AlwaysFree: China Property Developers Rush To Raise Funds After Shares Jump

• Agile joins Country Garden in selling shares after rally
• Government is taking steps to bolster the troubled sector

According to Bloomberg’s article published on November 16, 2022, Agile Group Holdings Ltd. became the second Chinese property developer in as many days to announce capital raising plans as investors piled into the industry’s shares.

Agile is selling stock at an 18% discount to raise HK$783 million ($100 million) via a top-up placement. Some of the proceeds will be used to repay debt, it said. Country Garden Holdings Co. on Tuesday said it will raise HK$3.9 billion.

Developers are capitalizing on a rally in their shares after authorities took steps to ease a credit crunch in the industry and speculation grew the country will relax its Covid policies. A Bloomberg Intelligence equities gauge of Chinese builders has soared 60% this month through Tuesday, with Agile more than doubling.

Authorities have sought to defuse the property crisis with a raft of measures in the past few months, including cutting interest rates, urging major banks to extend 1 trillion yuan ($140 billion) of financing in the final months of the year, and offering special loans through policy banks to ensure property projects are delivered.

“The slew of easing measures in the real estate sector announced by the Chinese government last week, which was seen as a positive move by the market, presented a timely window for real estate companies to raise funds,” said Victoria Lloyd, a partner in Baker McKenzie’s capital markets practice in Hong Kong.

Agile is selling 295 million shares at HK$2.68 each, according to an exchange filing Wednesday. Its shares traded at a record low HK$1.49 at the end of last month. The stock was down 17% to HK$2.70 at 9:57 a.m. local time.

An Agile dollar bond due 2025 gained 2 cents to 41.5 cents.

China’s home prices fell the most in seven years in October, underscoring the depths of the downturn that prompted policy makers to bail out the sector. New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.37% last month from September, a 14th straight decline, National Bureau of Statistics figures showed Wednesday. The existing-home market fared worse, down 0.47%, the steepest decline since 2014.

Before the rescue, China’s offshore property notes plummeted to record lows as defaults mounted to unprecedented levels. The rout had its roots in a crackdown that started in 2020 on excessive leverage at developers as well as speculation among homebuyers, and was worsened by Covid restrictions that exacerbated a slump in housing sales.

Agile, which develops villa apartments and high-rise homes set amid landscaped gardens, was among builders that met with one of China’s key bond-market regulators earlier this month about offering support to domestic note sales, the official Securities Times reported.

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