State-owned automotive manufacturer FAW Group says that the one trillion yuan in “intentional credits” granted to them by 16 banks, is in fact, just that — intentional — not actual credits handed to the company, The Paper reported.
According to FAW Group, it does not represent the real capital demand and does not affect the group currently.
Last week, the group formed a strategic cooperation with 16 banks which intend to provide 1.015 trillion yuan (US$146.18 billion) in future credits to the company.
As soon as this news came out, shares of FAW-listed companies rallied collectively — shares of FAW Car and Tianjin FAW were up by 10% for two consecutive trading days.
Traders and insiders believe that intentional credit of this size shows strong support for the company, guaranteeing it will be able to borrow from these banks on a continual basis.