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, in Beijing’s latest support measure for the cash-starved property sector.
The regulators have given the banks ‘window guidance’, or verbal orders that leave no paper trail, setting a date of Dec. 10 by which to make loans secured against domestic assets, said two of the sources, who all spoke on condition of anonymity.
China has stepped up support in recent weeks to undo 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 has 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.
Now a debt maturity wall looms for developers, with $39 billion of debt set to mature in the first quarter of next year, and $10 billion of that is denominated in dollars, Refinitiv data shows.
Funds flowing from banks will allow developers to repay offshore loans and dollar bonds, helping to repair global investors’ bruised confidence, two of the sources said.
Developers will qualify if their balance sheets are seen as being of “good quality”, such as CIFI Holdings (0884.HK), Country Garden (2007.HK), Longfor Group (0960.HK), Midea Real Estate (3990.HK) and Seazen Group (1030.HK).
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