A beleaguered developer faces a $15 million deadline as China’s real estate sector struggles with a debt crisis.
Embattled Chinese real estate developer Country Garden faces further liquidity challenges as payment of $15 million in interest related to offshore bonds comes due after twice avoiding default this month at the last minute. confronting.
The country’s top private developer, whose financial woes have worsened the outlook for the real estate sector and prompted the Chinese government to announce a slew of support measures, was deemed in default after Monday’s coupon payment deadline. A grace period of 30 days will be granted.
If Country Garden fails to pay the $15 million by the end of the grace period in mid-October, the principal will become due immediately and any failure to repay the notes will result in cross-default terms on other credits. will be activated, said Sandra Chow, co-director of Country Garden. Asia Pacific research at CreditSights.
With property sales in the world’s second-largest economy still very weak, Country Garden’s cash levels have plummeted and it will be “very difficult” for Country Garden to meet its debt obligations. Deaf,” Chow said.
A Country Garden spokeswoman did not respond to a request for comment from Reuters on Monday about the latest debt service obligations.
Last month, Country Garden warned that it was at risk of default if its financial performance continued to deteriorate. The company has 108.7 billion yuan ($14.9 billion) of debt due within 12 months, but had about 101 billion yuan ($13.9 billion) in cash as of June.
The company avoided default by getting approval from creditors for payment extensions on its onshore private placement bonds, providing significant relief to crisis-hit developers and the crisis-hit real estate sector in China.
The company missed $22.5 million worth of coupon payments tied to its $2 bonds in August, but managed to transfer the funds before the grace period ended this month, avoiding default.
Last week, domestic bondholders agreed to extend repayments on seven other Country Garden bonds for three years.
Shares in Country Garden, one of the few major Chinese developers not in default, rose nearly 1% in Hong Kong on Monday.
Many creditors believe that if Country Garden does not receive liquidity support soon, it will need to restructure its offshore debt.
Some of Country Garden’s offshore creditors have begun talks with New York-based law firm Koble & Kim and London-based Ashurst, with the real estate developer seeking to settle its debts. If restructuring is required, we are considering forming a group.