According to three sources, China has allowed its top four state banks a week to issue offshore loans to assist developers in paying off their foreign debt.
The announcements boost debt-ridden developers in the real estate industry, which has been in a crisis for roughly two years. The news comes after a rush of more significant pronouncements.
Two sources said that regulators have instructed banks to make loans secured by domestic assets by Saturday, December 10 through “window guidance,” or verbal orders.
To relieve a liquidity crunch that had stifled the sector, which accounts for a quarter of the world’s second-largest economy and has been a key driver of growth, China has increased support measures in recent weeks.
Over the past year, a growing number of developers have fallen behind on their payments to international creditors, leading some analysts to caution that such interruptions may reduce the interest of foreign investors in new debt issued by Chinese enterprises.
According to two of the sources, money acquired following the most recent action will enable developers to pay back dollar bonds and offshore loans in an effort to restore the sector’s battered reputation among international investors.
According to one source, qualified developers include CIFI Holdings, Country Garden, Longfor Group, Midea Real Estate, and Seazen Group, all of which are considered to be of “good quality” from a balance-sheet perspective.
According to the three sources, each of the four banks—the Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China—will choose a number of developers to support.
According to two of the sources, each bank will review three to four offshore loan requests that are secured by the assets of Chinese developers. Beijing will subsequently add more banks to the program, they added.
Inquiries and comments were sent to the People’s Bank of China, the nation’s central bank, but the China Banking and Insurance Regulatory Commission gave no response.
Representatives of the top four banks, as well as CIFI, Country Garden, Longfor, Midea Real Estate, and Seazen, did not respond to requests for comment.
