The largest commercial banks in China They have pledged to extend at least $130 billion in fresh loans to property developers, reinforcing recent regulatory moves to ease the sector’s crippling cash crunch.
Three state-owned banks offered $99 billion worth of lines of credit to developers on Thursday, a day after three others pledged $31 billion in response to Beijing’s plea for support.
In recent weeks, the authorities have intensified support measures for developers, after many defaulted on their debt obligations and were forced to halt construction.
The economic outlook is also deteriorating due to the resumption of COVID-19 lockdowns and other restrictions in cities across the country. China reported a record level of coronavirus infections on Thursday.
The massive and coordinated injection of liquidity in the real estate sector boosted the actions of the main developers on Thursday.
Country Garden, China’s top developer by sales, closed up more than 20% after state media reported on Thursday that it had received a credit line from China Postal Savings Bank worth at minus 50 billion yuan ($7 billion).
The Hang Seng Mainland Property Index gained 6.8%.
China’s banking regulator also reported on Thursday that banks issued 2.64 trillion yuan in loans to developers and 4.84 trillion yuan in home loans from January to October.
The policy priority has been on supporting the biggest and best developers, as it remains a challenge for them to raise enough cash through sales, bonds and equity financing, said Gary Ng, an economist. Senior at Natixis Corporate and Investment Bank.
“But I do worry a bit about the little ones, and they may still be unable to pay off debt due to the challenges of selling homes or financing themselves.”said.
(With information from Reuters)