The last five months of 2019 will see a rise in the volume of maturing real estate enterprise bonds in China.
A research report from Huatai Securities indicates that during the period from August to December 2019 a total of 210.6 billion yuan in real estate enterprise bonds are scheduled to mature.
August, September and October are expected to be the peak periods for single month maturation volumes, placing real estate enterprises under heavy refinancing pressure just as Chinese regulators put a squeeze on funding sources.
The Chinese central bank recently convened a meeting on adjusting and optimising the lending structure of banking sector financial institutions, stressing heightened scrutiny of the illicit flow of funds into the real estate sector via channels including consumer loans, bank wealth management products and entrusted loans.
The Huatai report said that this regulatory tightening will have a variable impact on different financing channels, with non-standard channels, US-dollar bonds and ABS financing expected to be the most heavily impacted.
Lu Ting (陆挺), chief economist with Nomura Securities, said to China Securities Net that maturation pressure for the US-dollar bonds of Chinese real estate companies will not be considerable.
In the second half of 2019 approximately USD$11.1 billion in offshore real estate enterprise US dollar bonds are scheduled to mature, as compared to $21 billion in the first half.
During the period from the third quarter of 2019 until the fourth quarter of 2020 approximately $8.4 billion yuan in offshore US dollar bonds issued by Chinese real estate enterprises are scheduled to mature on average each month.