Another well-known real estate company has a thunderstorm!

Another well-known real estate company has a thunderstorm!

As a local real estate giant and leading real estate company in Henan Province, Jianye Real Estate (0832.HK), a listed company in the real estate sector of Jianye Group, recently announced that it would suspend payment to all overseas creditors if it failed to pay interest on 7.75% senior notes due in 2024 before the end of the grace period;

Jianye Real Estate defaults for the first time! On the evening of June

23, Jianye Real Estate issued an insider announcement that the market situation continued to deteriorate and the payment of overseas debts was completely stopped. The announcement showed that since July 1, 2021, Jianye Real Estate has paid about $1.26 billion in principal and interest to overseas creditors, of which about $930 million in principal and $330 million in interest; The main reason for the default thunderstorm

of Jianye Real Estate is that the downturn of the whole real estate industry and the obstruction of housing sales lead to the exhaustion of liquidity, which eventually breaks the capital chain and triggers the debt default thunderstorm!

However, there is another reason, that is, the Federal Reserve continues to raise interest rates to loot the foreign debt of domestic real estate enterprises; in other words, China continues to cut interest rates and the RMB continues to depreciate!

Because Jianye Real Estate borrowed US dollars from creditors at the beginning (2021), and the interest rate of RMB deposits at that time was much higher than it is now, the RMB exchange rate remained around 6.2-6.3. Looking at the current RMB exchange rate, it has fallen below the 7.24 mark on June 26, the lowest level since November last year; The continuous interest rate increase of the US dollar has aggravated the foreign debt burden of real estate enterprises!

Many people may still not understand!

For example, if a domestic real estate company borrows US $1 billion in foreign debt (contract RMB 6.3 billion) at the low exchange rate of RMB 6.3 from 2020 to 2022, it will invest in domestic real estate development; Today, in 2023, under the background of the domestic economic downturn and the bleak real estate market, if the government strictly controls the price and does not allow the housing enterprises to reduce the price of new houses, while people's employment prospects are not good and their income continues to decline, it will inevitably lead to serious unsalability of new houses built by developers, and the cash flow return will be blocked, which will lead to the breakdown of funds and the failure to pay the foreign debt due; In addition, in 2023, the current RMB exchange rate has depreciated to 7.2. When the US dollar foreign debt of real estate enterprises expires, they still need to repay the US $1 billion foreign debt borrowed at the beginning, but the cash flow of RMB is recovered after the real estate enterprises sell their houses. According to the current exchange rate of 7.2, they need RMB 7.2 billion to convert the US $1 billion foreign debt. This is nearly 1 billion yuan more than 6.3 billion yuan converted from the original loan of $10,

which is even worse for the real estate enterprises that are already in the downward trend of the industry!

That is to say, even if there is no epidemic in the past two years and the real estate market is not depressed, the RMB exchange rate has risen sharply and the depreciation of the RMB has accelerated. As long as the domestic real estate enterprises borrow US dollar foreign debt, their operating profits will be greatly discounted after the debt matures! The risk of thunderstorm in housing enterprises will naturally be very great!

This is the secret of the US dollar's constant interest rate hikes in domestic real estate!