PBOC extends policies for financial support of real estate market
CHINA’S central bank on Monday (Jul 10) extended its policies to support the real estate market to the end of 2024.
The aim is to increase financial support to ensure home delivery, the People’s Bank of China (PBOC) said in a statement.
For newly issued ancillary financing that becomes non-performing, relevant institutions and personnel are exempt from liability if they have exercised due diligence, it added.
Financial institutions will be encouraged to negotiate with real estate firms to extend outstanding loans in order to spur the delivery of homes under construction, indicated a joint statement from the PBOC and National Financial Regulatory Administration. Some outstanding loans including trust loans due before 2024 will be given a one-year repayment extension, it said.
China’s two-year real estate crisis is stifling a recovery in the world’s second-largest economy, fuelling expectations for the government to take more steps to revive demand. Home sales resumed declines in June following a brief rebound earlier this year, adding to pressure on debt-laden developers.
Stress in the property industry flared up this week when one state-backed developer, Sino-Ocean Group Holding, saw its bonds tumble on concerns over its debt load, while another, defaulter Shimao Group Holdings, failed to find a buyer for a US$1.8 billion project at a forced auction.
Leading builder China Vanke said the nation’s home market is “worse than expected”, while Goldman Sachs Group now projects a higher default rate for Chinese high-yield property US dollar bonds.
“As long as physical property has lost its investment appeal as an asset class, it will be difficult for homebuyer confidence to reverse and sales to pick up,” Bloomberg Intelligence credit analysts Andrew Chan and Daniel Fan wrote in a note on Jul 5. “Some surviving Chinese developers’ may choose to default or restructure rather than attempt to resolve their debt problems.” REUTERS, BLOOMBERG
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