Chinese property firms’ bond issuances fell sharply in first quarter, Beike’s research unit says

Developers’ offshore issuances fell by 68 per cent, while the overall money raised declined by 43 per cent

Investors and creditors are still concerned about Chinese developers’ debts, research unit BRI says in report

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A money exchange in Hong Kong’s Central business district. Even if more supportive measures are rolled out by Beijing, time is needed to restore confidence in Chinese property firms, BRI says. Photo: AP

Published: 8:30am, 8 Apr 2022

Bond issuances by Chinese property developers shrank sharply in the first quarter of 2022.

Major developers issued offshore bonds worth only 35.5 billion yuan (US$5.6 billion) in the first three months of the year, which translates into a year-on-year decline of 68 per cent, said BRI, the research arm of Beike, China’s largest online property broker. Altogether with onshore issuances, Chinese property firms raised 173.3 billion yuan in this period, a year-on-year decline of 43 per cent.

“The risk associated with this industry persists, and investors and creditors – offshore in particular – are still concerned about Chinese developers’ debts. Even if we see more supportive measures being rolling out, time is needed to restore confidence,” BRI said in a research note on Thursday.

China’s “three red lines”, measures in place since August 2020 to control systemic risk posed by weak property developers, have sent the industry into a slump not seen since the 2015 stock market crash. Major developers such as China Evergrande Group and Kaisa Group Holdings defaulted on their bonds last year as a result.

And the cracks in the sector have widened this year, with the likes of Sunac China Holdings, the country’s fourth-largest developer, and Shimao Holdings Group, joining the list of distressed Chinese property firms.

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