China’s Securities Chief Signals Support for Bond Issuance by Real Estate Enterprises

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The head of the China Securities Regulatory Commission (CSRC) has flagged greater support for further debt issuance by private enterprises in the Chinese real estate sector.

“At present, we must pay close attention to the challenges and difficulties faced by the real estate sector, and support and implement improvements to the balance sheet of high-quality enterprises,” said Yi Huiman (易会满), CSRC chair, at the 2022 Financial Street Forum held in Beijing.

“[We will] continue to support the rational bond financing demand of real estate enterprises, support real estate enterprises to undertake acquisitions and restructuring and associated financing, and support enterprises involved in real estate operations to undertake equity financing based on set ratios.”

A recent meeting of the State Council convened by Premier Li Keqiang also flagged support for debt-issuance by private enterprises, as part of a raft of measures to bolster the health of the Chinese economy.

The draft version of the “Guidance Opinions on Deepening Company Bond Registration Reforms” (关于深化公司债券注册制改革的指导意见(征求意见稿)) issued on 18 November by CSRC called for “supporting rational financing demand of real estate enterprises, and raising the accessibility and convenience of bond financing by private enterprises.”

The “Notice on Effectively Performing Work for Finance to Support the Stable and Healthy Development of the Real Estate Market” (关于做好当前金融支持房地产市场平稳健康发展工作的通知) recently issued by the Chinese central bank and the China Banking and Insurance Regulatory Commission (CBIRC) called for “encouraging financial institutions to provide accompanying financing support, and effectively providing financial support for real estate projects.”

The change in policy tack has led to a resurgence in debt issuance by Chinese enterprises.

This included the issuance of 20 billion yuan in medium-term notes by Longfor Group on 15 November, and the National Association of Financial Market Institutional Investors (NAFMII) agreeing to review shelf registration for a 15 billion yuan issue of medium-term notes by Midea Real Estate on 15 November, and a 15 billion yuan of medium-term notes by Seazen Holdings on 17 November.