China has seen a sharp increase in the issuance of bonds to fund real estate sector mergers and acquisitions, following strenuous efforts by authorities to keep the market afloat in the wake of the Evergrande debt debacle.
As of 21 January China had seen the issuance of five real estate acquisition-theme bonds since the start of 2022, raising a total of 7.29 billion yuan, according to a report from 21st Century Business Herald.
Three major commercial banks alone – Industrial Bank Co., Ltd., Guangfa Bank and Ping An Bank, have also stated that they collectively pan to issue a total of 20 billion yuan real estate acquisition bonds.
The increase comes after China’s National Association of Financial Market Institutional Investors (NAFMII) held a meeting with real estate enterprise representatives on 10 December last year, committing to debt financing support for the sector.
NAFMII said it would “preferentially support enterprises that satisfy real estate adjustment policy in the issuance of medium and long-term debt financing instruments, to raise funds that will be preferentially used to supplement fund shortfalls for projects that are sold and currently in development, as well as used for the acquisition of real estate projects.”
The Chinese central bank shortly afterwards issued the “Notice on Property Providing Financial Services for the Risk Disposal Project Acquisitions of Key Real Estate Enterprises” (关于做好重点房地产企业风险处置项目并购金融服务的通知).
The Notice said that the central bank would support high-quality real estate enterprises in the use of bonds to raise funds for mergers and acquisitions of key real estate enterprise risk disposal projects.