Country Garden, Longfor and Midea Real Estate’s bond issuance plans boost for stricken Chinese property sector

Country Garden, Longfor Group and Midea Real Estate plan to issue yuan-denominated bonds with either credit default swaps or credit risk mitigation warrants

Analysts said the move will enhance investor confidence as more quality names may roll out similar bonds

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Three Chinese property developers are issuing yuan-denominated bonds, which will help to relieve some of the liquidity pressures. Photo: Bloomberg

Published: 8:45pm, 16 May 2022Updated: 10:09pm, 16 May 2022

Mainland Chinese developers’ plans to issue bonds backed by credit-risk hedging tools signal more support by Beijing for the battered sector, which has suffered from surging bond defaults and coupon payment delays since last year, analysts said.

Country Garden, Longfor Group Holdings and Midea Real Estate Holding this week plan to issue yuan-denominated bonds supported by either credit default swaps (CDS) or credit risk mitigation warrants, according to term sheets seen by the Post.

The notes come at an opportune time for mainland developers whose home sales have taken a hit due to Covid-19 lockdowns, further squeezing liquidity.

More private companies are likely to tap the bond market, which will benefit developers that have relatively sound financial fundamentals and momentum, said Zhang Bo, chief analyst at 58 Anjuke Real Estate Research Institute, a Shanghai-based property research firm.

Workers walk past a construction site of Country Garden in Kunming, Yunnan province. Photo: Reuters

“The credit risk protection tools will enhance credit safety and attractiveness of developers,” which is in line with the central government’s direction to correct overly-tight restrictions, he added.