In early April, some of mainland China’s largest real estate developers continue to issue new dollar bonds as a spring sales recovery boosts demand for cash. Both Evergrande and Sunac made the headlines with their sales of $2 billion and $750 million in senior notes, the fourth issuance of dollar bonds for each of these developers within six months, and new research shows that combined new financing by mainland developers exceeded RMB 102B in March. Keep reading for all the details.
Total new financing by developers in China reached RMB 102.42 billion during March, according to a report by real estate agency Tospur, the first time since November 2017 that the amount of new cash going to mainland builders has broken the RMB 100 billion threshold.
The March total was an increase of 85.25 percent compared to February, according to the agency. Of the new cash, just over RMB 98.51 billion came via debt, while another RMB 3.9 billion was raised through equity sales. Read more>>
On 8 April, Evergrande announced that the company would offer $2 billion in senior notes in three tranches, with the plan receiving approval from the Shanghai Stock Exchange on April 10th.
The first tranche of senior notes amounts $1.25 billion, due in 2022, carrying a 9.5 percent interest rate. A second tranche totalling $450 million with a 10 percent interest rate will be due in 2023 while the third tranche, totalling $300 million will be due in 2024 and carry a 10.5 percent interest rate. Read more >>
S&P Global Ratings assigned its ‘B’ long-term issue rating to China Evergrande Group’s proposed US dollar-denominated senior unsecured notes, subject to final review.
The credit agency gave the new debt a rating one notch lower than Evergrande’s corporate rating due to what it termed significant structural subordination risk associated with the bonds. S&P noted that, as of December 31, 2018, Evergrande’s capital structure consisted of about RMB 600 billion of priority debt at both project companies and subsidiaries, with the company also carrying about RMB 74 billion of unsecured debt at the group level. Read more >>
On 9 April, Sunac announced that it would issue $750 million of senior unsecured US dollar notes due in 2023 at a 7.95 percent coupon rate. The company indicated that the proceeds from the bond sale would be mainly used to refinance existing debt.
Sunac’s proposed US dollar denominated senior unsecured notes were assigned a ‘B+’ long-term issue rating by S&P, a rank one below the company’s corporate rating. As was the case in Evergrande’s new bond issue this week, the new series was assigned the lower rating because of a risk of structural subordination with Sunac’s secured debt ratio having reached 88.3 percent — significantly above the agency’s standard 50 percent threshold. Read more>>
On 4 April, Yuexiu Property announced that the company would issue HK$1.1 billion in convertible bonds at a 1.875 percent interest rate. The total issuance amount is convertible to more than 192 million units of Yuexiu Real Estate Investment Trust (0405.HK). The net proceeds will be primarily used for business purpose with interest to be paid semi-annually on 30 Oct 2019 and 27 April 2020, and the notes carry a year maturity.
As of 9 April, Yuexue and its subsidiaries hold a 36.39 percent stake in Yuexiu REIT. Should bondholders convert all units of the bond into units in Yuexiu REIT, the company’s ownesrhip in the listed trust to 30.23 percent. Read more>>
On 2 April 2019, R&F Properties announced that the company is planning to issue debt financing, including REIT products, in an amount not exceeding RMB 60 billion ($8.9 billion), according to an announcement by the company.
The Guangzhou-based developer said that the funds will be used for operations, repayment of existing debts to both financial and non-financial institutions and to pay off other liabilities, as well as for investment in new projects among other potential purposes.
According to R&F’s 2018 annual report 2018, as of the end of the year, the company had outstanding RMB 14.3 billion of company bonds, RMB 8.2 billion in ultra short term and short term commercial paper as well as RMB 1.4 billion in asset backed securities. Read more>>
On April 4th, China Fortune Land Development announced that it had borrowed RMB 25.2 billion in fresh cash during the first quarter of 2019, an amount now equal to 45.4 percent of the company’s RMB 55.5 billion in net assets.
As of 31 March 2019, the company had debts of RMB 160 billion, up more than 15 percent from its RMB 134.9 billion balance at the end of 2018. During the first quarter the Beijing-based developer took out RMB 678 million in bank loans, RMB 1.59 billion in bonds and RMB 22.9 in other borrowing, mainly from insurance companies and creditor loans. Read more >>
On 4 April 2019, Future Holdings issued $2 billion in senior notes at an interest rate of 6.15 percent, according to an announcement by the company. Initial buyers for the new paper include Haitong Securities, UBS AG Hong Kong and Huatai Financial Holdings Hong Kong, among others.
The maturity date for the Changzhou, Jiangsu-based developer’s latest debentures is 15 April 2023, with interest payments to be made semi-annually. Read more>>
Ronshine China Holdings announced on April 3rd that its board of directors had resolved to work with Guorong Securities to issue a fourth and final set of asset-backed securities under a previously approved plan, in order to broaden the Shanghai-based developer’s financing channels.
An account in mainland news site Guandian.cn indicated that the Hong Kong-listed developer’s latest tranche of ABS will be worth up RMB 2 billion ($298 million), with any proceeds to be used for working capital or repayment of existing debt. Read more>>