Shangua Pudong Development Bank becomes first Chinese lender to issue real estate bonds

As Beijing eases policies to aid cash-strapped developers, Shanghai Pudong Development BankPudong Development Bank Co has become the first Chinese lender to issue bonds to fund real estate acquisitions.

The bank plans to raise 5 billion yuan US $790 million by selling three-year bonds through China's interbank market, it said in a filing on Monday January 17 that the funds would be used to finance real estate project acquisitions in the form of lending.

Large developers are encouraged to acquire assets from cash-strapped real estate firms to ease the pressure on the market.

According to analysts, more financial institutions are expected to follow Pudong Development's bond sales plan, which points to a widening of financing channels for the property sector.

The issuance came after China Merchants Shekou Industrial Zone HoldingsShekou Industrial Zone Holdings Co announced plans to issue bonds for real estate acquisitions.

More cash-strapped developers scrambled to avoid defaults or raise money. The payment deadline for a 450 million yuan asset-backed security ABS was extended by the Shimao Group on Monday.