Struggling Chinese developers receive project loan support as Chinese government expands support By Reuters

© Reuters. FILE PHOTO: The logo of property developer Sunac is seen outside a housing complex in Beijing, China, September 19, 2023. REUTERS/Florence Lo/File Photo

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HONG KONG (Reuters) – More distressed property developers in China have added projects to local authorities’ so-called whitelists, reflecting a rapid expansion of government policies to inject liquidity into the crisis-hit sector.

Sunac China, Greenland, CIFI and SCE Group said the local government had listed some of their projects as eligible for bank lending, following a similar announcement by Country Garden last weekend.

Under the ‘Project Whitelist’ mechanism, launched on January 26, 35 city governments are recommending housing projects in need of financing to banks and working with financial institutions to meet project requirements.

Country Garden, China’s largest private real estate developer that defaulted on $11 billion worth of offshore bonds late last year, said on Saturday that more than 30 of its projects had been added to the whitelist.

Sunac, which completed restructuring $9 billion worth of overseas debt last year, said in a statement to Reuters on Monday that more than 90 of its projects had been added to the first city whitelist, including Beijing, Tianjin, Chengdu and Chongqing.

“Once the financing is in place, it will ease cash flow pressures on the development and operation of the Sunac project, further ensuring ‘courier’ operations in various cities,” the developer said.

Greenland also said Monday that 34 of its projects, which require 11.7 billion yuan ($1.63 billion) in financing, are on its whitelist in regions including Shandong, Sichuan and Yunnan.

Greenland, the first state-backed developer to extend foreign debt repayments to 2022 amid the property debt crisis, said the additional measures underlined the “strong support” of local authorities and financial institutions.

Shanghai-based CIFI, which is also pushing for offshore debt restructuring, said in a statement on Sunday that 18 of its projects had been added to a whitelist in cities including Chongqing, Beijing, Tianjin and Wuhan.

Both Sunac and CIFI are privately owned developers and rank in China’s top 20 by sales value.

SCE, which defaulted on $1.8 billion worth of bonds in October, has more than 10 projects on its whitelist with a total funding of 3 billion yuan, local media reported Monday, and is seeking a total of $10 billion in financing. added. An additional 20 projects added to the list are yuan.

SCE could not immediately be reached for comment.

Shares in Hong Kong-listed Country Garden closed flat on Monday, wiping out early gains of 4.8%, while CIFI was firm at 0.9%. Sunac and SCE closed down 0.9% and 0.65% respectively, while Greenland’s Shanghai-listed shares fell 5.9%.

Another developer who defaulted on debt repayments expects his project to be included in a second whitelist as soon as this week, said an executive who spoke on condition of anonymity. If approved, the loan would be completed after the Lunar New Year holiday, the executive said.

China aims to increase financing for housing projects in the future, but banks’ reluctance to lend to the sector is a major obstacle for developers who need the funds most.

Developers and investors have said these loans can only be used to ensure completion of selected projects and cannot be used to repay debt or restore financial health.

($1 = 7.1962 Yuan)