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In August, when real estate companies were at the peak of debt repayment, many real estate companies released information on repayment. Some companies, including Xuhui Group, had not yet received full repayment funds and were making every effort to raise funds and ensure that repayment would be completed as soon as possible within the grace period. Some companies, including R&F Properties, had failed to pay interest on three bills before maturity and were discussing solutions. Although the data on funds received by real estate companies from the National Bureau of Statistics in July showed signs of improvement in financing conditions, real estate companies still faced considerable pressure during the peak of debt repayment.

Industry insiders believe that since real estate companies' financing remains relatively sluggish recently and real estate sales have not fully recovered, there may still be debt defaults among real estate companies in the future, and liquidity issues still need attention.

Debt repayment peak is coming, real estate companies are paying off in a concentrated manner

August is the peak month for real estate companies to repay debts. According to CRIC statistics, 19 bonds of 65 real estate companies matured in July, and after excluding the part that has been redeemed in advance, the amount is about 26.7 billion yuan, a decrease of 42% month-on-month. In August, 26 bonds of 65 real estate companies will mature, and after excluding the part that has been redeemed in advance, the amount will reach 40.2 billion yuan, an increase of 51% month-on-month.

This can be seen from the repayment arrangements recently released by real estate companies. On August 19, Xiamen International Trade issued a repayment announcement for the sixth medium-term note in 2021, with a total issuance amount of 900 million yuan, an interest rate of 3.98%, and a maturity date of August 25.

In addition, on August 15, Jinhui Group announced the interest payment arrangement for the first medium-term note in 2023. The debt balance of the bond remains at 800 million yuan, the debt interest rate for this interest period is 4.0%, and the redemption date is scheduled for August 24. The amount of interest to be paid in this period is 32 million yuan.

On August 15, Zhujiang Industrial also announced the repayment arrangement for the second tranche of medium-term notes in 2021. The outstanding balance of the bond remained at 1.5 billion yuan, the interest rate for this interest-bearing period was 4.85%, the interest repayment date was August 23, and the principal and interest to be repaid in this period was 1.573 billion yuan.

At the same time, many real estate companies have also issued announcements of early redemption and resale. For example, the Pomegranate Group issued an announcement on August 16 that it had paid in advance the "19 Pomegranate 04 Corporate Bond" that was due on August 20, totaling 900 million yuan in principal and interest. So far, the total amount of 3.5 billion yuan of "19 Pomegranate 01-04 Corporate Bond" has been fully paid on schedule. The Pomegranate Group stated that after the redemption of this corporate bond, it is expected that there will be no large-scale rigid redemption in the next two to three years.

On August 19, Longfor Group announced that it had recently completed the repurchase of the "21 Longfor 05" bonds, with the repurchase amount reaching 1.9991 billion yuan. So far, Longfor Group has paid a total of 10.7 billion yuan of domestic credit bonds in 2024. After completing this repurchase, Longfor Group's remaining public debt due in 2024 is 1 billion yuan due for repurchase in December.

Financing is still at a low level, and some real estate companies have defaulted on their debts

Although there were no debt defaults by real estate companies in July, debt defaults were inevitable as the financing amount did not increase significantly during the concentrated repayment period in August.

On August 11, R&F Properties issued an insider information announcement, disclosing that the grace period for the three priority notes issued by Yilue Co., Ltd. has expired. In view of the current cash flow pressure faced by the group, the "Yilue Notes" did not pay interest before maturity.

According to the announcement, R&F Properties completed the sale of the ONE Nine Elms project and related consent solicitation in May 2024, reducing the company's debt by repaying the project loan and canceling the "Yilue Notes". R&F Properties said that the company is discussing a friendly solution with the note holders and will continue to closely monitor developments and consider all possible actions.

In addition, on August 14, CIFI Group disclosed detailed information on the interest payment and installment redemption (second) arrangements for the first tranche of medium-term notes in 2022 during the grace period. The outstanding balance of the bond is RMB 990 million, and the interest rate for this interest-bearing period is 4.75%. The principal of the bond of RMB 10 million and the corresponding interest were paid on August 14. However, as of August 14, CIFI Group stated that the company is making every effort to raise funds, but due to fund allocation and other reasons, the debt repayment funds have not yet been fully in place; the company solemnly promises to increase the efforts to collect funds to ensure that the above principal and interest repayments are completed as soon as possible during the grace period.

In fact, although the decline in funds in the real estate industry has narrowed slightly for four consecutive months and the funding pressure has improved marginally, the funds in place are still much lower than last year. On August 15, data from the National Bureau of Statistics showed that from January to July, the funds in place of real estate developers were about 6.19 trillion yuan, a year-on-year decrease of 21.3%. Among them, domestic loans were 921.6 billion yuan, a decrease of 6.3%; foreign capital utilization was 1.7 billion yuan, a decrease of 45.0%; self-raised funds were about 2.2 trillion yuan, a decrease of 8.7%; deposits and advance payments were about 1.87 trillion yuan, a decrease of 31.7%; personal mortgage loans were 874.8 billion yuan, a decrease of 37.3%.

In this regard, Wang Xiaoqiang, chief analyst of Zhuge Data Research Center, believes that judging from the data of various sources of funds, the decline in July has narrowed, among which the decline in foreign capital utilization has narrowed the most, by 6.7 percentage points, followed by deposits and advance payments, which narrowed by 2.4 percentage points. Driven by the "May 17" policy effect, June's transaction reached a small peak this year, driving the decline in deposits and advance payments to continue to narrow. However, in absolute terms, the funds in place are still significantly lower than last year, with a year-on-year decline of more than 20%, and there is still much room for improvement.

In addition, from July, CRIC statistics show that the total financing of 65 typical real estate companies was 52.346 billion yuan, a month-on-month increase of 63.8% and a year-on-year decrease of 9%. The financing scale of a single month hit a new high since 2024, mainly because Vanke obtained a bank loan of 32.666 billion yuan. In July, real estate companies issued bonds of 15.05 billion yuan, a month-on-month decrease of 2.9% and a year-on-year decrease of 55.6%.

Overall, Yang Xiao, an analyst at China Index Academy, said that from January to July, the issuance amount of credit bonds was 202.81 billion yuan, a year-on-year decrease of 29.0%; the issuance amount of overseas bonds was 6.70 billion yuan, a year-on-year decrease of 39.5%; the issuance amount of ABS (asset-backed securities) was 104.80 billion yuan, a year-on-year decrease of 34.6%.

Analysts from CRIC believe that as financing for real estate companies remains relatively sluggish recently and real estate sales have not yet fully recovered, there is still a possibility that real estate companies will default on their debts in the future, and liquidity issues still require the industry's attention.

Beijing News reporter Yuan Xiuli

Edited by Yang Juanjuan and proofread by Yang Li