China asks large banks to support Vanke in rare intervention, sources
say
Send a link to a friend
[March 11, 2024] HONG
KONG/SHANGHAI/
BEIJING (Reuters) -China has asked banks to enhance
financing support for state-backed China Vanke and called on creditors
to consider private debt maturity extension, in a rare intervention from
central government to help an embattled property firm, two sources said.
The State Council - China's cabinet - is coordinating support effort for
China Vanke, said the sources with direct knowledge of the matter,
adding financial institutions have been requested to make swift
progress.
Authorities are scrambling to stabilize a real estate sector in the
throes of a debt crisis characterized by default among the country's
biggest property firms, with support including boosting financing for
developers of certain projects.
However, central government response to individual firms' woes has been
rare, with action taken for Country Garden but most others tackled at a
local level or left to their fate, including one-time market leader
China Evergrande which faces liquidation.
Unlike those two developers, Vanke has government backing, with 33.4%
owned by Shenzhen Metro, a company held by Shenzhen's state asset
regulator. It is also one of few remaining Chinese property developers
whose credit is rated as investment-grade by international credit-rating
firms, so any debt repayment trouble could decimate market confidence,
analysts have said.
Investors have been selling securities of China's second-biggest
developer by sales amid mounting liquidity concern. But after Reuters'
report, Vanke's Shenzhen-listed stock rose 3.1% to 9.46 yuan, the
highest since Tuesday, while its Hong Kong-listed shares climbed as much
as 3.4% to HK$5.71.
The CSI 300 Real Estate Index rose 3.3% and Hang Seng Mainland
Properties Index firmed 1.8%.
The sources, who requested anonymity due to sensitivity of the matter,
said regulators met financial institutions and creditors but did not
specify when.
"Banks to ensure (China Vanke's) financing, insurers to extend
maturities for private debt, (every party) to guarantee the repayments
of public bonds," said one of the sources.
[to top of second column] |
A Vanke sign is seen above workers working at the construction site
of a residential building in Dalian, Liaoning province, China
September 16, 2019. REUTERS/Stringer/File Photo
Vanke declined to comment. The National Administration of Financial
Regulation and the State Council Information Office did not respond
to requests for comment.
"The central government wants to show a gesture that it is actively
rescuing the market. It is loosening up so the banks should do it
too," said Alvin Cheung, associate director of Prudential Brokerage
in Hong Kong.
Cheung said authorities have not been able to stabilize the market
after Evergrande defaulted, and if Vanke defaulted after Country
Garden, there would be no confidence or new liquidity left in the
market.
Another person with knowledge of the matter said some large national
commercial banks have made repayment requirements stricter for Vanke,
adding to its financial stress.
Total new bank loans issued to the developer in the fourth quarter
of last year slumped by more than half compared to the same period a
year earlier, the person said.
A separate person told Reuters last week that creditor insurers
including Taikang Insurance, state-owned PICC Property and Casualty
and New China Life Insurance, have received requests from Vanke for
debt maturity extensions.
To ease repayment concern, Vanke on Friday said it has deposited
funds required to repay $630 million U.S. dollar notes due on
Monday.
(Reporting by China bureaux; Writing by Clare Jim; Editing by Sumeet
Chatterjee and Christopher Cushing)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|