Shares of Chinese real estate firms rose Thursday following reports that these developers are getting credit facilities from the country’s major lenders. China’s megabanks, led by Industrial & Commercial Bank Ltd, have pledged financial support of at least $129 billion (¥925 billion) to property developers as part of a push to ease the turmoil in the real estate market, according to a Bloomberg report. The People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) outlined 16 steps to bolster the property sector, including loan repayment extensions, call for treating developers the same whether they are state-owned or not, to support with bond issuance and loosening down-payment requirements for homebuyers, a Reuters report said earlier this month.
These measures have been extensively spoken about in China, but nothing has been officially released. Share prices of Chinese developers soared following the report. China Vanke rose 3.4% to $2.24 (¥16.02) at 11:04 am GST, Country Garden climbed 20.4% to $0.36 (2.84 HKD) at noon GST, Midea Real Estate Holdings soared about 17% to $1.38 (10.76 HKD) at noon GST, and Longfor Group Holdings rose 12.2% to $2.70 (21.05 HKD) at 12:08 pm GST.
The rise in share prices followed an updated confirmation from China Bond Insurance that it would provide guarantees for $657 million worth of bond issuance by Longfor Group, Midea Real Estate, and Radiance Holdings, the National Association of Financial Market Institutional Investors said in a statement.
Country Garden said Thursday that it had signed a long-term strategic partnership contract with the Postal Savings Bank of China (PSBC), according to South China Morning Post.
“The PSBC will provide Country Garden with an intentional loan quota of up to $7 billion (50 billion Yuan) to be used for development, mergers, and acquisitions, guarantees, factoring in bond financing and other forms of finance facilitation,” South China Morning Post quoted Country Garden, citing a statement.
The fund could be used for mortgage lending to consumers who buy homes from the developer or affiliated firms.
