After an 18-month effort, Sunac China Holdings completed the entire process of overseas debt restructuring, becoming the nation's first large real estate enterprise to wrap up the domestic and overseas debt restructuring process. This landmark development provides a crucial demonstration for other debt-burdened developers, experts said. Sunac announced that all conditions for its overseas debt overhaul had been fulfilled and officially took effect from November 20. The company restructured about CNY90 billion in troubled debt, reduced its total debt by USD4.5 billion, and is poised to improve its operational fundamentals. Since last year, Sunac has been recognized within the industry as an example of proactive self-rescue. It quickly sensed the changing environment and took proactive measures such as promoting sales, disposing of assets and obtaining equity financing. The controlling shareholder, Sun Hongbin, also promptly provided an USD450 million interest-free loan to the company. Creditors approved its offshore debt restructuring plan in September, the first of its kind among major Chinese real estate developers. Since the second half of 2021, more than 50 listed real estate enterprises have initiated debt restructuring processes.
This restructuring indicated breakthroughs for real estate companies in debt disposal and risk mitigation, Yan Yuejin, Research Director at Shanghai-based E-house China R&D Institute, said in a note to the Global Times. “The more good news related to debt restructuring, the clearer the indications are that the real estate market and companies are stabilizing,” Yan said. The news drove up Chinese real estate shares on November 21. Sunac's shares jumped 12.02% at the close in Hong Kong. Risesun Real Estate Development Co's share price hit its daily limit and surged 10.27% in Shenzhen.
Behind the general rise of share prices, there was another stimulant: Bloomberg reported that Chinese regulators are drafting a list of 50 developers eligible for a range of financing, “the nation's latest effort to put a floor under the property crisis. The list, which includes both private and state-owned developers, is intended to guide financial institutions as they weigh support for the industry via bank loans, debt and equity financing,” the report said, citing anonymous sources. The market expects that more support policies are on the way for the sector, experts said.
The People's Bank of China (PBOC) will actively cooperate with industry regulators and local governments to ensure the stable and healthy development of the real estate market, and efforts will be made to reduce risk levels in the sector and guard against the spillover of risks from the housing market, PBOC Governor Pan Gongsheng said, as reported by the Global Times.
