China’s latest support measure for the cash-starved property sector will see top banks issue offshore loans to help developers repay overseas debt.
China banks to help developers repay debt
China has ordered its top four state-owned banks to issue offshore loans to help developers repay overseas debt, sources have told Reuters, rolling out its latest support measure for the cash-starved property sector.
The regulators have given “window guidance” – verbal orders that leave no paper trail – to the banks, setting a date of December 10 by which to make the loans secured against domestic assets, two of three people with knowledge of the matter who spoke to Reuters said.
China has stepped up support measures in recent weeks to alleviate the liquidity squeeze stifling the property sector, which makes up a quarter of the world’s second-largest economy and has been a key driver of growth.
A growing number of developers have defaulted on overseas creditor obligations in the past year, prompting some analysts to warn such disruptions could blunt foreign investors’ appetite for fresh debt issuance by Chinese companies.