Beijing has stepped up support for two major developers entangled in China’s prolonged property sector crisis, which intensified after homebuyers imposed a mortgage boycott last month on over 300 projects.
There was positive news on Monday with Greenland Holdings saying a unit had got loans from state-owned shareholders, while the parent company of Yango Group signed a debt relief agreement with one of the country’s biggest major asset managers.
The deals appear aimed at appeasing some of the millions of buyers troubled by the lack of progress on unfinished projects where they have made down-payments and monthly instalments.
Beijing last month vowed to increase support to private developers and ensure buyers can take delivery of their homes.
Shares in Yango jumped by their daily limit of 10% in trading on Monday, while Greenland gained roughly 4%.
Zhengzhou to Set Up $1.5bn Fund
Chinese media also separately reported that Zhengzhou, the capital city of central Henan province, plans to set up a 10 billion yuan ($1.5 billion) fund to tackle social and financial problems.
Greenland said in a statement on Monday that a subsidiary plans to borrow a combined 3 billion yuan from two state-owned shareholders. The two-year loans, with an annual interest rate of 6%, would help maintain ample liquidity, and help the company’s efforts to sure the smooth handing over of homes, it said.
China Huarong Asset Management, a major bad loan company, said in a statement that it has recently signed a framework agreement with Yanggo Longking Group to restructure its debt. Yanggo Longking is the parent of cash-strapped developer Yango Group.
The move is a concrete step by the Chinese government to defuse risks in the real estate market and reinvigorate Yango, Huarong said.
- Reuters with additional editing by Jim Pollard