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Amidst Evergrande Crisis, Many Chinese Developers Release ABS

FILE PHOTO: Real estate projects under construction are seen in the Shekou area of ​​Shenzhen, Guangdong
FILE PHOTO: Real estate projects under construction are seen in the Shekou area of ​​Shenzhen, Guangdong province, China November 19, 2021. Photo taken November 19, 2021. REUTERS / David Kirton

December 5, 2021

BEIJING (Reuters) – Several major Chinese property developers are planning to issue asset-backed securities in the near term, another sign that regulators are expanding mildly financing channels for developers during Evergrande’s debt crisis.

China Evergrande, grappling with more than $300 billion in debt, said on Friday there was “no guarantee” that it would have enough money to repay it, prompting the country’s top financial regulators to write off calm the market.

Regulators say any drop is manageable and developers’ usual funding needs will be met, but the sector is facing another year on condition tight funding and refinancing risks, Moody’s said in a note last week.

Country Garden, the country’s top real estate developer, said Sunday that the company is considering applying for a supply chain asset-based securities (ABS) issue in the near-term.

“As an innovative financial instrument, ABS products in the supply chain can support the financing of upstream suppliers and ease financial hardship for SMEs,” the company said. said in a statement on its official WeChat account.

It is also committed to controlling corporate risks through prudent practices, according to the statement.

Four other developers, including Huafa Industrial and Greentown China, received regulatory feedback on their plans to issue ABS with a total value of nearly 16 billion yuan ($2.51 billion), the Stock Exchange said. Shanghai Stock Exchange on December 3.

The Securities Times reports that China Vanke is also planning to release 777 million yuan worth of ABS supply chain in the near future.

“Constraints on domestic real estate bond financing have been eased and bond issuance volume in November was about three times higher than in October,” CICC analysts wrote in a note. CICC analysts wrote in a note, adding that bond financing is recovering in an orderly fashion.

China’s property market, which accounts for a quarter of gross domestic product by several indexes, has cooled sharply since May with sentiment shaken as growing liquidity stress engulfed the country. some of the country’s most indebted developers.

Analysts don’t believe Beijing will ease much in its campaign to rein in highly leveraged developers, but they do expect some policy tweaks to ensure home prices and sales don’t fall too much. fast.

Regulators said they would assist private companies, especially those affected by recent debt problems, to raise money “properly”, Xinhua news agency reported. on Sunday, citing an official from the securities regulator.

(1 dollar = 6.3758 Chinese Yuan)

(Reporting by Min Zhang, Samuel Shen and Norihiko Shirouzu; Editing by Kim Coghill)

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Bobby Allyn

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