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Bond Market News
China Drafts 16 Point Plan for Property Sector; Longfor Gets ~$2.8bn Debt Issuance Approval
November 14, 2022
China revealed its latest rescue package for the property sector across the country via a 16-point plan given below:
- Property development loans for developers – Lenders to treat developers under state or private ownership equally
- Home-buying requirements for individuals – Support local governments to set down-payment thresholds and mortgage rate floors
- Construction companies – Continuous and stable fundraising by construction companies
- Extension on developer borrowings – Extend outstanding bank/trust borrowings due in the next six months by 1Y
- Bonds – Support bond issuance by quality developers and extend repayment on bonds by negotiations
- Trust Financing – Trust companies encouraged to provide funding support for M&A, rental properties and retirement homes
- Special loans for project completion – CDB and NABARD to offer special loans in an efficient and orderly manner
- Additional support to ensure residential project completion – Financial support for residential construction delays
- Property project acquisition – Support acquisitions of property projects by stronger developers from weaker rivals; Banks/AMCs can issue bonds for real estate project acquisitions
- Market-based approaches including bankruptcy and restructuring – AMCs encouraged to deal as bankruptcy administrators and investors on restructuring of residential projects
- Homebuyers’ mortgages – Encourage banks to negotiate with homebuyers on extending mortgage repayments
- Mortgage repayment – Protect buyers’ credit scores
- Easing a major restriction on banks’ property lending – Temporarily ease restriction on bank lending to developers
- Fundraising for acquisitions – Optimize financing rules
- Lending on rental properties – Ramp up support to companies that own rental property business
- Diversify fundraising for rental properties – Banks can issue bonds dedicated to building rental properties
Separately, Longfor Group got approval from NAFMII, the interbank bond market regulator to issue up to RMB 20bn ($2.8bn) in state-backed debt. Longfor was the first developer to issue these state-backed bonds in late August where it raised RMB 1.5bn ($219mn) via 3Y notes. Longfor’s dollar bonds were trading flat at 47-54 cents on the dollar.
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