Major Chinese homebuilders’ financing declined further in July, analysts see no significant improvement in short term
DATA FEATURES
Major Chinese homebuilders’ financing declined further in July, analysts see no significant improvement in short term
DATA FEATURES

Major Chinese homebuilders’ financing declined further in July, analysts see no significant improvement in short term

 

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Chinese property developers’ financing declined further in July, with the total amount raised by the top 100 homebuilders amounting to 52.3 billion yuan, sliding 13.7% from a year earlier, down for the 4th consecutive month, and plunging 62.9% from a year earlier, showed data from the China Real Estate Information Corporation (CRIC).

In breakdown, developers’ onshore debt financing reached 42.9 billion yuan in July, falling 18.5% from the month before and sliding 33.6% from a year earlier, while offshore debt financing reached 2.9 billion yuan, surging 203.6% from a month earlier and falling 92.4% from a year earlier, showed CRIC data.

Their financing via asset-backed securities reached 4 billion yuan, falling 42.8% from the previous month and slumping 89.4% from a year ago.

The’ non-banking financing reached 88.1 billion yuan in July, sliding 56.7% from a year earlier and falling 3.1% from the previous month, showed the data.

Of that, onshore corporate bond financing fell 5.6% on year and rose 7.2% from the month before; offshore bond financing tumbled 98% from a year earlier and tumbled 74.5% from the previous month; trust financing tumbled 85.5% on year and fell 30.4% on month; while asset-backed security financing fell 51.8% from a year ago and fell 1.8% from the previous month, showed the data.

Notably, developers’ trust financing dropped below 10 billion yuan mark for the first time this year, showed the data.

Notably, despite the falling financing, their borrowing costs declined. The average borrowing cost stood at 3.85% in July, falling by 1.28 percentage point from a year earlier and falling by 0.19 percentage point from the previous month, according to the data.

The borrowing cost for onshore corporate bonds stood at 3.29% in July, down 0.67 percentage point from a year earlier and down 0.18 percentage point from the previous month, while borrowing cost for the only offshore bond was 4.3%, showed the data.

Property developers have 51 bonds maturing in July, and if the 74 billion yuan redeemed is excluded, the number of maturing debt increased by 15.8% from the previous month, showed the data.

“Property developers’ sales remained sluggish in the first half of the year, business cash collection has failed to improve their cash flows. Meanwhile, June and July was the second peak for offshore dollar bond maturity this year,” said Liu Shui, director of the corporate business department of the China Index Academy.

“More developers have defaulted on bonds in the recent two months and market confidence is yet to recover,” said Liu. “In July, most of onshore bonds were issued by state-owned developers and quality private developers.”

“Restrictions on developers seeking funding and on financing channels remain, and the sector’s financing environment will not significantly improve in the short term,” Liu said.

“However, as regulators repeatedly urged for meeting property developers’ reasonable financing needs and local governments have been introducing measures to support the real estate sector, the financing environment will unlikely significantly worsen.”