(Bloomberg) -- China’s biggest builder is raising capital via the stock market after government measures to shore up the real estate sector sent the industry’s shares surging.

Country Garden Holdings Co. is selling stock at an 18% discount to raise HK$3.9 billion ($500 million). Some of the proceeds will be used to repay offshore debt, it said, helping spur gains in the company’s dollar bonds.

A Bloomberg Intelligence equities gauge of Chinese builders has soared almost 60% this month, with Country Garden tripling, as authorities took steps to ease a credit crunch in the industry and speculation grew the country will relax its Covid policies.

Country Garden is selling 1.46 billion shares at HK$2.68 per share, an exchange filing showed Tuesday. At the end of October the stock traded at just HK$1. The shares were down 0.9% at HK$3.23 as of 2:22 p.m. in Hong Kong. 

Regulators last Friday issued a 16-point plan including allowing developers to extend bank loans and trust borrowings, Bloomberg reported. On Monday, “quality” property developers were allowed greater access to funds from presold properties held in escrow accounts. 

Country Garden may look into more equity raising, helping easing the developer’s short-term liquidity, Bloomberg Intelligence analysts Kristy Hung and Lisa Zhou wrote in a note Tuesday. The firm may also tap onshore bond sales, the analysts said. 

A Country Garden dollar bond due 2024 fell 1 cent to 41.7 cents after surging nearly 14 cents Monday.

Authorities have sought to defuse the property crisis with a raft of measures in the past few months, including cutting interest rates, urging major banks to extend 1 trillion yuan ($140 billion) of financing in the final months of the year, and offering special loans through policy banks to ensure property projects are delivered.

The People’s Bank of China and the China Banking and Insurance Regulatory Commission on Friday jointly issued a notice to financial institutions laying out plans to ensure the “stable and healthy development” of the property sector, Bloomberg reported.

The share sale comes amid a brightening outlook for the nation’s equities. The Hang Seng China Enterprises Index has surged more than 25% this month from its lowest level since 2005 amid speculation China will move away from Covid Zero to bolster the economy. The gauge was up 4.1% on Tuesday.

Matthew Eagan, who helps manage $62 billion for Loomis Sayles & Co., said China’s new real estate policy measures could be a “game changer” for thawing out a debt freeze in the country’s beleaguered property sector.

“This should mark the beginning of the reorganization and restructuring process desperately needed to break the log jam,” the 32-year markets veteran said of China’s plan to help ease a crisis that’s spurred a wave of defaults and sent offshore property notes to record lows. 

In a sign of the stress the industry is under, Chinese developer Greenland Holding Group Co. said it failed to repay an offshore note due Sunday, making it the sector’s latest to default.

(Updates share move in fourth paragraph and bond in seventh. An earlier version corrected the number of shares to be sold.)

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