Funding costs from high to low are generally: common stock, retained earnings, preferred stock, bond issuance, and long-term borrowing.

So foreign companies will raise funds in the order you said.

However, due to insufficient securities supervision in China, the capital cost of issuing stocks is very low, so everyone is rushing to issue stocks to raise funds. Even many companies listed overseas want to return to Shanghai and Shenzhen for listing.

Overseas funds are flooding, and there is no minimum financing cost, only lower font sizes. There are 2 comments on December 08, 2012 at 01:17. Source: China Business News. Author: Long Fei Correction | Favorites. I would like to recommend forwarding this article to: Forward to Hexun Weibo

Blog forwarded to Sina Weibo forwarded to Sohu Weibo forwarded to Tencent Weibo forwarded to QQ Zone forwarded to Renren forwarded to Douban forwarded to mobile phone network The overseas financing wave of real estate companies that started in mid-September is getting more and more intense.

trend.

In November, statistics from monitoring agencies showed that there were more than 27.3 billion yuan of overseas financing for real estate companies in China, which is rare in recent years.

Why are international capital markets so optimistic about domestic real estate?

How big of a storm will this huge amount of overseas capital cause in the real estate industry?

The unlimited use of overseas low-interest bonds is a strong signal that the international capital market is optimistic about China's future economic development.

On December 4, Shui On Real Estate announced that its wholly-owned subsidiary plans to issue senior permanent capital securities with a total principal amount of US$500 million.

On December 3, it entered into relevant subscription agreements with Deutsche Bank, J.P. Morgan, Standard Chartered Bank and UBS.

The security is callable in 2017, and the annual interest rate during the non-callable period is 10.125%.

The purpose of the financing includes: capital expenditure related to the Group's real estate business, as well as the acquisition, development, construction or enhancement of assets, land property or non-land property, or to fund the acquisition of equipment, or to repay existing debt.

Obviously, Ruian can use this fund freely, and there are no more restrictions on the capital side.

"With this capital, Shui On can once again leverage large projects worth over 10 billion yuan." Liu Siyu, chairman of Guangdong Xinyu Real Estate, expressed envy. For many domestic developers who suffer from no financing channels overseas, Shui On's

Financing plans are undoubtedly very tempting.

Due to the strict control on real estate financing in China, developers' financing channels have been repeatedly reduced. "Even if they obtain financial support from banks or trusts, they can only use the funds for their own purposes." Liu Siyu said.

"China Business News (Blog, Weibo)" reporter learned from relevant bank personnel that since 2009, developers' loans have been strictly prohibited from being used for land payment, and development loans are also strictly restricted to be used within projects.

The same is true for real estate trusts that have been "forced" to develop in recent years.

We can no longer expect to use domestic loans from project A for the rolling development of project B as we did in the early years. There is almost no room for developers to maneuver.

"Obviously, Ruian's financing is very competitive. When the market is good, it can be used for large-scale expansion. When the market is bad, it can be used to repay debts." Liu Siyu said.

If Ruian's loan has made domestic developers jealous, the notes issued by China Overseas Real Estate on November 15 are even more frustrating.

On that day, China Shipping announced that it would issue US$1 billion of guaranteed notes, including US$700 million of notes with a 10-year coupon of 3.95% and US$300 million of notes with a 20-year coupon of 5.35%.

Moreover, this low-interest bond is very popular in the capital market. As early as a week before China Shipping announced its issuance, there was news in the market that the note was overbought 12 times.

It is reported that China Shipping intends to use this to issue bonds and refinance for the development of real estate projects.

As for the high-yield Chinese real estate dollar senior notes, the coupon rate has also hit a new low.

Before November this year, coupons below 6% had never been successfully issued.

Just two weeks before China Overseas Real Estate issued bonds, SOHO China also successfully issued two senior notes totaling US$1 billion, including US$600 million of notes due in 2017 with a coupon of 5.75%; US$400 million

The note matures in 2022 and carries an annual interest rate of 7.125%.

SOHO China Chairman Pan Shiyi said at the time that this was a strong signal that the international capital market was optimistic about China's future economic development.

He revealed that SOHO China's psychological price for the annual interest rate of the five-year senior notes was 6.75%, but due to the enthusiastic subscription of US$6 billion, the final coupon rate was set below 6%.

In fact, on October 11 this year, Longfor Real Estate issued a US$400 million 7-year note with an annual interest rate of 6.875%.

Based on past experience in bond issuance by mainland property stocks, in order to attract international investors, the coupon rate must be set between 10% and 14%.

Therefore, at that time, Longfor’s bonds were exclaimed as “low interest rates” by mainland real estate companies.

Unexpectedly, "there is no minimum, only lower." Just one month later, China Shipping's guaranteed coupon dropped to less than 4%.

International capital pursues domestic real estate companies and obtained large amounts of overseas financing in November.

Among them, the amount of overseas financing reached 27.884 billion yuan, accounting for 73.5%.

"This shows that these mainland property stocks are very popular with investors." Oscar, a private equity fund manager who once served in an international investment bank, said that the only explanation for the repeated decline in interest rates is that there is huge demand, and the international capital market is enthusiastic about mainland property stocks.