 2021, the company will publicly issue special corporate bonds for Housing leasing (the first issue) to qualified investors. The scale of bond issuance is no more than 3 billion yuan (including 3 billion yuan), and the coupon rate is between 3.38% and 3.98%, which is in the lowest range of real estate enterprises.

Uneven financing

Investors have always been "averse to the poor and love the rich". They have been, are and will be in the future. The high dependence of real estate enterprises on financial institutions reveals this preference. The scale of real estate enterprises is not the only decisive factor to determine the financing cost and scale.

An analyst who did not want to be named told the 21st century economic report that it is normal for real estate companies to intensively raise funds recently. January was the peak. However, in the short run, the cost will come down a little bit. In the long run, although investors have a variety of strange preferences, they mainly depend on the phenomenon and rating of the capital market.

Take Evergrande real estate as an example. The financing cost of this real estate enterprise, which has been in the top 3 for many years, has been at a high level. The reason is that its debt scale is larger than that of its peers. In recent years, the cost of US dollar debt of Evergrande has remained at about 10% or higher.

In the latest research report, CITIC Securities also pointed out that under the management of mortgage concentration and "three red lines", different enterprises in the industry have different financing situations.

"Due to the abundant overseas liquidity, the overseas liabilities of enterprises will continue to lengthen and reduce costs. But the cost of domestic capital will not drop too fast. Although the leverage ratio of many enterprises has decreased to varying degrees, due to the limited overall capital investment, it is expected that most companies with high capital cost will still find it difficult to achieve significant downward trend of capital cost. The lack of assets for allocation at home and abroad has determined that the capital cost of some high-quality enterprises will go down further. "

Under the new financing rules, financing alone is not the optimal solution. Kerrui Research Center believes that reducing the financial leverage of real estate enterprises will be the main theme. In the future, the financing of real estate enterprises will mainly rely on borrowing the new to repay the old, and the financing growth rate may decline. "Three red lines" will force real estate enterprises to improve their own product strength and operation ability, reduce dependence on financing, improve project de conversion and accelerate development cycle.

In this context, real estate enterprises should "live within their means". "Land purchase is the biggest expenditure of real estate enterprises, which will slow down slightly; cash flow is capital without cost, and sales promotion will be increased appropriately." One top 20 chief financial officer, who declined to be named.