(Yicai) Jan. 3 -- China’s property developers, especially private firms, are facing mounting debt repayment pressures after financing became tougher over the past three years, with more debt scheduled to mature. 

Total new financing at 80 representative builders shrank 28 percent to CNY569.2 billion (USD80.3 billion) last year from 2022, according to data from property insights platform China Real Estate Information. In the quarter ended Dec. 31, new financing slumped 53 percent year on year. 

The figure has fallen for third straight years, with annual declines of 24 percent and 34 percent in 2021 and 2022, respectively. 

Banks have mainly targeted credit at state-owned developers, Yu Xiaoyu, research director at property think tank Yihan, told Yicai, adding that it is difficult for private builders to secure credit, and even if they can, the amount is usually small.

Bond issuance has also not been entirely effective lately in easing the liquidity squeeze and slow sales at developers because the scope of issuers and the scale of funds raised are limited, Yu said.

Last year, developers borrowed the least in five years through bond sales, down more than 30 percent from a 2020 peak, Yu said, adding that private firms made up less than 10 percent of the total. In addition, investors have little confidence in builders, damping down their interest in subscribing to bond sales, he said.

Equity financing is a tough avenue too as it usually takes a longer time and has a low success rate in getting regulatory approval, Yu said. More than 30 property firms set out private placement plans last year, but only three came to conclusion.

A source at a big private developer in good financial standing told Yicai that although his company was able to issue bonds the proceeds were insufficient. The status quo will not change if financial institutions do not take more substantive action, the person added.

With more debt coming due this year, market insiders are concerned about the chances of survival for many of the industry’s players.

This year’s maturing debt total is much bigger than in 2023, Yu said. Given the financing environment and sluggish property sales, some of last year’s defaulters may also fail to repay debt in 2024, Yu said. 

China’s property developers have CNY737.3 billion of offshore and onshore bonds falling due this year, an 11 percent increase on 2023, according to a report by Fitch Ratings. The repayment pressure will be highest in March and August.

Editors: Tang Shihua, Emmi Laine