Experts say PSL could fund slum and housing projects
Experts say Promised Supplemental Loans (PSLs) will help build affordable housing and slum redevelopment in China as policymakers ramp up economic support and try to stabilize a troubled real estate market. The money will likely be used to fund the project.
PSL is a monetary policy tool that provides low-cost, long-term funding to policy banks.
Experts say China’s central bank, the People’s Bank of China, will support the real economy by further lowering interest rates, making better use of outstanding loans to promote economic restructuring, and easing debt stress on local governments. It is possible to try.
The two men made the announcement on Monday after PBOC Governor Ban Gongsheng said in a weekend interview with Xinhua News Agency that the PBOC would provide medium- to long-term low-cost financing support for “three major projects” including affordable housing. This comment was published.
The three major projects are the development of affordable housing projects, the redevelopment of slum areas, and the construction of recreational facilities that can be easily converted into emergency structures (such as temporary hospitals during epidemics).
The Central Financial Work Conference, which will set the tone in late October, called for swift action on “three major projects” to build a new development model for the debt-laden real estate sector.
In an interview with Xinhua News Agency, Mr. Pan said the People’s Bank will also improve the policy system for rental housing finance and cooperate with other authorities and local governments to promote the stable and healthy development of the real estate market.
In an article published by People’s Daily on Monday, Mr. Ban said the People’s Bank of China’s intention to provide low-cost financing for the “three major projects” while preventing real estate market risks from spilling over into other areas. was reiterated.
Experts said Pan’s comments suggest that PSL is likely to be used soon to support affordable housing and slum redevelopment projects.
Lu Feipen, a researcher at China Post Savings Bank, said: “Given that PSL has worked well in promoting credit expansion in certain sectors, We need to utilize this tool.”
Lu said the PBOC could provide low-cost long-term funding to policy banks through PSL, allowing PSL to use the funds to finance affordable housing and other projects. said.
Citing preliminary estimates, he said PSL’s funding size could reach between 500 billion yuan ($70.06 billion) and 1 trillion yuan.
Established in 2014, PSL was initially used to finance slum redevelopment, with policy banks pledging bonds and credit assets to the People’s Bank for long-term financing. According to UBS estimates, the People’s Bank of China injected 630 billion yuan through PSL in the fourth quarter of last year to support infrastructure investment.
In an interview with Xinhua News Agency, Ban said the central bank will also focus more on cross-cyclical and counter-cyclical adjustments and maintain moderate credit and social financing growth.
Mr. Ban emphasized the need to keep monetary policy prudent and properly manage the total money supply, and the People’s Bank of China to encourage financial institutions to mobilize funds that may currently be deployed inefficiently. He said he would encourage them to do so.
Wang Jian, an analyst at Kunimori Securities, said mobilizing outstanding loans means commercial banks will stop renewing some maturing loans and instead use credit lines to extend loans to new customers. He said it could mean that. Technology manufacturing and services sector.
Mr. Ban said the People’s Bank of China will strengthen support for key national strategies, key areas and weaknesses. “Financing costs in the real economy will decline, while remaining at an overall stable level.”
Pan also said the Bank would step up reform efforts to further reduce lending costs for businesses and households, after the weighted average interest rate on new corporate loans hit an all-time low of 3.82% in September.
Mr. Pan said that China’s financial risks are generally controllable, but the People’s Bank of China will reduce the risk of local government outstanding debt, strictly manage new debt, and provide emergency liquidity to heavily debt-burdened areas as needed. He said that he would strive to provide the following.