The “three red lines” policy on debt ratios has begun aggravating market stress and impairing balance sheets. Those on the wrong side of those lines found themselves almost entirely locked out of credit markets. In short there are now more property firms on the wrong side of the red lines than when the policy was first rolled out, and even the most financially healthy are struggling. They are also mulling letting companies in good financial condition raise debt by more than the current 15% annual limit, per Bloomberg. However, the three red lines remain in place for now.

Source: New York Times January 11, 2023 05:32 UTC