MNI BRIEF: PBOC Sets A New Tool To Bail Out Property Sector
The People's Bank of China will introduce a re-lending tool to boost the struggling real estate sector and help ease the stockpile of newly built houses, Tao Ling, deputy-governor of the PBOC briefed reporters on Friday.
The CNY 300 billion re-lending program for affordable housing will have an interest rate of 1.75% and a term of one year, targeting 21 banks, she said, noting the central bank will provide funds amounting to 60% of the loan principal, potentially enabling banks to lend up to CNY500 billion. (see:MNI INTERVIEW: China To Contain Property Spillover - Advisor)
The loans will support state-own companies’ purchase of completed, but unsold, commercial housing at reasonable prices to then be used as affordable housing. She said companies in the scheme must not aiming to mask debts or serve as financining vehicles fro local government, with acquired properties quickly allocated or leased.
The scheme will enable real estate companies torecover funds and continue ongoing construction projects, improving their financial position, Tao explained.