Xuhui moves further towards the shore

Author | Cao Anxun

Editor | Zhou Zhiyu

A month after announcing the third edition of the overseas debt restructuring plan, Sunac has achieved phased results.

On May 27, Sunac announced that it has made further progress with the coordinating committee holding about 59% of the principal amount of the overseas debt, and both parties have agreed to move to the next stage, including negotiations and signing a legally binding agreement.

Sunac stated that the support of the syndicate coordinating committee is another major milestone for the company in seeking a comprehensive solution to its overseas debt. The company will continue to work with the coordinating committee, the bondholder group, and their advisors to agree on detailed arrangements for the comprehensive proposal.

In addition to the main terms mentioned in the comprehensive proposal, Sunac will also seek to include RMB-denominated loan options to accommodate the different needs of overseas lenders.

Furthermore, the long-term loan options in the comprehensive proposal, combined with the financing support obtained by Sunac through the "real estate project whitelist" mechanism, are expected to further reduce Sunac's overall financial costs in the future.

The capital market is eagerly awaiting the new progress in Sunac's overseas debt restructuring. On May 27, Sunac's stock price rose by 3.61%.

Sunac's progress in overseas debt restructuring is positive. Sunac announced a proposal for negotiations with creditors on April 29, offering 6 options to creditors, including principal reduction, issuance of new notes, and debt-to-equity swaps, aiming to reduce overseas debt by approximately $3.3 billion to $4 billion, accounting for half of Sunac's overseas debt.

Yi Ju Research Institute's research director Yan Yuejin stated that Sunac's diverse debt disposal methods also demonstrate a thorough consideration of creditors' market preferences and demands, providing very good guidance.

As a representative of proactive self-rescue in the real estate sector, Sunac has been active this year, advancing debt restructuring while completing two domestic bond extensions totaling approximately RMB 2.448 billion by 2024. Progress has been made in overseas debt restructuring, and efforts are being made to improve operations and ensure delivery. In the first four months, Sunac completed the delivery of 16,000 new homes.

Currently, Sunac has obtained financing support for 29 projects on the "whitelist." Among them, Wuhu Lujin Impression added RMB 150 million in financing, and the Beijing Guoxiang Yunzhu project, which had previously received replacement financing, obtained an additional RMB 50 million in financing.

Sunac's debt restructuring coincides with the emergence of an epic new real estate policy. On the same day Sunac announced progress in overseas debt restructuring, Shanghai released new real estate policies, relaxing purchase restrictions and further reducing mortgage costs.

Including Sunac, real estate companies heavily invested in first and second-tier cities are seeing more signs of recovery.

CITIC Securities pointed out that in the current market environment, they are more optimistic about the investment value of real estate companies focusing on core cities. These companies have been deeply cultivating first and second-tier cities for many years, possess high-quality land resources and project reserves, strong product capabilities, and maintain good interactive relationships with local governments. With the recovery of market demand and improvement in policy environment, these companies are expected to benefit first.

Zhang Dawei, Chief Analyst at Zhongyuan Real Estate, stated that the government's determination to promote the real estate industry and economic recovery has exceeded expectations. The continuous release of new real estate policies is boosting market confidence, and overall, the outlook for the real estate market can be more optimistic In the future, with the implementation of new policies and the active promotion of financing coordination mechanisms, the path for real estate companies to issue bonds is expected to become smoother. The day when Sunac China completes the restructuring of its overseas debt is not too far away