The Chinese Communist Party (CCP) will ease debt rules to facilitate state-owned property developers to buy up assets of indebted private peers facing a liquidity issue.
According to Reuters, the Chinese authorities have urged state-owned builders to examine the assets of private firms experiencing liquidity problems as an increasing number of them have failed to meet due payments, causing financial markets to tremble.
Tang Jingyuan, a top pundit, said that the real estate market in China is in a downturn after Beijing started a crackdown on the real estate industry last year. Simultaneously, new regulations are implemented which restrict indebted property developers even further.
Financial intelligence provider REDD said that officials requested the building corporations to buy assets from 11 private developers experiencing financial difficulties in mid-December.
Shimao Group, a Shanghai-based developer, defaulted on a trust loan payment and planned to postpone payments on asset-backed securities, reflecting China’s property sector’s persistent stress.
Shanghai Shimao Construction, a Shimao Group subsidiary, failed to fully pay $124.25 million due on Dec. 25, with a total outstanding sum of about $101.19 million.
Shimao is China’s 14th largest developer and one of the significant bond issuers in the real estate market, with roughly $10 billion in domestic and foreign notes.