Viewpoint real estate networkOctober twenty _ firstChinese home ownershipAccording to the announcement, notes with a total principal of US $48 million have been sold through over-the-counter transactions, and the issuers of the notes areKaisa Group Holdings Limited。
According to the announcement, there are two sales of bills, one is a priority note maturing in 2024 with a coupon of 9.375%, and the other is due in 2025 with an interest rate of 11.7%. The total amount of principal and interest recovered from the two notes is about US $20.38 million (about HK $160 million). Among them, the latter note was just purchased on April 28 this year.
Chinese property said that the proceeds from the sale would be used to provide immediate liquidity for the company to redistribute the proceeds to meet other reinvestment opportunities that may arise. It will be used initially as general working capital and as reinvestment when the opportunity arises.
According to the announcement, before the sale, Chinese buyers held Kaisa notes with a total principal of US $225 million, and still held US $177 million of Kaisa notes after the sale.
For a small number of bills sold this time, Chinese property buyers are expected to generate a realised loss of about HK $225 million.
From subscription to loss selling
Subscription for the Kaisa preferred note began in September 2017. At that time, the Lau family continued to increase their holdings of Chinese real estate corporate bonds, and Kaisa had just recovered from debt default on the verge of bankruptcy.
According to the announcement at the time, Kaisa issued three batches of priority notes in September 2017, including $7.25 per cent of priority notes due in 2020 and $8.50 per cent in 2022, and $9.375 per cent of priority notes due in 2024, with the proceeds intended to be used to refinance existing debt, allocate existing and new property projects and use them for general corporate purposes.
Extrapolated from this sale of Chinese real estate, it subscribed for a total of US $150 million in 2024 notes from Kaisa at that time, accounting for nearly 1/4 of the total. However, it is said that at that time, Gamby, the wife of the Chinese property owner, took the lead, and the Liu family, Chinese property owners, and several investment friends, together with several investment friends, already held a total of US $1.2 billion in Kaisa bonds. Kaisa shares opened high that day. By the end of the day, it rose 20.46% to close at HK $6.30, leading the rise in inner housing stocks, with an intraday high of HK $6.60, an all-time high.
For investing in Chinese real estate companies, Chinese property buyers said that "the return on investment is very satisfactory." Chinese property has said it expects to earn more than HK $870 million a year in terms of Kaisa bonds held by the Lau family. The Chinese also subscribed for home ownership in April of the same year.EvergrandeThe real estate debt is 1 billion dollars.
It sold not only Kaisa dollar debt, but also Zhongliang dollar debt at a loss.
Chinese property buyers subscribed one after another on November 26 and December 1, 2020 respectively.Zhongliang HoldingsThe public preferred note is 250 million dollars. On the evening of August 23, 2021, Chinese property buyers announced that they had sold US $7 million (about HK $54.415 million) notes through the over-the-counter market at a consideration of US $6.8382 million (about HK $53.157 million).
It is said that US dollar debt fell sharply after the departure of Zhongliang professional managers, and Joseph Lau realised a loss of about HK $1.341 million in this transaction. This is part of the Zhongliang notes previously subscribed by Chinese buyers.
"tipping point"
The focus of the sell-off is Evergrande shares.
In September this year, Gamby and Chinese Real Estate respectively sold 24.4 million shares of Evergrande shares and 109 million shares, and expressed their intention to sell all China Evergrande Group shares.
According to the 2021 report of Chinese Real Estate, as of the end of June this year, the total book value of the company, including bonds, listed equity investments and structured products, was 13.833 billion Hong Kong dollars, accounting for 39.9 percent of the total assets of Chinese real estate. On the other hand, Evergrande has dealt a heavy blow to the income of Chinese home buyers in both stocks and bonds.
Since 2018, the Liu Luanxiong family has subscribed for $1.7 billion of China Evergrande Group's high-interest dollar bonds, of which Evergrande has subscribed for $1.1 billion of the $3 billion bonds issued in January 2019. According to the 2021 China report of Chinese Real Estate, its income decreased by 63.0% compared with the same period last year, mainly due to the decrease in dividend income from Evergrande shares.
It is accompanied by the privatization of Chinese real estate.DelistingThe plan is to buy back about 25 per cent of public holdings in the public market at HK $4 per share for a total consideration of about HK $1.908 billion.
For Joseph Lau, known for his keen sense of investment, delisting may have reached a tipping point. Although Chinese property buyers have sold at a loss several times in succession, these losses are not large in terms of annual interest income. It is understood that Chinese property buyers receive an annual dividend of HK $500 million from Kaisa bonds, while Evergrande pays an annual dividend of at least HK $800 million.
Chinese home buyers may not stop their losses in time, but stop at a tipping point where they are expected to change.