Domestic Bond Issuance by Chinese Real Estate Companies Rises 112% YoY in November

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New data points to a surge in bond financing by Chinese real estate companies last month despite onerous costs.

Figures from Chinese financial data provider Wind indicate that real estate companies in China issued 52.3 billion yuan in domestic bonds in November, for an increase of 14% compared to the preceding month and a year-on-year rise of 112%.

In the same month real estate companies issued 30.4 billion yuan in offshore bonds, for an increase of 263% compared to the preceding month and a YoY rise of 7%.

During the period from January to November Chinese real estate companies issued 563.2 billion yuan in domestic bonds for a YoY rise of 66%, as well as 322 billion yuan in overseas bonds, for a YoY increase of 12%.

Data from CRIC (克而瑞地产研究中心) further indicates that the average cost of bond financing for Chinese real estate companies was 8.54% in November, for the highest one-month level since 2015, while the average cost of overseas bond financing was 11.47%, for a rise of 5.02 percentage points compared to the reading of 6.45% for the first ten months of 2018.

For the period from January to November this year the average financing cost of real estate companies in China was 6.32%, for a marked rise compared to the reading of 6.06% for the first ten months of 2018, and ahead of the full year average for 2017.

Despite these high costs analysts say that the recent increase in financing approvals has helped to ease the liquidity pressure on Chinese real estate firms, which will prompt leading players in the sector to step up their acquisitions of small and medium-sized developers.

Large-scale real estate companies have proved more successful at obtaining financing, while the share of overseas bond issuance has seen a marked increase.

 

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