Buying corporate bonds out of their own pockets


Since entering March, most real estate companies’ stock prices and bond prices staged a “roller coaster” market, from “a green” to “turn red”, investors also followed the pinch.In the real estate market as a whole lack of confidence at present, some large housing enterprises also began to take the initiative to “protect”.As of March 25, executives of a number of real estate companies, including Country Garden, New City and Xuhui, purchased corporate bonds themselves in the bond market. Their increased holdings convey confidence to the outside world and also contribute to the stability of the bond market.In March, executives of several real estate companies bought corporate bonds themselves in the market.Country Garden, the top selling player, was the first to take action to protect the bond market.On March 17, Country Garden announced that mo Bin, director of the company, and Wang Zengrui, supervisor, planned to buy up to 20 million yuan of corporate bonds.On March 23, Country Garden expanded its senior management team to include all directors, supervisors and senior managers, with the purchase size not exceeding 100 million yuan (including the previous 20 million yuan).Following country Garden, New City Holdings announced on March 18 that liang Zhicheng, director and president, Qu Dejun, director and co-president, Guan Youdong, chief financial officer, and Chen Peng, secretary of the board of directors planned to purchase corporate bonds in the secondary market of up to 20 million yuan from March 21 to June 20.Another private housing enterprise Xu Hui also joined the action.On March 21, Xuhui Holdings announced that the company’s directors Chen Dongbiao and Yang Xin plan to purchase the company’s bonds with a total size of no more than 30 million yuan, and the purchase time will be after the 2021 annual results announcement.That is to say, in the 5 days before and after, according to the upper limit of the amount of calculation, the three leading private housing enterprises will reach the maximum amount of 150 million yuan.Real estate executives in the secondary market at the market price from the purchase of bonds, is also its active buyback, increase their own shares, in the bond market launched a new round of action.Bai Wenxi, chief economist of IPG China, analyzed, “The executives’ self-purchase of bonds is to boost investor confidence and successfully complete the bond issuance task, which can provide necessary support and credit for corporate financing.Corporate bonds are issued for financing. Buying corporate bonds through executives is equivalent to lending money to the company, which shows that the company is optimistic about the future and has confidence in the company, which is conducive to the completion of the task of corporate bond issuance.”From the information disclosed in the announcement, the senior management’s self-purchase of bonds is aimed at “the corporate bonds whose market quotation deviates from the valuation greatly”, that is to say, the senior management will also “catch the bottom” at the appropriate time.Compared with the purpose of “bottom hunting”, Bai Wenxi also stressed that the purpose of the high management’s self-purchase of bonds is mainly to convey confidence to the outside world:”Even if Dong Buys his own company’s existing bonds, it is also a sign of confidence in his own company, which is conducive to boosting market confidence and stabilizing bond prices. While alleviating investor pressure, It is also conducive to maintaining the company’s stock price and facilitating the company’s subsequent financing.”In fact, three large private real estate enterprises in a concentrated time to make similar action, its behind is also closely related to the volatility of the real estate bond market.Take Country Garden as an example. On March 11, before the action was launched, country Garden suffered a wave of “double killing of stocks and bonds”, especially the continuous collapse of the price of existing bonds.Not only Country Garden, on March 14 and 15, real estate stocks plunged for two consecutive trading days, among which, the stock prices of Jinke Stock, New City Holdings, China Merchants Shekou, Binjiang Group, Gemdale Group, Poly Development and other real estate stocks and many bond prices fell sharply.”If we turn back the clock to the first half of last week, we can see that most of the real estate companies’ bond prices have irrationally deviated,” Yang Xin, CHIEF financial officer of Sunbright Holdings, said at the earnings call on March 24.We also noticed that in fact, this round of bond volatility is not only derived from the fundamentals of the enterprise itself or the industry, but also accompanied by the spread of some false information.””There was some false news in the beginning and then institutions realised gains by shorting overseas.We have also seen individuals spread false information in groups of hundreds of people in a very covert way.”Yang said.To prevent and defuse risks in the real estate market, on March 16, according to Xinhua News Agency, the Financial Stability and Development Committee of The State Council held a special meeting in the afternoon to study the current economic situation and capital market problems.The meeting pointed out that real estate enterprises should timely study and put forward strong and effective risk prevention and mitigation plans, and put forward supporting measures for the transformation to a new development model.In addition to the Financial Stability and Development Committee of The State Council, the People’s Bank of China, the Banking and Insurance Regulatory Commission, the Securities Regulatory Commission and the State Administration of Foreign Exchange also made simultaneous statements on March 16 to prevent and defuse risks in the real estate market, actively promote the transformation of the development mode of the real estate industry, and promote the virtuous cycle and healthy development of the real estate industry.In the above good news after the stack, the housing enterprise stock market and bond market to usher in a rebound after the gradual transition to a stable.In this connection, Yang Xin also felt deeply: “After the six ministries and commissions spoke out, the overall bond price gradually returned to rational, the reason for this is not only the immediate decision of the regulatory layer, but also the major shareholders and management of housing enterprises to take the initiative to buy back.Through a series of actions, we hope the trend of domestic and overseas bonds will be more reasonable and rational, rather than disturbed by a few false words.”In the view of the industry, in the real estate industry confidence repair of the critical period, the leading real estate company executives to buy back bonds signal more than the actual significance, will also help the steady development of the real estate bond market.Beijing News reporter Xu Qian edited by Yang Juanjuan proofread by Zhao Lin

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