China is said to be easing rules for state-backed property developers to buy up distressed assets of private companies, as per a source. Banks are said to have told state-owned property developers that M&A loans would be excluded in calculating their debt ratios. State-owned developers that acquire distressed assets will not have those loans included as debt under the ‘three red-lines’ rules, providing some relief. This comes after Chinese property developers have been facing liquidity issues on account of regulatory restrictions on borrowing and an unfavorable market environment given recent prominent defaults from the space.

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