Chinese Property Developer Country Garden Faces Another Deadline for $66.8 Million Interest Payments
HONG KONG – Chinese property developer Country Garden, which recently missed two dollar interest payments, is facing another deadline on Monday. The company must make two coupon payments totaling $66.8 million.
The due payments on Monday are tied to Country Garden’s 6.5% April 2024 and 7.25% April 2026 bonds. While the developer has a 30-day grace period, it faces a significant test later this month. If it fails to pay a $15 million coupon due in September by October 17, its entire offshore debt could be deemed in default.
Country Garden, China’s largest private developer, has $10.96 billion in offshore bonds and 42.4 billion yuan ($5.81 billion) worth of loans not denominated in yuan. If it defaults, the company will need to restructure its debt, and its assets could be at risk of liquidation by creditors.
China’s property sector has been grappling with a debt crisis since 2021, with numerous companies, mostly private property developers, defaulting on debt obligations. This has left many homes unfinished and contributed to a deepening crisis as confidence in housing and capital markets dwindled, putting additional pressure on developers’ liquidity.
To revive the sector, which represents about a quarter of the world’s second-largest economy, Beijing has rolled out several support measures in recent months. However, some analysts argue that more measures are necessary.
UBS, in a research note on Friday, stated that property sales growth in major cities likely remained weak in September, indicating a limited rebound in sales despite efforts to ease the property crisis.
Market observers are closely watching whether Country Garden, with its nationwide projects, can avoid default once again by making payments at the last minute.
In September, Country Garden secured approval from its onshore creditors to extend yuan bond payments. The company also managed to make coupon payments on the offshore markets in the final hours of the grace period.
However, the developer still has not paid a $15 million coupon due on September 17 and another $40 million coupon due on September 27, both of which have 30-day grace periods.
($1 = 7.2951 Chinese yuan renminbi)
Reporting by Clare Jim; Editing by Lincoln Feast.
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