China to support financing for quality developers, adjust borrowing curbs

China will take steps soon to boost financing for good-quality property developers, including adjusting borrowing curbs on them, the official Xinhua news agency said on Friday (Jan 13).

Reporting the latest move to ease a liquidity crunch that has plagued the real estate sector since mid-2020, Xinhua said financial regulators have drafted a 21-task plan to guide quality developers’ balance sheets back to a safe range.

China’s property sector, accounting for a quarter of the economy, has struggled with defaults and stalled projects, hitting market confidence and weighing on growth.

The plan mainly targets relatively large property firms that are systemically important, Xinhua said, adding that financial institutions will be able to use their own discretion.

Media reported this week regulators had initially added seven privately owned developers on a “white list” to receive liquidity supports, but Xinhua said on Friday there was no such list.

The report said regulators will improve the “three red lines” policy, introduced in late 2020 and partly blamed for triggering the debt crisis.

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The policy has squeezed the sector’s high leverage, restricting how much developers can borrow in new funding each year by capping their debt ratios.

Regulators will keep the overall framework for 30 pilot property firms, adjusting some of its parameters, Xinhua said, without giving details nor naming firms.

Bloomberg News reported last week that Beijing may allow some property firms to add more leverage by easing borrowing caps, and extend, by at least six months, a grace period for meeting the policy’s debt targets.

Regulators will establish a 100-billion-yuan (S$19.6 billion) fund to buy housing inventory to convert into rental housing, accelerate loan deployment to ensure the delivery of home projects, extend a transition period for banks to implement rules to lower their real estate loan concentration and support developers’ offshore debt repayments, Xinhua said. REUTERS