Trade wars may be jarring financial markets in Hong Kong and mainland China this week, but the market for mainland developer debt appears to be improving, with one of the major international ratings agencies predicting happier financial times ahead.
In this week’s round up of financing news for China’s developers, R&F finds buyers for RMB 1 billion in new short term notes, and even one of the country’s most cash-strapped builders, Tahoe Group, shows signs of conquering its debt mountain.
Keep reading for all the details.
Mainland Developer Finances on Upswing in 2019 Says Moody’s
The credit metrics of a majority of Chinese property developers will continue to improve over the next 12 to 18 months as a result of lower sales growth targets, according to global ratings agency Moody’s.
Credit metrics in 2018 improved for 40 out of 62 developers rated by Moody’s, following more disciplined spending on land. Moody’s report forecasts that large and mid-size developers’ revised sales targets will mean fewer debt-funded land purchases, and weighted-average revenue to adjusted debt for the companies in the rating agency’s report will increase to 73 percent in 2019 from 63 percent in 2018. Read more>>
R&F Properties Issues RMB 1B Ultra Short Term Bond
On 29 April 2019, R&F Properties announced that the company had issued the fourth phase of its 2019 ultra-short-term bond for RMB 1 billion ($150 million). The sale received 12 subscriptions in total, with maximum and minimum subscription premiums at 5.5 percent and 4.5 percent respectively. The company will use the net proceeds from the sale to repay other short-term bonds which are coming. Read more>>
Ronshine to Issue $200M in Additional Senior Notes
Ronshine China announced on 30 April 2019 that it will issue $200 million in new senior notes due in 2022, with the debentures carrying an interest rate of 10.5 percent. This latest tranche of bonds will be merged with an earlier $300 million issue of senior notes. The net proceeds of this latest sale will be used primarily for debt repayment and refinancing. Read more>>
Tahoe Repurchases RMB 3B in Corporate Bonds
On 26 April 2019, financially challenged luxury developer Tahoe Group paid investors approximately RMB 3.1 billion to buy back just under 30 million corporate bonds and to cover associated interest fees from its ‘’16Taihe02’’ (SZ11394) series.
The company had issued the RMB 3 billion bond in 2016, with the five-year notes carrying an interest rate of 6 percent, with the company announcing in early April that it would make no subsequent increases to the notes’ interest rates just before it began the buyout. Read more>>
Yuexiu Offers REIT Units for Holders of Convertible Developer Bonds
On 30 April 2019, Yuexiu Property (3006. HK) announced that investors would be allowed to exchange the company’s convertible bonds for units in Yuexiu REIT (0405. HK), a real estate investment trust sponsored by the developer, which is a unit of the Guangzhou municipal government.
Starting from 2 May, holders of HK$1.1 billion bond issue, which had been set to mature in 2020, are entitled to exchange their bonds for up to a total of over 192 million units in the REIT. Should all of the bond holders exercise their rights to the conversion, Yuexiu Property’s ownership stake in Yuexiu Real Estate Investment Trust would be reduced from 36.39 percent to 30.23 percent. Read more>>