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Cailianshe News, August 23 (Editor: Yang Bin)This morning, the Ministry of Housing and Urban-Rural Development answered questions from reporters on hot issues such as guaranteed delivery of houses at a press conference held by the State Council Information Office. Regarding the financing of real estate companies, the Ministry of Housing and Urban-Rural Development stated that it will promote the transformation of real estate development companies' financing from relying on the credit of the main body to based on project conditions. Real estate bond financing is still sluggish. According to statistics from relevant channels, the issuance scale of domestic real estate bonds decreased by 59.6% in July. However, the secondary market for real estate bonds has performed well recently. Market insiders said that the subsequent policies will focus on implementing the policies that have been issued, such as "purchasing existing commercial housing as affordable housing", and real estate bond investment needs to wait for the sales trend to pick up.

In July, the issuance of domestic real estate bonds dropped sharply year-on-year, and the net financing gap widened further compared with June. According to statistics from rating agency Orient Securities, a total of 19 real estate companies issued 28 real estate bonds in July, with a total issuance scale of 20.62 billion yuan. The number of bond issuers and the number of bonds issued fell by 26.9% and 41.7% year-on-year respectively, and the issuance scale fell sharply by 59.6% year-on-year. In terms of net financing, affected by the issuance end, the net financing gap widened to 11.89 billion yuan that month, compared with 8.59 billion yuan in the previous month.

Not only did private real estate bond financing not improve, the scale of state-owned enterprises' bond issuance also fell year-on-year. In July, the scale of state-owned enterprises' issuance fell sharply by 53.0% year-on-year to 20.07 billion yuan, with a net financing amount of -4.49 billion yuan; in terms of private enterprises, in July, only one private enterprise, Jinhui Group, issued real estate bonds through China Bond Enhanced Guarantee, with an issuance scale of 550 million yuan, and the issuance volume in that month fell by 93.4% year-on-year.

In terms of overseas bonds, according to the Enterprise Early Warning, there was no record of overseas dollar bonds issued by real estate companies in July. This year, only eight real estate companies, including Greenland Holdings and R&F Properties, issued 18 dollar bonds with a total scale of US$1.728 billion.

Regarding the financing of real estate companies, the Ministry of Housing and Urban-Rural Development stated at a meeting today that it will establish a coordination mechanism for urban real estate financing and introduce a "white list" system for projects. It will provide financing support for compliant projects based on cities and projects, and promote the transformation of real estate development companies' financing from relying on the credit of the entity to relying on project conditions.

Recently, the secondary market of real estate bonds has performed well. According to the statistics of CICC research team, the spread of domestic real estate bonds narrowed in July, and the average excess spread of AAA, AA+ and AA implied ratings narrowed by 1bp, 27bp and 6bp respectively. The narrowing of AA+ and AA was mainly affected by the decline in the spread of Vanke, Greentown Real Estate, Cinda Real Estate and Guangdong Pearl River.

As for real estate dollar bonds, Cailianshe has previously reported that this year's high-yield dollar bonds, mainly real estate bonds, have performed better than investment grade bonds overall. Since July, the iBoxx Chinese dollar real estate bond index has risen another 2.7%.

In the absence of significant improvement in real estate sales, the interim performance of real estate bonds mainly depends on policy impulses. The Politburo meeting at the end of July continued the previous statement, continuing to emphasize "persisting in digesting existing stocks and optimizing incremental growth", and also mentioned "purchasing existing commercial housing for use as affordable housing."

CICC's research team believes that sales performance in July weakened month-on-month, and there were few new real estate policies. Subsequent policies may continue to implement the policies that have been issued. The current market is still in the bottoming stage, and a certain degree of patience should be maintained while waiting for the market turning point.

Regarding the construction and supply of affordable housing, the Ministry of Housing and Urban-Rural Development said today that it will actively promote the acquisition of existing commercial housing for use as affordable housing, and promote the accelerated completion of acquisition of projects with mature conditions, and timely allocation and distribution. In terms of the reform of the existing housing sales system, the Ministry of Housing and Urban-Rural Development said that it will vigorously and orderly promote the sale of existing housing, guide local governments to select new real estate development projects, agree to implement the sale of existing housing when land is transferred, and formulate supporting policies based on practice.

Regarding investment in real estate bonds, in addition to the implementation of policies, most institutions still recommend waiting for the sales trend to pick up, with state-owned enterprises outperforming private enterprises.

Huatai Securities' fixed income research team believes that real estate sales rebounded marginally in June. Looking forward, the reversal of risk appetite for real estate bonds will require a trend recovery in transactions. We will focus on the off-season performance in July and August, the launch of real estate companies, and whether policies will be strengthened. Strategically, the extension of duration and variety exploration of medium- and high-grade real estate bonds of central state-owned enterprises are better than sinking, and we will pay attention to the debt repayment trends of leading real estate companies.

China Chengxin International pointed out that the valuation of real estate bonds fluctuates greatly, and it is recommended that investors closely monitor the recovery of real estate sales, and take advantage of the short-term oversold bond investment opportunities of high-yield real estate companies as the temporary game has not produced risks, and remain cautious about medium- and long-term bonds.