Thursday, August 9, 2012

Busy Building Synthetic China REIT CDO's on the Shanghai and Shenzhen Stock Exchanges

Below is a recent article about the Shanghai and Shenzhen markets—where pledging equity in exchange for loans is HOT!

I suspect I’m one of the few outside the investment banking and ISDA crowd who’s figured out….this is exactly how they constructed the US housing short back in 2005-08!  What kinda made me laugh was when I saw that one of the board of directors of Enron is Chairman of one of these property companies (When I draw out the capital flows, entities, name changes, and downright fraud in the financials you'll understand why they brought in the experts!.....more on that good stuff later).


58 Housing prices listed pledged 116 million shares of developers robbing Peter to pay Paul

Analysts pointed out that the largest shareholder of the listed room rate recently pledged equity in exchange for financing the action-intensive, or put an "invisible shackles for the enterprise"   Recently, the property market bottoming out sound from spreading. For most of the listed room rate, double high inventory and liabilities is still a troublesome issue, part of the housing prices the situation is still not optimistic.   June 20, the number of listed companies intensive announcement, said the pledge of the equity in exchange for funds. In fact, since the beginning of this year, the Shanghai and Shenzhen capital market financing action extremely frequent. The statistics show that from early 2012 to June 21, Correspondent deadlines, Shanghai and Shenzhen, a total of 58 Housing prices listed release the company's largest shareholder pledged equity in exchange for the funding announcement, shares in about 11.6 billion shares.   Housing prices listed rely on this method the financing of the action surge, this 'robbing Peter to pay Paul' capital operation will bring a lot of hidden risks to the enterprise. "A trust company veteran, told reporters. Accept the pledge party more than a trust company  , according to statistics Up to now, the 58 A-share listed room rate pledge shares of approximately 11.6 billion shares, pledge of shares per 132 million shares. In addition, in recent weeks, the Sunshine City, the development of the Kaaba, and shares in Hong three Housing prices listed on the pledge of equity of more than 443 million shares.   June 20, Sunshine City, said the company recently received the notice of the shareholders of Fujian Sunshine Group, East Fang Xinlong, Kang Tian, ​​Fujian Industrial, East Fangxin Long and the Sunshine Group held a total of 32.6 million outstanding shares of some of this moratorium The shares pledged to Jiangxi International Trust Co., Ltd., Hong Tian Co., will they hold 5800 shares of Sunshine City pledged to the CITIC Bank Co., Ltd. Fuzhou Branch, pledged reasons are financing.   In addition, the three shareholders of the Sunshine City in the first quarter of this year, on six occasions pledged to the trust company and bank a total of about 114 million shares. At this point, the Sunshine City shareholders have already pledged 209 million shares of equity.   It is worth mentioning is that the proportion of foreign pledge of the shareholders of the above listed room rate is soaring, even many well-known housing prices.Among them, the family home, Guangyu Group and Shida Group foreign pledge the equity ratio reached 100%. Emori, Development, Asia Standard construction, Wan Chak shares, Shimao shares, the largest shareholder of the housing prices will be held by the equity of listed companies, the proportion of foreign pledge in more than 99%.   The recipient of the above listed room rate shareholders pledged shares worth scrutiny. Reporters learned that, according to statistics 175 pen equity pledge, net of unearned marked a clear 6 pen, the identity of the pledgee to about 50 banks, the remaining nearly 120 mostly as a trust company, a handful of private investment institutions.   It seems that the equity pledge to accept the party identity, trust companies and private investment institutions accounted for more than 70% of the banks, including retail banking, accounted for, but less than 3%. Enterprise survival and put the "invisible shackles  "for the listed room rate, the largest shareholder pledged equity financing is a very fast financing channels, some previous cooperation of enterprises, the day can get the funds, which ' rice on 'Housing prices, no doubt saving grain. After all, even if the property market to pick up that also developers live in order to enjoy the welfare of this heater. "of the trust company veteran the case, said the reporter.   The source further pointed out that fact, many small and medium-sized enterprises listed room has equity pledge spare no effort to frequently used as its main financing quick detour. Such as the new lake treasure Manzawa shares. According to statistics, this year, the new lake - the largest shareholder has pledged stake 21, the cumulative pledged shares of listed companies a total of 1.58 billion shares, the industry as a live sample rely on pawn financing.   

In this regard, the senior official said, after all, rely on the pledge by way of equity financing, the cost is relatively low, some of the annual cost is even less than 11%, This is also listed company has not yet entered the stock market of small and medium-sized room prices 'live' was a long time reasons. But frequently move the Tang capital, to the listed room rate, there are a lot of worries.  In fact, more than a trust company senior also told this reporter that the trust company to become equity shareholders of the listed room rate pledge disk access, the problems will surface.This year, the trust itself to usher in the payment of the peak of more intensive pledged equity in the room rate. Recently, the results of the Beijing China real estate industry due to inability to pay 1 billion real estate investment trust, once a debt restructuring is a precedent Moreover, this is just the tip of the iceberg.   Veteran of the above trust company admitted to reporters that the developers "robbing Peter to pay Paul" to temporarily keep their own yard. Equity Pledge frequent, large shareholders may be restricted, and even change the shareholder unrest. From this perspective, part of the Housing Enterprise's project development process and the business of operating rhythm may be greatly affected, and even some of the items held in abeyance risk, which undoubtedly is particularly important for the development of rhythm in the room rate is a very big risks, even on the part of the Housing Enterprise, that is, their survival put the "invisible shackles. In this regard, experts warn investors Keep your eyes open. Keywords: Housing prices listed developers

No comments:

Post a Comment