Source: Bloomberg
Author: Chen Lulu, Emma Dong, Ma Fangjing, Huang Rongrong, Dorothy Ma
In the 20 -year investment career of Dhiraj Bajaj, he has never experienced this roller coaster -like experience.
Initially, Dalian Wanda Group told bond holders including BAJAJ, everything was good.The $ 400 million (about S $ 546 million) owed will be fully paid.But a few days later, some creditors received a notice that the company actually lacked $ 200 million, and the relevant bills fell severely.
However, soon, the creditors were informed that Wanda raised its cash, and these bonds soared again.
Wanda finally redeemed the July due.But Bajaj said that the incident and other similar incidents made him particularly cautious about investment in China in the future.
More and more people in the financial circle are saying that.On the occasion of dozens of liability real estate companies, including industry giants Country Garden, which is tens of -debt, foreign capital management companies say that in the long run, it is the poor governance -many people even say that they are deteriorating -and the defects in disclosure.It will allow them to avoid mainland borrowers.Experts warn that this may lead to a decrease in corporate financing channels, higher borrowing costs, and further damage to the Chinese economy in the next few years.
"The standards have obviously deteriorated, and this will not be tolerated by the global investment community," Bajaj said."We tolerance for many high -yield companies in China is getting lower and lower, because they lack the standards of disclosure and have no direct and clear communication."
Representatives of Wanda and Country Garden have not responded to repeatedly comment on requests.
Of course, China has never been a model of good governance.Some companies have been entangled with hidden debt and accounting errors for many years.
But between 2012 and 2020, in the case of the average annual return of Chinese-funded US dollar bonds of the garbage level exceeding 9%(the return on US bonds is less than 7%), investors are basically willing to turn a blind eye to this.
Now, such a return has become the "old yellow calendar".China offshore garbage bonds (mostly issued by housing companies) have shrunk by more than 127 billion US dollars in just two and a half years ago.The time to touch is almost when the "three red lines" on the Beijing side will slow down the speed of borrowing housing companies.
The "Three Red Line" aims to curb the acts of real estate developers have rely on excessive expansion of debt and public speculation for many years.However, with the surge in re -financing, these policies eventually pushed a record number of companies to default and led to a series of reorganizations.
A large number of foreign investors say that although they understand that poor corporate governance is a risk factor for investing in China, when the pressure is getting greater, the relevant governance standards, especially in terms of coherent communication with the creditor, become becomingGet worse and worse.
For example, after Country Garden failed to pay the interest rate of the two US dollar bonds on time last month, it has never known whether investors have intended to pay within a time -limited period (the company finally paid on Tuesday).What makes creditors even more dissatisfied is when the company has never clarified when the wide limit expires.
Just last month, China Aoyuan submitted regulatory documents, announcing holding about three -quarters of their existing bills to support its restructuring agreement.Document wording makes some people believe that the company has reached an important threshold for the agreement to be approved.However, the above support is only applicable to holders of a securities, and the outside world complains that the company does not explicitly explain the support of investors.
Last year, Greenland Holdings with a state -owned background unexpectedly requested that it delayed the payment of a US dollar bond for one year, shaking the market, but other bills were paid in just a few months.
In 2021, after a few weeks after the claimer said that there was no liquidity problem, a few days after paying a non -public offerment bill, a US dollar debt default shocked investors.
An investor who is unwilling to be named has contacted the company's founder through WeChat after breach of the contract and asked about it.Zeng Bao replied a GIF picture: A cat sat on a small box with "I am in the stool".
The representatives of China Olympic Garden, Greenland, and Fantastic Year did not respond to the request of comment.Bloomberg News also asked Zeng Baby to comment from the pattern period, but did not respond.The detailed contact information of Zeng Bao has not been provided in the past year, and the reporter cannot obtain it from open channels.
"Credit market financing has never been traded by a hammer. Even after a stress incident or a breach of contract, the company should not abandon itself," said Lawrence Lu, a senior director of S & P corporate rating."If Chinese issuers want to return to the capital market, they should change their ideas."
Govern "Disability"
When evaluating corporate credit status, S & P will inspect its management and governance quality.The rating company will weigh the governance factors such as management culture, violations of laws and laws, communication coherence, and quality reports.Enterprises will get a strong, satisfied, general or weak overall score.
Lu said that the scores of most mainland speculative borrowers are "weak"; in recent years, with the shortage of funds in the real estate industry in recent years, the results have deteriorated significantly.
"" It should be more frequent and transparent with the stakeholders, and the issuer should give all investors equal treatment, "Lu said."Compared with global standards, there are many jobs to do."
An industry insider who had worked in a breach of contract developers said that it was easy and difficult to do.
The person who requires anonymous because he does not want to affect the future career development that when the company strives to complete the project, the cash condition will usually continue to change. When liquidity is tightGo to business.The person said that some developers would rather be a little low -key and are unwilling to make a promise that is difficult to achieve to the creditors.
"Can't invest"
IMPAX Asset Management Group PLC Asia Pacific Sustainable Development and Management Head of Management and the former China Research Director of the Asian Corporation Governance Association said that global bond buyers are already re -evaluating China's credit asset allocation.
"Foreign investors still have the willingness to invest in China, but how much we invest in," Li said."We are facing a market full of uncertainty, coupled with the lack of transparency, the prediction is more difficult. If there is no prediction, we cannot invest."
Tommy Wu, a senior economist of commercial banks in Germany, believes that this may affect the search for financing.
"All companies will have to resort to domestic financing and give local banks and official pressures that are already busy to clean up a large amount of debt issues," WU pointed out."This will also push up the financing costs of Chinese enterprises, erode their profitability, suppress their willingness to expand their business, and even lead to layoffs. All of this will further make China's economy."
The second largest economy in the world is the most lack of challenges.With the deterioration of economic prospects and the turbulent real estate industry to suppress residents' willingness to consume, a private survey showed that the expansion rate of China's service industry activities in August fell to the low point of this year.
After the latest data shows that housing sales have declined for the third consecutive month, and after exacerbating the pressure of shrinking, the Beijing side is trying to revive confidence.Last week, China allowed its first -tier cities to reduce the percentage of the first payment of house purchase and encouraged banks to reduce the interest rate of stock mortgages.
Wednesday, bet on official support politicsCebu may increase the market to promote the surge in China's real estate stocks, and some of the stock prices of some dilemma have reached the biggest increase in history.
"serious" processing
BAJAJ of Lombard Odier said that China ’s regulatory efforts should be increased to ensure high -standard corporate governance.
This includes the Hong Kong Securities Regulatory Commission, the People's Bank of China, the National Development and Reform Commission, and the China Securities Regulatory Commission.
A representative of the Hong Kong Securities Regulatory Commission said that incidents such as selective disclosure or information on market changes may belong to the jurisdiction of its market abuse clauses and will be treated "very serious".
The Bank of China, the Development and Reform Commission, and the CSRC did not respond to the request of comment.
"Chinese regulatory agencies must act," Bajaj said."Otherwise, I am afraid that the foreign investor group of Chinese corporate bonds will shrink."
This will have a new impact on the Chinese economy, which is already difficult to attract foreign investors.Just last week, the US Minister of Commerce Raymond said that American companies believe that China is increasingly "not available", even if Beijing has promised to improve foreign investors' treatment in recent months.
LGT Capital Partners' investment portfolio manager and Willem Glorie, who previously held Wanda Bonds, believes that it is not enough to rely on his trust to rely on his charm.
He said that the most disturbing place in the July Wanda incident is not the contradiction or price fluctuations in the front and back of the information.He believes that some Wanda investors can get information earlier earlier than others, which is more frustrating.
Information "is not publicly distributed to all investors at the same time," Glorie said."They mentioned one thing to some investors. If there is a change the next day, they will mention another matter. Investors cannot chase the company every day to understand the latest information."
