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China may allow banks to provide unsecured short-term working capital loans to eligible real estate developers, Bloomberg reported citing people familiar with the matter, as part of Beijing’s efforts to relieve the property crisis.
The working capital loans would help these firms fund day-to-day operations and help free up capital for repaying debt. These loans differ from the usual loans available for developers that need to be backed by land or assets as collateral.
Chinese regulators are also mulling setting up a mechanism through which one lender can take the lead in supporting a distressed real estate firm though financing plans in coordination with other creditors.
If these measures are approved, they would be Beijing’s biggest push yet in propping up the property sector that is facing an ~$446B shortfall in funding needed to complete millions of unfinished apartments, the report said.
Note that regulators are working on a list of 50 real estate developers eligible for financing, which is said to include Country Garden (OTCPK:CTRYF) and Sino-Ocean (OTCPK:SIOLF) , among others. The final list is expected to be released within days.