The Tellereport, citing Shell Research Institute data, reported that debt issuance by Chinese real estate companies totaled 173 billion yuan ($27.2 billion) in the first quarter of 2022, a decrease of 43% year-on-year.
Among them, domestic bonds accounted for 80%, worth 137.8 billion yuan ($21.66 billion), a year-on-year decrease of 28.6%.
Meanwhile, the overseas bond scale dropped 68% year-on-year, valued at 35.5 billion yuan ($5.56 billion)
According to Shell Research, three key factors contributed to the Chinese companies’ debt issuance scale decrease.
First, the Covid epidemic resurgence in China and the ongoing Russia-Ukraine war have increased the uncertainty of the local and international environment.
Second, the real estate industry’s credit risk continues to worsen, hitting the finance, supply chain, and demand expectations.
The unaltered debt risks for individual real estate enterprises and the lack of confidence of participants have led to the decline in expectations.
Last, the financial-oriented real estate enterprises in China will cut the scale of their own liabilities following the gradual withdrawal of the large-scale debt development model.
Shell Research Institute believes that the repayment pressure on housing firms has not been much eased given the rapid reduction in the bond issuance scale.