Shanghai Bank to Issue Bonds For Funding Real Estate Acquisitions

Shanghai Pudong Development Bank Co has become the first Chinese lender to issue bonds to fund real estate acquisitions, as Beijing eases some policies to aid cash-strapped developers. The bank plans to raise 5 billion yuan (US$790 million) by selling three-year bonds through China's interbank market, it said , adding that the funds would be used to finance real estate project acquisitions in the form of lending. Beijing is already encouraging large developers to acquire assets from cash-strapped real estate firms to ease liquidity pressure. Pudong Development's bond sales plan points to broadened financing channels for the property sector, and more financial institutions are expected to follow suit, analysts said. The issuance came after property developer China Merchants Shekou Industrial Zone Holdings Co last week announced plans to issue bonds for real estate acquisitions. More cash-strapped developers scrambled to avoid defaults or raise money. Shimao Group won approval from creditors to extend the payment deadline of a 450 million yuan asset-backed security (ABS).