China's top banks to issue offshore loans to help developers repay debt -sources

Midea Real Estate Holding

02/12/2022 07:37

By Julie Zhu, Engen Tham and Jing Xu
       HONG KONG/SHANGHAI/BEIJING, Dec 2 (Reuters) - China has
ordered its top four state-owned banks to issue offshore loans
to help developers repay overseas debt, three people with
knowledge of the matter told Reuters, rolling out its latest
support measure for the cash-starved property sector. 
    The regulators have given 'window guidance', or verbal
orders that leave no paper trail, to the banks, setting a date
of Dec. 10 by which to make the loans secured against domestic
assets, two of the sources said.
    China has stepped up support measures in recent weeks to
free up a liquidity squeeze that has stifled the sector, which
makes up a quarter of the world's second-largest economy and has
been a key driver of growth.
    A growing list of developers have defaulted on overseas
creditor obligations over the past year, prompting some analysts
to warn that such disruptions could blunt foreign investors'
appetite for fresh debt issuance by Chinese companies.
    Funds received after the latest step will allow developers
to repay offshore loans and dollar bonds in a bid to repair
global investors' bruised confidence in the sector, two of the
sources said.
    Developers seen as being of "good quality" from a
balance-sheet perspective, such as CIFI Holdings  0884.HK ,
Country Garden  2007.HK , Longfor Group  0960.HK , Midea Real
Estate  3990.HK  and Seazen Group  1030.HK  will qualify, one
source said. 
    Each of the four banks, Bank of China  601988.SS , China
Construction Bank  601939.SS , Industrial and Commercial Bank of
China  601398.SS  and Agricultural Bank of China  601288.SS ,
will pick several developers to fund, the three sources said. 
    Each bank will process three to four offshore loan proposals
that will be secured against developers' assets in China, said
two of the sources, adding that Beijing would expand the scheme
later by adding more banks.
    The People's Bank of China, the central bank, and the China
Banking and Insurance Regulatory Commission (CBIRC) did not
immediately respond to Reuters' requests for comment. 
    The big four banks did not respond to requests for comment,
nor did representatives of CIFI, Country Garden, Longfor, Midea
Real Estate and Seazen. 
 (Reporting by Julie Zhu in Hong Kong, Engen Tham in Shanghai
and Xu Jing in Beijing; Editing by Sumeet Chatterjee and
Clarence Fernandez)
 ((julie.zhu1@thomsonreuters.com; +852 2843 6519; Reuters
Messaging: julie.zhu1.thomsonreuters.com@reuters.net))