China Eases Financing for Distressed Developers

Chinese central bank has stepped up its to distressed property developers by allowing bak and bad-debt managers to loosen restriction on some loans to ease cash crunch, according to Bloomberg citing people familiar with the matter.

The People’s Bank of China held a meeting with 20 major baks and asset-management firms last week to aid in resolving crisis at a dozen large real estate firms including the China Evergrande Group.

The central bank sought looser requirements on a range of financing, from lending for property acquisitions to extending maturities on debt, the people added.

The meeting sends strongest signal of Beijing support toward cash-strapped developers as virus lockdowns take a toll on economic growth.

In 2020 at at-least 17 firms have defaulted on offshore bonds since authorizes began their crackdown on excessive borrowing.

The central bank also guided financial institutions to extend borrowings already overdue if developers provide additional credit support such as pledging more assets, Bloomberg reported. The PBOC also reiterated its support for struggling firms through real estate development loans, said the people.

About 12 developers including China Evergrande, Sunac China Holdings Ltd. and Shimao Group Holdings Ltd. will be supported in the first wave of the program. The list of developers may change based on the evolving situation, the people familiar said as reported by Bloomberg.