China developer Country Garden misses two dollar bond coupon payments
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The home builder warned last week that it would post an unaudited net loss for six months ending on June 30.
PHOTO: BLOOMBERG
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HONG KONG – Major Chinese property developer Country Garden Holdings said on Tuesday it has not paid two United States dollar bond coupons that were due on Sunday totalling US$22.5 million (S$30.3 million), confirming market fears that the biggest privately owned developer in China is slipping into repayment troubles.
The bonds in question are notes due in February 2026 and August 2030, the firm told Reuters. Both payments have 30-day grace periods, according to investors citing prospectuses.
China’s property sector has seen a string of debt defaults the world’s most indebted property developer,
Country Garden, which had total liabilities of 1.4 trillion yuan (S$263 billion) at the end of 2022, and large exposure in lower-tier cities, told Reuters in a separate statement that it is improving capital arrangements to ensure the legal rights of creditors.
It added that its usable cash had declined, showing “periodic liquidity stress”, due to a deterioration in the sales and refinancing environment, and the impact from various fund regulations.
“The company has been holding fast, but it’s hard to see the dawn light,” it said, highlighting efforts to ensure home deliveries and debt repayments as the industry grapples with “unprecedented difficulties”.
Its Hong Kong-listed shares fell 14.4 per cent on Tuesday, their biggest daily drop since December 2022, and most of its dollar bonds sank to below 10 cents on the dollar, according to Duration Finance.
Its September 2025 bond traded at 9.21 US cents on the dollar at 8.27 local time, down from 14 cents on Monday, while Shenzhen trading of an onshore bond was temporarily suspended after it plunged 28.6 per cent.
“The fact that (Country Garden) is struggling to address an interest payment, rather than a full bond principal repayment, perhaps underscores its very tight liquidity,” said CreditSight analyst Nicholas Chen.
“Given (its) size, we think such an event will have a negative spillover effect for the sector, particularly on investor sentiment towards other privately-run developers that are still afloat.”
Last week, Country Garden aborted a US$300 million share placement at the last minute, saying it had not reached a “final agreement” for the deal to go ahead.
The home builder also warned last week that it would post an unaudited net loss for the six months ending on June 30, compared with a net profit of 1.91 billion yuan a year earlier. REUTERS
