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房地产业风声鹤唳 券商多业务线缩减地产债

The real estate industry is jittery and securities firms cut back on real estate debt through multiple lines of business.

證券時報APP ·  Oct 21, 2021 01:51

Sun Xiangfeng, a reporter from the Securities Times.

"We are no longer doing real estate debt, and our business focuses on investing in urban bonds." A small brokerage bond underwriter told the Securities Times.

With the increasingly stringent real estate financing environment, Evergrande, Huaxia Happiness, mood years and other enterprises have broken out large or small liquidity crises, followed by an increase in the difficulty of issuing bonds in the primary market and increased investment risks in the secondary market. for most securities firms, whether it is investment banking business or investment business, real estate debt-related business has become a "chicken rib", many securities firms simply give up the relevant business.

Stay away from "real estate"

The China Securities Regulatory Commission (CSRC) approved Shimao's application to issue corporate bonds with a total face value of no more than 6.638 billion yuan to professional investors, according to an announcement by Shimao shares (600823.SH) on October 15.

This is a shrinking release plan. Shimao shares "applied to the China Securities Regulatory Commission for a corporate bond issuance quota of no more than 7.9 billion yuan" and planned to repay a total of 7.909 billion yuan in principal and interest on seven bonds, according to a report disclosed by Shimao shares on Aug. 20.

According to the relevant requirements in the applicable guidelines No. 1-Application documents and compilation of the rules for the examination and approval of the issuance and listing of Corporate Bonds on the Shanghai Stock Exchange, the amount of declared issuance of residential real estate enterprise projects accepted after August 10, 2020 shall not exceed 85% of the amount of principal and interest of the corporate bonds to be repaid and sold back. In the end, the bond size of Shimao was reduced to 6.638 billion yuan.

But even so, it is not easy for Shimao to issue bonds. An investment banker at a large brokerage told the Securities Times that his brokerage had given up the opportunity to underwrite Shimao shares on the grounds that it was "worried that it would not be sold".

Shimao had been plagued by rumors of a liquidity crunch, with bond prices trading on the secondary market plummeting. As of October 20, the company's corporate bonds "20 Shimao G3" traded in the secondary market were quoted at 88.69 yuan, while the prices of other bonds, such as "20 Shimao G2", were also well below face value.

However, the investment bank said frankly that the business of rejecting Shimao shares is not only that Shimao liquidity may be risky, but that after the real estate "three red lines" policy came out last year, the company has comprehensively tightened its real estate debt-related business. "except for Vanke and Longhu, all other businesses have basically stopped."

A reporter from the Securities Times learned that in the past two years, many brokerage investment banks have not participated in the underwriting business of real estate bonds, which is also reflected in the industry data.

As of October 20, securities companies had underwritten 337.049 billion yuan of real estate bonds during the year, according to Wind data. Among them, CITIC, CITIC Construction Investment and China International Capital Corporation underwrote 61.93 billion yuan, 56.491 billion yuan and 31.416 billion yuan respectively, accounting for 18.37%, 16.76% and 9.32% of the market share respectively. The market share of the three leading brokerages in underwriting real estate bonds is as high as 44.45%.

Last year, Citic Construction Investment, CITIC and Zhongshan Securities were the top three in the real estate bond underwriting business, with a cumulative market share of 37.22%.

"large brokerages have high-quality customer resources, and many small real estate companies are unable to issue bonds, but large real estate companies can cooperate with large real estate companies in the business of large brokerages." Another small brokerage bond underwriter told the Securities Times that the company's current attitude is to "be cautious and comply with regulations and stay away from real estate".

A reporter from the Securities Times combed through the data and found that large real estate companies did provide more business opportunities in the bond issuance market this year. Take CITIC, which has a rapidly increasing market share this year, as an example, underwriting 11.4 billion yuan of general corporate bonds and asset-backed bonds for Vanke during the year, accounting for 18.4% of the company's total related business.

However, there are also some companies with tight liquidity among the customers of these head brokerages, such as Citic Construction Investment, which underwrote a total of 8.2 billion yuan of corporate bonds of Evergrande Group in April, which was recently traded at 73.60 yuan.

Game reversal opportunity

The difficult situation of real estate debt, not only in the primary market, the secondary market reaction is more obvious, when the investment banking sector to give up real estate debt, many brokerage proprietary investment departments also moved real estate debt out of the "target pool".

"the risk-to-income ratio is too low, and the storm is likely to lose all its money. Some industries in the credit debt market have been very prosperous in the past two years, and there is no need to dig for food in such saline-alkali land as real estate." Wang Shuo (a pseudonym), a proprietary trader of the brokerage, told the Securities Times.

Wang Shuo said that many brokerages he knew were also avoiding real estate debt at the investment level.

In fact, this situation has even aggravated the credit risk of the real estate industry. Mingming, deputy director of CITIC Research Institute, told the Securities Times that due to the impact of risks and cautious policies, the primary and secondary markets of real estate debt have been under pressure since the beginning of this year, and the issuance is also under pressure, especially the financing of private and small and medium-sized real estate enterprises is not as expected. Among them, the net financing situation of standardized bonds, trust financing and Chinese dollar debt is not optimistic.

However, as the risks of the real estate industry are gradually exposed, some analysts and investors believe that related investment opportunities such as real estate debt may also be born in the predicament, and they are most concerned about the marginal easing of regulatory policy.

"how to deal with the relationship between stable growth and risk prevention has become the core proposition. The policy has repeatedly stressed the avoidance of secondary financial risks, so the handling of real estate cases is expected to be more cautious, based on the premise of financial systemic stability. At this stage, we believe that there has been marginal relaxation and rebound in real estate policy. " Mingming said that for some time in the future, real estate bond issuance may have to change with the market, or it will mainly recover from CMBS (commercial real estate mortgage-backed securities) and then transition to corporate standardized bonds, and this time period will be improved according to the disposal plan of super-large real estate enterprises.

Yang Weiyi, chief macroeconomic analyst at Guoyuan Securities, also believes that the credit of the real estate industry is already in a state of "hard landing", and the weak growth rate of real estate investment has dragged down economic data. In theory, there is indeed the possibility of further relaxation of relevant policies in the real estate industry.

In this context, some market institutions are also taking advantage of the possibility of industry reversal.

"the undervaluation of real estate debt is systematic, but some high-quality enterprises can cross the cycle, and the problems of many enterprises are liquidity problems, and their own business management is still very good, from an investment point of view, now a small amount of money to participate in real estate debt is optional." Said a credit analyst at the asset management of a brokerage.

However, some market participants are also more cautious. "right now, the real estate industry is jittery, and I haven't seen an inflection point yet, so my advice on real estate investment is to sink credit as little as possible." Yang Weiyi said that although the benefits of sticking to the high credit strategy are mediocre, we cannot expect to get excess returns from the real estate industry at the moment. "once credit sinks, the risk will increase exponentially."

The translation is provided by third-party software.


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