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Chinese property developers’ US dollar bonds are surging as market sentiment improved after the Chinese government pledged to support healthy development of the real estate market. Longfor Group’s 4.5% bond due 2028 is jumping 3.8 cents on the dollar to 67.5 cent, on course to the biggest one-day jump in more than four months. China Vanke’s 3.975% bills due 2027 gains 0.9 cent on the dollar to 77.3 cent, rising for the third consecutive trading day.
The State Council, China’s Cabinet, said at a regular policy meeting last Friday that the country will take one-city-one-policy approach to promote stable and healthy development of the real estate market and it pledged to make sure the so-called “rigid housing demand” is satisfied and reasonably support upgrading housing needs.
In addition, State Council reportedly last week approved a plan to set up a real estate fund to support 12 liquidity-embattled real estate companies, as well as other developers which were newly selected by some local governments, reported by REDD. The first instalment of the fund will be pumped by 50 billion yuan from China Construction Bank and a re-lending quota of 30 billion yuan from the People’s Bank of China, according to the report. The maximum size of the fund is as much as 200-300 billion yuan.