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VIRUS OUTBREAK

China to support debt financing for virus-related projects

Firms with good credit will be encouraged to provide liquidity support for affected SMEs

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The Shanghai government plans to cut loan rates and take other measures to help companies and maintain growth as the spread of the novel coronavirus takes its toll on China's economy.

Shanghai

CHINA will take more steps to support debt financing for companies that are working on preventing or controlling the spread of the coronavirus, and for firms operating in areas that have been hit by the outbreak.

Authorities will help companies that are seeking to raise funds for projects such as medical services and scientific research related to the virus, the National Development and Reform Commission (NDRC) said in a statement on Saturday.

The income requirements for bonds on such projects can be relaxed if safeguards for debt repayment are in place, it added.

Firms will also be allowed to raise money to repay or roll over previous project loans that were used to prevent or control the outbreak.

Companies affected by the disease but with quality assets and good operations of virus-related projects will be allowed to apply for the issuance of new corporate bonds to repay the principal and interest of debt due in 2020.

NDRC will encourage firms with good credit to provide liquidity support for small and medium-sized enterprises (SMEs) affected by the outbreak.

It will also allow the extension of time limits for bond issuance and the submission of application materials for some companies.

Separately, the Shanghai city government plans to cut loan rates and take other measures to help companies and maintain growth as the spread of the novel coronavirus takes its toll on China's economy.

The city wants financial institutions to increase lending to industries, and small and medium-sized firms hit by the epidemic, Ma Chunlei, deputy secretary-general of the municipal government, said at a briefing in Shanghai. He called for loan rate cuts of at least 0.25 percentage points off benchmark prime for the duration of the virus.

Other measures could include extended repayment periods, rent reductions and deferment of tax payments, Mr Ma added.

Companies are facing tightened cash flows and higher costs because of the disrupting effects of the virus. The planned measures are expected to reduce corporate costs by more than 30 billion yuan (S$6 billion).

Nationwide, China is offering a comprehensive package of tax and fiscal measures to help domestic businesses hurt by the coronavirus outbreak.

The transportation sector will be a key beneficiary from measures including temporary value-added tax breaks and loss carry-over extensions. Agriculture and retail companies will also benefit in some provinces. BLOOMBERG

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