By Marc Jones

LONDON, (Reuters) – JPMorgan (NYSE ) believes that Evergrande (a troubled Chinese property firm) and its rivals are carrying billions in off-balance-sheet debt. This can be used to increase the leverage ratios.

JPMorgan’s China- and Hong Kong property experts said that the tactic was likely to be used to make firms conform to new borrowing caps rules last year. Evergrande’s example is the extreme.

JPMorgan analysts claimed that Evergrande may have shifted some interest-bearing loans to off-balance-sheet debt instead of deleveraging. “Commercial paper, wealth management products, perpetual capital securities, and others are not considered debt.

Evergrande’s net gearing, which measures the amount of debt to equity, was estimated at 177%, rather than the 100 percent reported by its accounts.

JPMorgan said that “it is possible that real gearing could have been even higher” as data about some off-balancesheet debt aren’t publicly available. JPMorgan further stated that Evergrande’s debt, or “disguised”, amounted to 55%.

Other major firms whose gearing levels were likely to be higher than formally reported included R&F Properties at 139% versus the 123%, Sunac China Holdings at 138% versus 87% reported and Country Garden at 76% versus 50% reported.