中国房地产HY 2020年展望

1、ChinaFixed IncomeCredit2020 Outlook: Catch me when you canChina Property HYTHIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINAChinaFixed IncomeCredit2020 Outlook: Catch me when you canChina Property HYHY of HY an on in 2019 has proven to be an exceptionally good year for investors in China propert

2、y HY, with an average year-to-date total return1 of 13%, exceeding our 5-10% yearly totalreturn forecast in China Property HY: 2019 Outlook: Climbing the wall of fear,12 December 2018. The year has been characterised by record USD HY supply, which totalled USD63bn year-to-date versus USD38bn in 2018

3、 (recall that we revised up our issuance forecast twice during 2019 first in February to USD38-40bn from USD8-10bn (see China Property HY: Hat trick in the making, 19 February), and then in July to USD61.5-63.5bn (see China Property HY: While the quota lasts, 18 July, and Figure 1 and 2). Property s

4、ales have been resilient, with signs of policy loosening towards the end of 2019; we believe there is room for further loosening in 2020e.USD HY 12USDWe are of 18 July of to We in in toinin10 December 2019Keith ChanHead of Corporate Credit Research, Asia PacificThe Hongkong and Shanghai Banking Corp

5、oration Limited HYPERLINK mailto:keithkfchan.hk keithkfchan.hk+852 2822 4522Roanna ChauAssociate, Credit ResearchThe Hongkong and Shanghai Banking Corporation Limited HYPERLINK mailto:roanna.c.y.chau.hk roanna.c.y.chau.hk+852 3941 7186Record HY issuancein2019e2. coupled with yield tightening11.0Chin

6、a property USD HY issuanceChina property USD HY issuanceUSDmUSDm010.09.08.0%7.0%6.05.04.0Jan-18Feb-18Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19Jan-18Feb-18Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19Feb-19Apr-19 Jun-19 Jul-19 Aug-19 S

7、ep-19 Oct-19 Nov-19 Dec-1920042005200620072008200920102011201220132004200520062007200820092010201120122013201420152016201720182019e2020eSource: Bloomberg,HSBCestimatesSource: Bloomberg,HSBC1 Total return is defined as the sum of capital return and accrual return in USD.Disclosures & DisclaimerThis r

8、eport must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.Issuer of report: The Hongkong and Shanghai Banking Corporation LimitedView HSBC Global Researchat:https: HYPERLINK / /by60%China property USD HY bond is

9、suance front-end loaded in2019USDmUSDm0USDmUSDm1H162H161H172H171H182H181H192H19eFeb-19 Mar-19 Apr-19 1H162H161H172H171H182H181H192H19eFeb-19 Mar-19 Apr-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19Dec-19NetissuanceGrossissuanceNetissuanceSource: Bloomberg,HSBCestimatesSource: Bloomberg,HSBCTight debt

10、 financing access, and hence, constrained capexAfurtherdissectionintotheChinapropertyUSDHYtrendanotabledeclinein net in 2H19e trend is even more profound using monthly gross net issuance (see 3 and 4). in our reflects the policy stance for USD debt since as by the of the Rule 778. decline in monthly

11、 USD HY bond supply is met with interest from for bonds in the market (see Figure 5), yields trending China property HY primary market transactions are more than four onin2019,fromthreein2018,selectHYtransactionsmore than 10 (i.e. in 10 x USD400m in 14x covered; RONXIN21 in 15x USDin10 xandin11xcove

12、red).Demand for China property HY bonds reviving to 2017level12.010.08.06.04.02.0Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Au

13、g-19 Sep-19 Oct-19 Nov-19 Dec-190.0Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19HY new issueso

14、versubscriptionratioAverageSource: Companies, HSBCImprovement in debt leverage profile in 2H19eCoupled with tight debt financing access onshore via trust financing (Caixin, 15 July 2019) and limited incremental debt financing availability in the onshore bond market, we have witnessed a notable decli

15、ne in land purchases since 3Q19 (see Figure 6 and 7). To be specific, known land purchases by China property developers with offshore bond market presence were down by 15% y-o-y in 10M2019 to RMB1.4trn (USD200bn), per our estimate. During the same period, 35 China property developers we monitor repo

16、rted a 20% y-o-y increase in contracted sales to RMB5.3trn (USD755bn). We expect improvement in debt leverage metrics for them in 2H19e.Constrained capital expenditures on land since 3Q, given tight liquidityaccessUSDm equivalentUSDm equivalent0RMBbnRMBbn2H19e2H19e1H162H161H172H171H182H181H191Q093Q0

17、91H162H161H172H171H182H181H191Q093Q091Q103Q101Q113Q111Q123Q121Q133Q131Q142Q141Q153Q151Q163Q161Q173Q171Q183Q181Q193Q19NetissuanceofonshoreCNYbondsbyChinadeveloperswith offshore HY marketpresenceKnown land acquistions for developers in offshore bond universeSource: Wind,HSBCestimatesSource: Companies,

18、HSBCFive key themes for 2020Theme 1: USD HY bonds turning scarce issuance dropping notably to USD30-35bn in 2020e from USD63.5bn in 2019e; size of space to reach USD150bnWe forecast a notable decline in USD bond supply from China property HY developers in 2020e, with gross issuance normalising to le

19、vels seen in 2016-18. The sharp decline in USD bond supply is driven by our expectation of the NDRC maintaining its policy stance in limiting developers incremental offshore debt financing access via Rule 778, as the authority needs currency flexibility on the back of trade negotiation uncertainties

20、 (note homebuilders and LGFVs are the two sectors that face greater foreign currency asset liability mismatch than peers).We in be in in in HY a 8 HY in a in HY by a in We HY China property USD HY net issuanceto plummet in 2020e versus2019eGrowth of China property USD HY space coming to a stall in20

21、20eUSDmUSDm02015201620172018 2019e USDbnUSDbn0ChinapropertyUSDHYbondsoutstanding60%50%40%30%20%10%20112012201120122013201420152016201720182019e2020eChinaproperty%AsianHYGrossissuanceNetChinaproperty%AsianHYSource: Bloomberg,HSBCestimatesSource: Bloomberg, HSBCestimatesHY:60%USDm2019egross net (Low (

22、High /callnet 2020e high-end net issuance vs 2019enetissuanceAsian Corporate HYMainland China90,50064,39343,00053,00035,78017,220-73%- Mainland China property HY63,50049,83330,00035,00027,2777,723-85%- Mainland China LGFV HY13,0007,7613,0006,0001,6304,370-44%- Mainland China other HY14,0006,79810,00

23、012,0006,8735,127-25%India7,0756,3236,0007,0007636,237-1%Hong Kong1,1057811,5002,0001,498502-36%Indonesia2,4751,5783,0004,0001,8312,16937%Others8,0204,1536,0007,0002,9064,094-1%Asian corporate HY issuance109,17577,22859,50073,00042,77830,222-61%Asian corporate HY redemption31,94842,77842,778Asian Co

24、rporate IGMainland China63,14730,86050,00055,00030,90024,100-22%- Mainland China LGFV17,08211,33210,00012,0006,8005,200-54%- Mainland China central SOEs23,6399,29125,00026,00017,4508,550-8%- Mainland China local SOEs9,0006,2628,0009,0003,4005,600-11%- POEs13,4263,9757,0008,0003,2504,75019%Hong Kong1

25、1,1503,5998,0009,0004,6744,32620%Korea6,6503,4907,0008,0004,7503,250-7%Singapore2,1504000500050025%India7,2134,8136,0007,0001,0006,00025%Others9,1903,9469,00010,5002,3888,112106%- Indonesia5,6755,5297,0007,5003387,16230%- Malaysia1,000(2,000)1,0001,5002,050(550)NA- Thailand1,5154391,0001,50001,50024

26、2%- Philippines0(1,021)0000NA- Taiwan1,0001,0000000NAAsian corporate IG issuance99,50047,10880,00090,00043,71246,288-2%Asian corporate IG redemption52,39143,71243,712Asian corporate gross issuance208,675139,500163,000Asian corporate net issuance124,33653,01076,510Source: Bloomberg, HSBC estimatesNot

27、able drop in Asian HY gross corporate issuance expected in2020eAsian HY corp. issuance (USDm)Asian HY corp. issuance (USDm)110,000100,00090,00080,00070,00060,00050,00040,000Duration of China property HY new issues to lengthen in 2020e versus2019543Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec

28、-16 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Jun-19Nov-1920182019e2020eMainland China India Hong Kong Indonesia OthersSource: HSBCYears to Maturity / Expected Remaining LifeNote: Markit iBoxx USD Asia ex-Japan China Real Estate High Yield Index Sourc

29、e: Markit, HSBCFigure 13 and 14 show that for China corporates/ non-bank FIs (NBFIs) and China property developers that have come to the USD bond market since June 2019, more than 80% and 85% of the issues, respectively, have NDRC bond issuance quota approved on or prior to May 2019. 25%20%15%10%5%J

30、an-19 Feb-19 Mar-19 Apr-19 Jan-19 Feb-19 Mar-19 Apr-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19Nov-19China property developers depleting legacy quotas since June201925%20%15%10%5%Jan-19 Feb-19 Mar-19 Apr-19 Jan-19 Feb-19 Mar-19 Apr-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19Nov-19NDRCUSD/EURbondquotaapprovals(f

31、orChineseissuersthatcame to market since Jun-19)NDRC USD bond quota approvals (for Chinese developers that came to market since Jun-19)Source:Companies,HSBCSource: Companies,HSBCTheme 2: Liquidity access via onshore bond issuance could potentially loosen Incremental debt financing is not available i

32、n onshore bond market for China property developers. In particular, according to Bloomberg news dated 5 June 2019, certain underwriters were asked by regulators not to tap unused quotas for selling bonds or asset-backed securities for developers that have been aggressive in bidding for land. Coincid

33、entally, we note a few names have not been issuing in onshore bond markets since 5 June 2019 (see Table 15), whereby HY property names that are still issuing after 5 June include Beijing Capital Land, China Aoyuan, China South City, China SCE Group, Central China Real Estate, Country Garden, Fantasi

34、a, Greentown, Logan Property, Modern Land, Powerlong, Road King, Ronshine, Shimao, Times China, Xinhu Zhongbao and Zhenro Properties (see Appendix for individual China property HY names onshore bond issuance in year-to-date 2019).Nonetheless, gross issuance activity has been muted, whereby monthly n

35、et issuance for China property names with offshore bond market presence dipped into negative trajectory in recent months (see Figure 16 and 17).Select names turned quiet in onshore bond market issuance in2019CompanyNoteAgile Group, CIFI, KWG Group,SunacChinaNo onshore bond issuance in 2019 Gemdale,

36、Risesun Real Estate,SeazenHoldingsNo onshore bond issuance since Mar 2019 Yango Group,YuzhouPropertiesNo onshore bond issuance since Apr 2019 Guangzhou R&F, Hengda Real Estate(ChinaEvergrande)No onshore bond issuance since May2019Source: Companies, Wind, HSBCOnshore China property bondissuance peake

37、d in2016RMBbnRMBbn1Q152Q151Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q181Q192Q193Q194Q19eMonthly net issuance of China property bonds dipped into negativetrajectory3020RMBbn10RMBbn0-10Mar-17 Mar-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 Jul-19 Sep-19

38、Nov-19OnshorebondissuesforChinapropertynameswithoffshoreHY USD bond marketpresenseNet issuance of onshore CNY bonds by China developers withoffshore HY market presenceSource:Wind,HSBCSource: Wind,HSBCPut ratios of China property bonds normalising to 2017 levels wrongorder80%70%60%50%40%30%20%10%3Q17

39、4Q171Q182Q183Q184Q181Q192Q193Q194Q193Q174Q171Q182Q183Q184Q181Q192Q193Q194Q19Onshore bond maturity profile for China property developers with offshore HY presence peak of maturity in2021USDm-equivalentUSDm-equivalent202020212022202320242025202602020202120222023202420252026Onshorepropertybondsputratio

40、fornameswithoffshore HY bond marketpresenceOnshore bonds maturitySource:Wind,HSBCSource: Wind,HSBCOn the other hand, we draw comfort from put ratios (i.e. early redemption of bonds upon holders exercise of put options) of China property bonds normalising to the 20-25% level seen in 2017 as opposed t

41、o 65% in 2Q18 (see Figure 18). We also draw comfort from the onshore bond maturity profile for China property developers with offshore bond market presence being reasonably lengthened (see Figure 19). Assuming 25% of put-able bonds get early redeemed, we are looking at onshore bond refinancing requi

42、rements of RMB203bn (USD29bn) in 2020e, taking into account RMB169bn (USD24bn) of bond maturities and RMB133bn (USD19bn) of bond puts. Please refer to the Appendix for bond maturity/ put requirements in 2020e by name.Theme 3: Continuous buying from Hong Kong corporates for Treasury management Accord

43、ing to annual reports and public filings to the Stock Exchange of Hong Kong, we note a number of Hong Kong-based listed corporates are actively involved in China property USD HY bond investments, with ten listed Hong Kong landlords/ conglomerates holding USD5.5bn worth of China property HY bonds, pe

44、r our estimate using publicly available information (see Table 20). We note these Hong Kong corporates, via private banks, are the stabilising force in the China property HY bond market, as they are not subject to selling/ buying pressures as a result of fund outflows/ inflows, contrary to fixed inc

45、ome fund managers. Corporates are well proven to be “strong hands” of these bonds over the years, given their ability to hold these instruments through bond price volatility.Various mid-tier listed Hong Kong landlords are active China property bondinvestorsCompanyTickerSize of China property bondUSD

46、/ HKD Bond issuer itselfNames in bond portfolio*portfolio (USDm)(Y/N)Asia Standard (1)129.HK1,717YEVERRE, FTHDGR, KAISAG, MINGFA, MOLAND,RONXINKingboard Holdings (2)148.HK1,198NCOGARD, GZRFPR, KWGPROChinese Estates127.HK1,178NEVERRE, KAISAG, ZHLGHDS E A Holdings251.HK578YEVERREChuangs Consortium (3)

47、367.HK303NAGILE, COGARD, EVERRE, GRNLGR, GZRFPR,HPDLF, KAISAG, KWGPRO, LOGPH, MINGFA,TPHL, YLLGSPCSI Properties497.HK208YAGILE, COARD, EVERRE, GRNCH, KAISAGLifestyle International1212.HK184Y/C C Land1224.HK64YEVERREEmperor International (4)163.HK58Y/Wang On Group (5)1222.HK50NCSCHCN, REDPRO, ZHLGHD5

48、,538* Non-exclusive (1) Including Asia Orient (214.HK) and Asia Standard Hotel (292.HK) (2) Including Kingboard Chemicals (1888.HK) (3) Including Chuangs China (298.HK)(4) Including Emperor E Hotel (296.HK) (5) Including Wang On Property (1243.HK) and Wai Yuen Tong (897.HK)(4) Including Emperor E Ho

49、tel (296.HK) (5) Including Wang On Property (1243.HK) and Wai Yuen Tong (897.HK)Source: Companies, HSBCGiven more than 90% of China property USD HY bonds are in Asian regional investors hands, taking cue from primary bond transaction distribution statistics, this particular asset class is less subje

50、ct to exogenous volatility, in our view (see Figure 21 and 22). Specifically, China property HY bonds outperformed Asian HY corporate peers (see Figure 23) throughout the course of 2019; Figure 24 shows cumulative total return of China property USD HY bonds since 2006, using Markit iBoxx USD Asia ex

51、-Japan China Real Estate High Yield Index (i.e. up 260% since end-2005, with annualised return of 7% since end-2005 or 8% since end-2014).HY 22. key100%100%80%80%60%60%40%40%20%20%0%2011 2012 2013 2014 2015 2016 2017 2018 20190%2011 2012 2013 2014 2015 2016 2017 2018 2019AsiaEuropeUSNote:Primarydist

52、ributionstatisticsofChinapropertyUSDHYbonds Source: Bloomberg,HSBCPBsFM/AMBanksOthersNote: Primary distribution statistics of China property USD HY bonds Source: Bloomberg, HSBC23. China property HY outperformed Asian peers in 2019115112109106103100Dec-18 Feb-19Apr-19Jun-19Aug-19Oct-19HY Global fina

53、ncial crisisEuropean sovereign debt crisisGlobal financial crisisEuropean sovereign debt crisisKaisa defaultsUSD bondsChina onshore debt de-leveraging2006200720062007200820092010201120122013201420152016201720182019ChinapropertyHYAsiancorporateHY Markit iBoxx USD Asia ex-Japan China Real EstateTRINot

54、e: Total return index re-based to 100 as of end December 2018ChinapropertyHY:MarkitiBoxxUSDAsiaex-JapanChinaRealEstateHYIndex Asian corporate HY: Markit iBoxx USD Asia ex-Japan corporate HY Index Source: Markit,HSBC* Capital gains plus interest accruals; 100 as of end December 2005.Note: Markit iBox

55、x USD Asia ex-Japan China Real Estate HY Total Return Index Source: Markit, HSBCTheme 4: Foreign currency debt exposure manageable despite currency volatility Mainland China property developers foreign currency debt exposure has been on the rise (see Figure 25), but we believe it is manageable. Offs

56、hore debt (mainly HKD and USD) should account for slightly more than 30% of their total debt as of FY2019e, per our estimate (see Figure 26), and is lower than the levels seen in 2013-14. We would argue the foreign currency asset and liability mismatch is not as significant, given developers have be

57、en building up their offshore asset base in the last few years, mainly via investment in Hong Kong and US property markets. We also note mainland China property developers offshore bond maturity is reasonably well stretched, with a peak of USD bond maturity in 2021 (see Figure 27). Figure 28 shows t

58、he debt mix of mainland China property developers with offshore bond market presence in 2019e, with 70/30 mix between onshore/ offshore debt.Significance of offshore debt onthe rise for China propertydevelopers35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%2H16 1H17 2H17 1H18 2H18 1H19 2H19eOffshore debt % t

59、otal debtNote: For China property developers with offshore bond market presence Source: Companies, HSBC estimatesYet, foreign currency debt exposure is still lower than levels seen in2013-1440.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%2013 2014 2015 2016 2017 2018 2019eOffshore debt % total debtNote:

60、For China property developers with offshore bond market presence Source: Companies, HSBC estimatesPeak of China property HY USD maturity in2021Debt mix of China property developers with offshore bond marketpresenceUSDmUSDm0bonds 20%loans 11%Onshore perpetuals 1%Onshore bank loans and trusts 53%2020