China allows resumption of local share sales to boost developer funding

CHINA will end one of its major equity fundraising bans on property developers on Monday (Nov 28) to ease the real estate downturn, allowing listed builders to sell local shares for debt repayment and acquisitions.

The lifting of some multi-year restrictions on stock sales by developers will support the “stable and healthy” development of the sector, said the China Securities Regulatory Commission.

Under the latest measures, listed firms will be allowed to resume private placements in China to raise funds to complete housing projects, build affordable housing, replenish working capital or repay debt. The regulator also allowed developers to sell stock to buy property assets, and opened the door for share listings following mergers.

China has been stepping up support for its embattled property industry, which has seen a wave of defaults and plunging sales following a crackdown from Beijing. Regulators issued a 16-point plan earlier this month to boost the real estate market, while several state-owned banks pledged at least 1.28 trillion yuan (S$244.37 billion) in funding for developers.

In a separate move, state-backed China Bond Insurance is loosening requirements to access funding from a key programme which guarantees local bond sales from cash-strapped developers.

The company will now accept collateral from builders beyond their core assets, according to sources. The firm will also lift the acceptable loan-to-value ratio to above 50 per cent in some cases, as well as consider collateral from less developed regions, said the sources. BLOOMBERG