Chinese real estate enterprises have stepped up preparations for the issue of medium-term notes since the start of 2023, with regulators giving them the opportunity to improve the health of their balance sheets by tapping debt markets.
On February 2, China’s National Association of Financial Market Institutional Investors (NAFMII) announced that it had completed shelf-registration from five real estate companies for the issuance of medium-term notes worth a total of around 66.9 billion yuan.
These five real estate enterprises include Vanke , Seazen Holdings, Midea Real Estate, New Hope, Wuxin Industrial Group and China Railway Construction Real Estate Group.
According to NAFMII’s announcement, the total registration amount of 66.9 billion yuan will remain valid for 2 years from the date of signing the notice.
Vanke registered a total of three items, worth 28 billion yuan, 3.7 billion yuan, and 2 billion yuan respectively, for a total amount of 33.7 billion yuan. Seazen Holdings and Midea Real Estate registered 15 billion yuan in medium-term notes, while Wuxin Industrial registered 1 billion yuan, and China Railway Real Estate registered 2.2 billion yuan.
In addition to this, earlier on January 6 and January 31 Jinhui Group Co., Ltd. and Country Garden Real Estate Group completed registration with NAFMII for the issuance of medium-term notes worth 2 billion and 20 billion yuan respectively.
In China “shelf issuance” generally refers to issuers “applying once before issuing in instalments.” This means issuers can publicly announce the securities they plan to issue in advance, but do not need to issue these securities immediately and can instead “leave them on the shelf.”
According to NAFTII, this model is conducive to enterprises and investors to finding better windows of opportunity for security issuance, as well as improving investment efficiency.