Distressed Chinese developers get project loan backing as Beijing ramps up support (updated)

CIFI Holdings (Group)

05/02/2024 07:01

(Adds Greenland details, more context, updates share prices)
    By Clare Jim
       HONG KONG, Feb 5 (Reuters) - More distressed property
developers in China have had projects added to local
authorities' so-called whitelists, reflecting the rapid
expansion of a government policy aimed at injecting liquidity
into the crisis-hit sector.
    Sunac China  1918.HK , Greenland  600606.SS  and CIFI
 0884.HK  said local governments had listed some of their
projects as being suitable for bank loans, following a similar
announcement by Country Garden  2007.HK  at the weekend.
    Under the "project whitelist" mechanism launched on Jan. 26,
governments of 35 cities are recommending to banks residential
projects needing financial support, and are coordinating with
financial institutions to meet projects' needs.
    China's largest private property developer, Country Garden -
which defaulted on $11 billion worth of offshore bonds late last
year - on Saturday said more than 30 of its projects had been
added to whitelists.
    Sunac, which completed a $9 billion offshore debt
restructuring last year, in a statement to Reuters on Monday
said over 90 of its projects had been added to the first batch
of whitelists of cities including Beijing, Tianjin, Chengdu and
Chongqing.
    "As the financing comes in place, the cashflow pressure of
the development and operation of Sunac projects would be eased,
which will further ensure the work of 'home delivery' in
different cities," the developer said.
    Greenland also on Monday said 34 of its projects, requiring
11.7 billion yuan ($1.63 billion) in financing, are on
whitelists in provinces including Shandong, Sichuan and Yunnan.
    Greenland, the first state-backed developer to extend
offshore debt payments in 2022 amid the property debt crisis,
said the additions highlight "strong support" of local
authorities and financial institutions.
    CIFI, another major developer that is working on offshore
debt restructuring, in a statement on Sunday said 18 of its
projects have been added to whitelists in cities including
Chongqing, Beijing, Tianjin and Wuhan.
    The price of the Hong Kong-listed shares of Country Garden
rose as much as 4.8% on Monday, with Sunac rising 3.6% and CIFI
5.8%. Greenland's Shanghai-listed shares fell 3.4%.
    Another developer that defaulted on debt repayments expects
its projects to feature in a second batch of whitelists as early
as this week, said an executive on condition of anonymity due to
the sensitivity of the issue. Loans, if approved, should come
through after the Lunar New Year holiday, the executive said.
    China aims to increase financing for residential projects in
coming days but banks' reluctance to lend to the sector is a
major obstacle for distressed developers most in need of funds.
    Developers and investors have said any such loans can only
be used for ensuring the completion of selected projects, and
cannot be used to repay debt or help regain financial strength.

($1 = 7.1962 Chinese yuan renminbi)

 (Reporting by Clare Jim; Editing by Jamie Freed and Christopher
Cushing)
 ((clare.jim@thomsonreuters.com;))