China’s real estate enterprises received the green light to resume refinancing and mergers and acquisitions (M&As) after a 12-year suspension by the China Securities Regulatory Commission (CSRC). This may comprehensively and rapidly improve the financing situation of property enterprises, industry experts said. The stable and healthy development of the property market, the CSRC said, is critical for the stability of the financial market as well as the overall economy and society. “This is the last one of three measures, known as ‘three arrows’, which aim to assist property developers with sufficient financing solutions to ensure the stable development of the sector,” said Yan Yuejin, Director of the Shanghai-based E-house China Research and Development Institution.
Yan said that in a bid to solve the financing difficulties of privately-owned property developers, the People’s Bank of China (PBOC) and certain government departments have designed a package of policies to expand financing channels to the bond, credit and equity markets. “The CSRC’s move to support the refinancing of property companies, in combination with previous loosening measures by financial regulators to support credit expansion and bond financing, is expected to create a friendlier environment and better opportunities for property developers’ refinancing,” Yan said. An analyst with Yicai Media Group recalled that in October 2010, listed property developers’ refinancing was suspended by the CSRC.
Recent relaxations on credit expansion and bond financing, and the speech by CSRC Chairman Yi Huiman to the Annual Conference of the Financial Street Forum 2022, have created expectations that the current restrictions on equity financing will also be eased, said Li Yujia, Chief Researcher at the provincial Policy Research Center of Guangdong. “For the moment, the difficulties and challenges confronting the real estate industry are still there, and more support needs to be given to prime property developers, in terms of improving their balance sheets, aiding their reasonable bond issuances and financing demand, and facilitating mergers and acquisitions in the industry,” said Yi.
The CSRC’s five measures are aimed at tackling issues like the property sector’s mounting capital pressure, and this will help boost industry confidence and stimulate the market. Capital has always been the lifeblood of property developers – and solid performance of property developers, especially those owned privately, is key to boosting market confidence, said Wang Xiaoqiang, Chief Analyst with the Zhuge Real Estate Data Research Center, as reported by the China Daily.
