Distressed Chinese developers get project loan backing

The logo of property developer Sunac is seen outside a residential compound in Beijing, China Sept 19, 2023. REUTERS/Florence Lo/File photo

HONG KONG  —More distressed property developers in China have had projects added to local authorities’ so-called whitelists, reflecting the rapid expansion of a government policy aimed at injecting liquidity into the crisis-hit sector.

Sunac China, Greenland and CIFI said local governments had listed some of their projects as being suitable for bank loans, following a similar announcement by Country Garden at the weekend.

Under the “project whitelist” mechanism launched on Jan. 26, governments of 35 cities are recommending to banks residential projects needing financial support, and are coordinating with financial institutions to meet projects’ needs.

READ: China unveils new property support measures

China’s largest private property developer, Country Garden – which defaulted on $11 billion worth of offshore bonds late last year – on Saturday said more than 30 of its projects had been added to whitelists.

Offshore debt restructuring

Sunac, which completed a $9 billion offshore debt restructuring last year, in a statement to Reuters on Monday said over 90 of its projects had been added to the first batch of whitelists of cities including Beijing, Tianjin, Chengdu and Chongqing.

“As the financing comes in place, the cashflow pressure of the development and operation of Sunac projects would be eased, which will further ensure the work of ‘home delivery’ in different cities,” the developer said.

Greenland also on Monday said 34 of its projects, requiring 11.7 billion yuan ($1.63 billion) in financing, are on whitelists in provinces including Shandong, Sichuan and Yunnan.

Greenland, the first state-backed developer to extend offshore debt payments in 2022 amid the property debt crisis, said the additions highlight “strong support” of local authorities and financial institutions.

CIFI, another major developer that is working on offshore debt restructuring, in a statement on Sunday said 18 of its projects have been added to whitelists in cities including Chongqing, Beijing, Tianjin and Wuhan.

Country Garden

The price of the Hong Kong-listed shares of Country Garden rose as much as 4.8 percent on Monday, with Sunac rising 3.6 percent and CIFI 5.8 percent. Greenland’s Shanghai-listed shares fell 3.4 percent.

READ: After Country Garden debt deal, focus shifts to China property recovery prospects

Another developer that defaulted on debt repayments expects its projects to feature in a second batch of whitelists as early as this week, said an executive on condition of anonymity due to the sensitivity of the issue. Loans, if approved, should come through after the Lunar New Year holiday, the executive said.

China aims to increase financing for residential projects in coming days but banks’ reluctance to lend to the sector is a major obstacle for distressed developers most in need of funds.

Developers and investors have said any such loans can only be used for ensuring the completion of selected projects, and cannot be used to repay debt or help regain financial strength.

($1 = 7.1962 Chinese yuan renminbi)