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China’s leading property developer has recently secured an additional low-interest loan of 1.7 billion yuan (approximately 230 million USD) from its largest shareholder, Shenzhen Metro Group. This financial boost aims to assist the company in managing its debt obligations.
The new loan agreement stipulates a maximum term of three years, with interest rates set at 66 basis points below the one-year loan prime rate published by the National Interbank Funding Center just prior to each disbursement. Currently, this rate stands at 2.34 percent.
Since the beginning of the year, Shenzhen Metro has extended cumulative financing of 30.8 billion yuan (around 4.3 billion USD) to the developer. As with previous loans, the funds are designated for repaying bond principal and interest.
Shares of the developer closed slightly lower, down 0.3 percent at 6.26 yuan (about 88 US cents) in Shenzhen today. The stock has experienced a decline of nearly 17 percent since the end of last year.
Shenzhen Metro, which operates under the Shenzhen State-owned Assets Supervision and Administration Commission, became the company’s largest shareholder in 2017, holding a 27.2 percent stake.
The company’s operating revenue dropped 27 percent in the third quarter year-over-year to 56.1 billion yuan, with cumulative revenue for the first nine months totaling 161.4 billion yuan, also down by 27 percent compared to the previous year.
Net losses nearly doubled over the three-month period ending September 30, reaching 16.1 billion yuan. Over nine months, losses widened to 28 billion yuan, with the third quarter’s loss surpassing the combined losses of the first two quarters.
At the end of September, the company’s asset-to-liability ratio stood at 73.5 percent, with interest-bearing liabilities totaling 362.9 billion yuan. Nearly 5.9 billion yuan in bonds and interest payments are scheduled for maturity at the end of next month, marking a peak in repayment obligations at year’s end. As of September 30, the company held cash reserves of 65.8 billion yuan.
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