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<Research>Daiwa: 'Three Red Lines' Phase-out Offers Limited Improvement to CN Property Sector's Credit Environment
Recommend 17 Positive 28 Negative 7 |
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Chinese property developer stocks rallied yesterday (29th) following reports that Chinese authorities will no longer require developers to submit the monthly "Three Red Lines" reports, Daiwa wrote in its report. In Daiwa's opinion, the "Three Red Lines" policy was initially intended to curb excessive debt growth, but it has long been unrelated to the financing channels of most developers. At the parent company level, bond issuance for most private developers has been frozen, regardless of their "Three Red Lines" status. Surviving developers such as LONGFOR GROUP (00960.HK) and SEAZEN (01030.HK) have shifted to operational loans as their primary funding source. Accordingly, Daiwa believes that the removal of the "Three Red Lines" offers limited improvement to the industry's credit environment. On a positive note, Daiwa did pick up on signs of normalization in the credit environment for Chinese developers, such as successful offshore bond issuances by CHINA RES LAND (01109.HK), GREENTOWN CHINA (03900.HK), SEAZEN, and YUEXIU PROPERTY (00123.HK). AAStocks Financial News |
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