Trust Industry Treads Water in April; Real Estate Credit Crunch Underway; Shandong Firm Auctions Assets to Repay "Apocalypse" Trust

Flat growth in the trust industry is contractionary from the late 2013 peak. If credit elsewhere picks up it can offset the decline, but it also needs to flow to the borrowers served by the trust market. Evidence from prior months points to a more generalized slowdown in credit growth, to say nothing of the real estate sector that is in full blown contraction. The case in the news today is of a Shandong firm auctioning assets, having begun the asset sale process more than a year ago and under suspicion of embezzling funds overseas.

Data and charts from 金牛理财. Bars showed fund raising and lines the number of products.

Newly issued trusts in April raised only about 47% as much capital as in March, with the total number of trusts issued also down. For those worried about ponzi financing, note the drop in real estate trusts (the bottom darker blue section on the bars) and remember that May is a huge month for real estate trusts coming due. There is nowhere near enough capital coming into the market to replace the maturing trusts, with ￥120 billion coming due in May alone (20% of the total), but real estate trusts raised only about one-tenth of that in April. If the borrowers need to roll their debts, credit will have to come from different channels. Without credit, the selling pressure on the real estate market will intensify.

Fundraising was a bit better for newly established trusts:

The strength in fundraising was entirely due to growth in products with maturities of 1-year or less than 1-year.

Here's the average yield and average maturity for the trust market:

Here are the different trusts by use of funds. The big growth in the "other" category is concerning.

The trust industry looks relatively healthy from the view of total assets gathered, but the numbers are not positive for the overall credit market and not good at all for the real estate market.

Defaults and forced assets sales are already underway. The case below from Shandong has misappropriation of funds as part of the story, with CITIC already having auctioned off a number of assets last year in order to extricate itself from the situation.

Shandong Real Estate Firm Auctions Off Assets (千亿地产信托兑付洪峰5月来袭 一山东房企上拍卖席)

Qingdao Real Estate Trust Crisis Feeling (青岛地产信托5月危情 中航信托或已脱身)

舒斯贝尔 Shieldspeare Group in the firm in question.

Text from the Auction article:

If nothing else, at 10:00 on May 7, the assets Shusibeier Department will once again embark on the "Auction seats", it's another piece of land use rights, the judicial auction.

Jiangxi Huitong Auction Co., Ltd. (hereinafter referred to as Jiangxi Huitong) in the April 17 announcement mentioned, Qingdao Shusibeier Construction Development Co., Ltd. (hereinafter referred to as Qingdao Shusibeier) is located in the town of Jimo, Qingdao Huashan seven cases totaling 587,736 square meters (approximately 882 acres) of land use rights, will auction on May 7. Another subject of Qingdao, Traders Ltd. (hereinafter referred to as Qingdao, Traders) held in Qingdao International Golf Club Limited (hereinafter referred to as the Qingdao International Golf) 43% stake in the auction reference price of 300 million yuan.

May 5, Jiangxi Huitong regard to the "Daily Economic News" reporter confirmed that the Qingdao International Golf scheduled for April 28, held 43% equity interest in the auction, has not been scheduled, the specific auction time without notice.

Two causes of these asset auction is scheduled Qingdao, Traders failed to settle a trust product - Aviation Trust · Apocalypse 182 equity income Qingdao Golf Capital Trust Plan (hereinafter referred to as the Apocalypse 182). The trust funds raised 350 million yuan of total product, trust funds for the transferee Qingdao, Traders legitimate rights of all income Qingdao International Golf 43% stake.

.....For the auction of 43% equity interest in Qingdao International Golf involved, the "Daily Economic News" reporter repeatedly call Qingdao, Traders, but the phone has no answer.

The Shusibeier (China) office parties, headquartered in Shandong Rizhao recognition, Qingdao Shusibeier its branch in Qingdao. But the announcement on the subject of questions involving the foregoing, the parties declined to comment.

Strange that Qingdao Shusibeier phone number Shusibeier (China) aspects provided to reporters, consistent with the Qingdao Public Security Traders phone.

......However, in the six months after the establishment of the Trust project [in 2011], CITIC Trust claimed Shusibeier misappropriated of funds, applied to the court and performed notarial collateral seizure.

......　However, all the above unsold plots in January 8, 2013 the first auction. Since then, 因舒斯贝尔 questioned CITIC Trust sale of the underlying asset, but also the second auction was eventually forced to suspend. In early May 2013 the third auction, CITIC Trust to return 400 million fund, covering project principal. May 24, the third unsold plots, and finally in the fourth auction reserve price at a discount of 20% (2.5 million) to shoot.

According to both the trust contract, CITIC Trust needs at least 612.5 million yuan project debt. And after going through four auctions, CITIC Trust to get out.

In fact, CITIC Trust is not the only one involved in the financial institutions, since 2010, had Shusibeier route through a number of affiliated companies and trust financing, the Air Trust, Kunlun Trust, a new era of trust etc have had their cooperation.

......However, the "China Real Estate News" reported in 2013 pointed out that since 2010, Shusibeier in the country had no formal project development.

It is noteworthy that, in Shandong local real estate circles, there will be a lot of money transfers Shusibeier questioned overseas.

In this regard, a number of attempts to contact reporters yesterday Shusibeier Company's management, including personnel, including Jin Ming, but did not get a response.