China property Kungfu bonds may see a technical rebound in April and May before seeing more maturities coming in July. While there are more single B bond maturities in April, the maturities for BB and C categories are on the low side. Maturities would increase in 3Q with more bonds maturing in all rating categories.
Refinancing needs of IG issuers remains nominal The refinancing needs of investment-grade developers are nominal for the rest of 2022, amounting to less than $3 billion at five firms. Investment-grade developers are mostly owned by SOEs and have better access to onshore funding and bank loans, with the exception of Country Garden. Non-state-owned Country Garden will have higher refinancing needs and account for 28% of the total, or around $700 million. The peak quarter for maturity will be in July, with more than $1.1 billion of bonds coming due. The investment grade category only has bonds maturing in April, July and November.
IG-rated bonds due in 2022
Source: Bloomberg Intelligence
BB property bonds have low refinancing pressure until June BB rated bonds may face less pressure to issue Kungfu bonds in 2022 although slightly more maturities come along in June and July. The total maturing amount for the rating category is only slightly higher than their investment-grade counterparts. A reduction in BB bonds, which is the result of various downgrades, could also be a key reason for the lower refinancing pressure in the category. Dalian Wanda may face higher refinancing pressure as it has more than $1.3 billion of bonds coming for the rest of 2022. Other BB bonds don't face meaningful refinancing needs. Road King doesn't have any Kungfu bonds maturing until 2023.
BB rated bonds due in 2022
B rated bonds to face lower pressure before maturities in August B rated developers may face lower refinancing pressure in the next couple of months before seeing more maturities in August. While there are more single B bond maturities in April, the amount would fall to below $1 billion per month in May to July. Around $2 billion of bonds maturing in August and $1.1 billion in September would represent the peak for this year. If we take away SOE-related developers like Greenland and China South City, the amount to be refinanced would fall by 30% to less than $6 billion. Greenland has the most maturing bonds, accounting for over 20% of the total for the rest of the year. China South City's partial SOE-ownership would ease some refinancing pressure.
B rated bonds due in 2022
C rated bonds to have low maturities except July, August C rated bonds are facing low maturities except for the months of July and August. Maturities in April are nominal while maturities for September and November are below $500 million. There are no bonds maturing in December. Major maturities come from Guangzhou R&F, Shimao, and Sunac, which together account for 65% of the total. Guangzhou R&F has the highest maturities, accounting for close to a quarter of the total, followed by Shimao's 19% and Sunac's 23%.
C rated bonds due in 2022
