China property bond markets update
The Chinese property bond market slowed down during the week from 1 Apr 2013 to 5 Apr 2013, as most companies have finished announcing their 2012 earnings last week and there were no new bond issuances in the primary market (in both investment grade as well as high yield space). This being the first week of the month, various Chinese property developers released their monthly contract sales data. On an average, the companies have witnessed strong sales growth on a monthly basis as well as yearly basis. There were a few rating actions by the rating agencies, with ratings of most of the property companies being affirmed and few being upgraded or downgraded.
There was one private placement of notes by a real estate company. ChinaSouthCity issued HKD 975 million of convertible notes maturing on 9 Apr 2018. The notes bear an interest of 6.5% per annum. The company plans to use the proceeds from the bond issuance to fund properties under development and properties planned for future development, refinance some of its existing debt, and for general corporate purposes. Soufun released home prices data for the month of March. Average home prices in China witnessed a sequential increase of 1.06% in Mar 2013, while the increase on a YoY basis was 3.9%.
S&P revised the rating outlook on Fantasia while it downgraded Renhe's ratings by two notches. Moody's affirmed the ratings on Shimao Property, Central China Real Estate Group, Hopson Development and Shanghai Industrial Urban Development Group Limited.
Fantasia had reported solid results for 2012. This week, S&P revised the rating outlook on Fantasia to stable from negative. S&P downgraded Renhe's corporate credit rating and the issue rating to CCC from B-. The rating outlook is negative. S&P expects the company to face liquidity pressure over the next year, as its sales and collection of receivables are not likely to improve materially.
Moody's has said that Shimao's 2012 results are credit positive and support its ratings. Shimao has managed to reduce its debt level, while achieving strong sales. Moody's has affirmed the ratings on Central China Real Estate as the company's 2012 results are as expected. Moody's expects the company to maintain a stable credit profile. Moody's has commented that Hopson's ratings are not impacted by its 2012 results. The rating agency expects an improvement in the company's sales this year. Moody's has affirmed the ratings of Shanghai Industrial Urban Development, while commenting that the 2012 results are much better than that of 2011.
The various sector data (sales trend and rating actions) flowing in this week are as expected and held no surprise to the junk bond investors. The Asian fixed income investors should track the monthly sales data of the property companies, especially the junk bond issuers, to regularly assess their liquidity positions. The retail investors should seek advice of expert financial advisors who can keep them updated on the sector, whether it is sales trend or policy changes.
There was one private placement of notes by a real estate company. ChinaSouthCity issued HKD 975 million of convertible notes maturing on 9 Apr 2018. The notes bear an interest of 6.5% per annum. The company plans to use the proceeds from the bond issuance to fund properties under development and properties planned for future development, refinance some of its existing debt, and for general corporate purposes. Soufun released home prices data for the month of March. Average home prices in China witnessed a sequential increase of 1.06% in Mar 2013, while the increase on a YoY basis was 3.9%.
S&P revised the rating outlook on Fantasia while it downgraded Renhe's ratings by two notches. Moody's affirmed the ratings on Shimao Property, Central China Real Estate Group, Hopson Development and Shanghai Industrial Urban Development Group Limited.
Fantasia had reported solid results for 2012. This week, S&P revised the rating outlook on Fantasia to stable from negative. S&P downgraded Renhe's corporate credit rating and the issue rating to CCC from B-. The rating outlook is negative. S&P expects the company to face liquidity pressure over the next year, as its sales and collection of receivables are not likely to improve materially.
Moody's has said that Shimao's 2012 results are credit positive and support its ratings. Shimao has managed to reduce its debt level, while achieving strong sales. Moody's has affirmed the ratings on Central China Real Estate as the company's 2012 results are as expected. Moody's expects the company to maintain a stable credit profile. Moody's has commented that Hopson's ratings are not impacted by its 2012 results. The rating agency expects an improvement in the company's sales this year. Moody's has affirmed the ratings of Shanghai Industrial Urban Development, while commenting that the 2012 results are much better than that of 2011.
The various sector data (sales trend and rating actions) flowing in this week are as expected and held no surprise to the junk bond investors. The Asian fixed income investors should track the monthly sales data of the property companies, especially the junk bond issuers, to regularly assess their liquidity positions. The retail investors should seek advice of expert financial advisors who can keep them updated on the sector, whether it is sales trend or policy changes.
