Country Garden seeks KPMG guidance on offshore debt

Country Garden (2007) has appointed KPMG as consultant for its offshore liability restructuring, while Ping An Bank has put 41 firms on a list of developers eligible for its funding support, with half of them being state-owned builders, the latest move in a widening rescue campaign for the nation's property sector.

The company said it will develop a holistic solution with debtors to fully address the current offshore debt risks, and commit to ensure its long-term development and the interests of all stakeholders and creditors.

It was reported to have about US$11 billion (HK$85.8 billion) offshore bonds and US$6 billion offshore loans.

A day earlier, the Chinese developer vowed to deliver over 480,000 units this year, fewer than 600,000 units last year.

Meanwhile, Ping An Insurance's (2318) bank unit decided to adjust criteria related to extending credit lines in order to meet builders' reasonable funding demand, a task set out in a major annual government economic conference last month.

Market reactions were mixed. Chinese developer dollar bonds were indicated 0.5 cents higher on average after the news. But shares slumped for builders not on Ping An Bank's list, including Country Garden, Shimao (0813) and Sunac China (1918).

More than half of the builders on the list are state-backed companies, including Poly Property (0119) and Beijing Urban Construction (1599). The rest cover private-sector peers such as Longfor (0960), China Vanke (2202) and Gemdale (0535).

Poly Property ranked first among 16 Chinese developers with over 100 billion yuan (HK$110 billion) in sales last year, followed by China Vanke in second place. Gemdale and Longfor were tenth and eleventh, respectively.

The list offers a fresh example of how financial firms are responding after Beijing stepped up efforts to ease a cash crunch among builders, as an unprecedented housing slump worsens.

Ping An Insurance, parent of Ping An Bank, had previously said it is trying to reduce exposure to the sector, and regulators have been encouraging insurers to focus on their core business.

The latest list marks a shift in strategy and may see other banks follow suit.

Its list also includes local builders such as Hangzhou Binjiang Real Estate and Greentown China (3900).

The Hong Kong-based New World Development (0017) and Sun Hung Kai Properties (0016) are also on the list.