Due to the default of many private enterprise bonds on 20 18, it is more difficult for private enterprises to issue bonds. Recently, three private housing enterprises, Country Garden, Longhu Development and Midea Real Estate, successfully issued corporate bonds under the escort of credit protection tools, which made the industry see the dawn of financing difficulties for private housing enterprises.
China securities journal reporter found that the introduction of credit protection tools is the key to reverse the financing dilemma of private housing enterprises. For enterprises, the most important thing is to practice hard and accumulate strength during the bottom of the market.
Financing opening
Recently, Country Garden, Longhu Development and Midea Real Estate have successively completed the issuance of domestic corporate bonds, becoming the first demonstration private housing enterprises to create credit protection tools to issue bonds. Insiders bluntly said: "The' ice-breaking' journey of private housing financing has begun."
The reporter learned from Shenzhen Stock Exchange and Shanghai Stock Exchange that on May 20th, Country Garden completed the bookkeeping and filing of the first phase of 500 million yuan corporate bonds in 2022, with CITIC Jiantou Securities as the lead underwriter. On the same day, Midea Real Estate successfully issued corporate bonds in 2022 (the first phase) with an issuance scale of 654.38 billion yuan. The lead underwriters are Shenzhen-Hong Kong Securities and Guotai Junan Securities. Previously, Longhu Development, an indirect subsidiary of Longhu Group, publicly issued 2022 corporate bonds (Phase II) to professional investors with an issuance scale of 500 million yuan, with CITIC Securities as the lead underwriter.
On May 24th, according to the disclosure of China Bond Credit Enhancement Company, it and Shanghai Bank jointly created a credit risk mitigation certificate to help Xincheng Holdings issue the first medium-term notes in 2022. On May 23rd, the corporate bond project information platform of Shanghai Stock Exchange showed that the project status of "Greentown Real Estate Group Co., Ltd. publicly issued corporate bonds to professional investors in 2022" was updated to "feedback".
Oriental Jincheng Research Report shows that as of May 15, private housing enterprises have not issued open market bonds for 65 consecutive days. The "opening" of financing for private housing enterprises has attracted much attention from the market.
"Country Garden's issuance of corporate bonds has attracted many institutions including large state-owned banks, joint-stock banks and securities companies to actively participate in the bidding. The subscription multiple of the whole audience is as high as 1.6 times, and coupon rate is 4.5%, which is far lower than the comparable interest rate of corporate bonds of the same term. " Du said:
convoy
It is worth noting that under the background of poor financing environment in the real estate industry, private housing enterprises can "open the gate" and credit protection tools are essential. It is reported that Country Garden, Longhu Development and Midea Real Estate have all introduced credit protection tools in the recent bond issuance process.
When talking about why credit protection tools were introduced, Du bluntly said that it was to enhance investors' willingness to subscribe. The real estate industry has entered a downturn and market investment confidence has become sensitive. The number and scale of bond issuance and subscription of private real estate enterprises in the bond market have decreased, which has led to a rapid increase in bond financing costs. Take Country Garden as an example. The rate of 2 1 Bidi 04 released in February 2002 in coupon rate is 6.3%, which is significantly higher than that in September 20021bidi03, and that in coupon rate is 4.33%. "Since the beginning of this year, we have extensively discussed the market investment intentions with Country Garden, but there are fewer investors in the market who have the intention to subscribe for bonds, and the initial quotation is far beyond the scope accepted by enterprises. After several rounds of exploration, it is still too late to implement the appropriate subscription intention. "
However, the turning point to solve the above problems will come soon. In May, China Securities Regulatory Commission announced the launch of a special support plan for private enterprise bond financing in the exchange bond market. By cooperating with bond underwriting institutions to create credit protection tools, the plan will increase credit and support private enterprise bond financing with market, prospect and technical competitiveness, which is in line with the national industrial policy and strategic direction.
Du told reporters: "CITIC Jiantou Securities and CITIC Jiantou Finance put forward a comprehensive service plan of' bond issuance credit protection contract creation' to Country Garden. After several rounds of communication, the program has been highly recognized by investors. "
The so-called "credit protection instrument" refers to the financial instrument that the credit protection seller and the credit protection buyer agree that the credit protection buyer will pay the credit protection fee to the credit protection seller in the future according to the agreed standards and methods, and the seller will provide the buyer with one or more reference entities or one or more, one or more types of debts that meet the specific debt types and debt characteristics. Credit protection tools include credit protection contracts and credit protection certificates.
"With credit protection tools, it is equivalent to inciting market funds to participate in private enterprise bond investment through' low premiums'." Wang Guangxue, member of the Executive Committee of CITIC Jiantou Securities and secretary of the board of directors, said vividly. In Wang Guangxue's view, by creating credit protection tools to cooperate with private housing enterprises to issue bonds, we can take advantage of the differences in risk preferences of investors in the bond market to attract risk-conservative investors to subscribe for private housing enterprises' bonds.
With the credit guarantee tool "escort", the difficulties encountered by the lead underwriter in promoting the issuance of bonds by private housing enterprises are also solved. "The project took only one week from launch to landing, but many tasks were successfully completed, including preparing bond raising materials, starting the company's meeting process, applying for the joint creation of CSI Finance, contacting interested investors, filing bond books, signing contracts, etc." Du said that in order to dispel investors' concerns and attract institutions to participate in bidding, CITIC Jiantou Securities has also enhanced investors' understanding and recognition of this bond issue from three aspects: actively creating credit guarantee, guiding enterprises to improve information disclosure and strengthening communication with investment institutions.
This breakthrough can be expected.
In fact, under the "escort" of credit protection tools, the "opening of the gate" of bond financing for private housing enterprises has already made the industry see the dawn of the industry financing dilemma.
"The successful issuance of Country Garden corporate bonds shows that credit protection tools have an important role in promoting the bond financing of private housing enterprises." Wang Guangxue believes that this model provides a new idea for the subsequent real estate enterprises to carry out bond financing work smoothly and orderly.
Tian, dean of the Institute of Financial Development of Nankai University, believes that the bond issuance model of private housing enterprises such as Country Garden provides specific measures for other private enterprises to learn from, which is helpful to improve the problem of difficult and expensive financing in the industry.
Tian further stated that financial innovation serving the real economy is of great significance to economic growth. "In the current economic environment, China should effectively strengthen financial services to the real economy, consolidate market confidence through various financial innovations such as credit enhancement and credit guarantee, realize positive feedback and a virtuous circle, and serve the financing development of enterprises while ensuring investors' due returns, so as to promote the steady development of enterprises and steady economic growth. "
Tian believes that private housing enterprises can also consider realizing asset securitization through financial instruments such as REITs, obtaining funds and improving cash flow. Of course, the most important thing is that enterprises should practice hard, improve efficiency, enhance core competitiveness, and accumulate strength during the bottom of the market. After all, the market has always been recognized and favored by powerful enterprises.