Bond issuances by Chinese property developers shrank sharply in the first quarter of 2022. Major developers issued offshore bonds worth only 35.5 billion yuan (US$5.6 billion) in the first three months of the year, which translates into a year-on-year decline of 68 per cent, said BRI, the research arm of Beike, China’s largest online property broker. Altogether with onshore issuances, Chinese property firms raised 173.3 billion yuan in this period, a year-on-year decline of 43 per cent. “The risk associated with this industry persists, and investors and creditors – offshore in particular – are still concerned about Chinese developers’ debts. Even if we see more supportive measures being rolling out, time is needed to restore confidence,” BRI said in a research note on Thursday. China’s “three red lines”, measures in place since August 2020 to control systemic risk posed by weak property developers, have sent the industry into a slump not seen since the 2015 stock market crash. Major developers such as China Evergrande Group and Kaisa Group Holdings defaulted on their bonds last year as a result. Kaisa bonds rise after it enters joint venture with state developer, bad asset manager And the cracks in the sector have widened this year, with the likes of Sunac China Holdings, the country’s fourth-largest developer, and Shimao Holdings Group, joining the list of distressed Chinese property firms. Beijing has rolled out a number of policies to buoy the sector since late last year. In January, the People’s Bank of China lowered the five-year loan prime rate – a reference rate for mortgages – by a modest 0.05 per cent to 4.6 per cent to reduce the borrowing cost of buying a home. In March, the finance ministry also decided not to expand a property tax trial to more cities this year, citing poor market conditions. Distress sales by Chinese luxury homeowners in Hong Kong on the rise At the same time, more than 60 local governments ripped up old, restrictive rules in the first quarter to revive the property market. However…
Source : South China Morning Post
Read more…Chinese property firms’ bond issuances fell sharply in first quarter, Beike’s research unit says
