Chinese property crisis drives derivative rethink

Midea Real Estate Holding

07/06/2022 04:53

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Yawen Chen
    HONG KONG, June 7 (Reuters Breakingviews) - Beijing has
helped some private developers with bond issues by letting them
offer protection via tools like credit risk mitigation warrants.
So far it’s symbolic and over-reliant on reluctant state banks.
If private money can be wooed, however, the market could finally
take off.       
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    CONTEXT NEWS
    Chinese property developer Seazen Holdings has raised 1
billion yuan ($150 million) from a medium-term note with a
credit risk mitigation warrant from Bank of Shanghai and China
Bond Insurance, IFR reported on May 31.
    The two-year bond with a one-year extension option was
priced at par to yield 6.50%. Both CRMWs have a tenor of two
years.
    Chinese developers Longfor Group Holdings, Midea Real Estate
and Country Garden Real Estate Group have raised 2 billion yuan
in the onshore bond market in the past two weeks, reportedly
chosen by the government to improve market sentiment, according
to the IFR report.
    China’s 100 biggest real estate developers saw new-home
sales plummet 59% in May from a year earlier, according to
preliminary data from China Real Estate Information Corp,
Bloomberg reported on May 31. 

 (Editing by Pete Sweeney and Thomas Shum)
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