State-owned bond company to guarantee notes worth US$2.7 billion issued by Chinese developers
- China Bond Insurance Company, together with the National Association of Financial Market Institutional Investors and the China Real Estate Association, met 21 firms on Tuesday, Securities Daily says
- Regulators are keeping an eye on the financing challenges that these companies are facing, analyst says
The state-owned China Bond Insurance Company is expanding support to a dozen private developers by guaranteeing bonds worth 20 billion yuan (US$2.7 billion).
The company, together with the central bank-backed National Association of Financial Market Institutional Investors (NAFMII) and the China Real Estate Association, met 21 private property companies on Tuesday, state-run media Securities Daily reported.
Sources familiar with the matter confirmed that the meeting took place, but added that the details of the bond to be guaranteed were not yet available.
Sixteen developers have since August this year joined a pilot programme under which they can issue bonds or asset securitisation products that are guaranteed by China Bond Insurance.
“This is the third meeting of private Chinese developers led by NAFMII since August,” said Yan Yuejin, the director of Shanghai-based E-House China Research and Development Institution. This means that the “regulators are keeping an eye on the financing challenges that these companies are facing”.
“It also means that solving bottlenecks at private property enterprises, to some extent, still depends on improvements in financing policies,” he added.
The firms taking part in Tuesday’s meetings were “relatively healthy” in terms of their overall financial performance, Yan said. But the authorities should create a better financing environment keeping in mind the latest market situation in China, he added.
The People’s Bank of China supports the healthy development of the real estate sector, Yi Gang, the central bank’s governor, said in a recorded message at the Global Financial Leaders’ Investment Summit on Wednesday. He pointed out that sales and lending to the sector had seen a marginal improvement.
“With the ongoing urbanisation in China, we hope the housing market can achieve a soft landing,” Yi said.