China Relaxes Restrictions on Overseas Loans So Developers Can Repay Dollar Bonds

China’s financial regulators recently loosened restrictions on a lending mechanism to encourage banks to offer loans to overseas branches of property firms, many of whom are struggling to repay their U.S. dollar bonds, sources with knowledge of the matter told Caixin.

The mechanism (内保外贷) allows a property firm on the Chinese mainland to apply for financing guarantees from a domestic bank, thus enabling their overseas units to apply for a loan from offshore branches of the bank.