The figure is 70 billion yuan more than last year, Liu Shui, a senior researcher at the China Index Academy, wrote in a note on Monday. Bonds issued in the onshore market account for nearly two-thirds of the total, the academy said in a separate report on Friday.
In the first quarter alone, around 263 billion yuan of bonds issued by property companies will mature. Of the total, nearly 40 billion yuan of onshore debt and close to 70 billion yuan of offshore debt were issued by developers now considered risky or in distress, the academy’s report shows.
“There could still be default risks for real estate companies – they face mounting repayment pressure, while sales have not yet seen a stable recovery,” Liu wrote. “Some developers have limited financing support from regulators, so they are still at risk of default.”
China’s property sector, described by Vice Premier Liu He in December as a “pillar” of the economy, has been in crisis for more than a year. Developers have been hobbled by a shortage of funds caused by a slump in home sales and an inability to raise new financing due to government controls on their debt.
The cash crunch has burdened them with unprecedented financial stress that has forced many into default or lengthy negotiations with creditors to restructure their repayment obligations.
In 2022, developers defaulted on 149.6 billion yuan of onshore bonds and US$30 billion of offshore bonds, respectively 2.5 times and 3.5 times the amount in 2021, analysts at GF Securities wrote in a Monday report.
The three biggest onshore defaulters were China Evergrande Group, Yango Group and Sunac China Holdings, according to the report. In the offshore market, 26 developers defaulted, with Sunac and Evergrande at the top of the list.
Chinese authorities recently announced a slew of measures to help developers, especially those with lower debt risks, replenish their capital through bank loans, bond issuance, and equity sales on stock markets on the Chinese mainland and in Hong Kong.
The moves are part of a wave of supportive policies to shore up the property market. They include a government-backed bond issuance facilitation programme, new loan quotas to support unfinished projects, and loosened restrictions on a lending mechanism to encourage banks to help developers repay maturing US dollar bonds.
The measures appear to be working, at least for the biggest developers. In December, 100 major property companies raised 101.8 billion yuan, 84.7% more than in November and 33.4% more than a year earlier, according to data published on Saturday by consultancy China Real Estate Information Corp (CRIC). Most of that was raised in the domestic bond market, which accounted for 83.3 billion yuan of the total, an increase of 83.4% year on year.
But for 2022 as a whole, fundraising by the 100 companies slumped 38% to 824 billion yuan, according to CRIC, as many distressed developers found it difficult to borrow money or sell properties to raise cash.