HomeBusinessCountry Garden misses bond payments as Chinese properties fear flare-up

Country Garden misses bond payments as Chinese properties fear flare-up

By Clare Jim

HONG KONG (Reuters) – Country Garden said on Tuesday it has failed to pay the two-dollar bond coupons due Aug. 6, confirming market fears that China’s largest private developer will run into repayment trouble.

The bonds in question are banknotes maturing in February 2026 and August 2030, both with a 30-day grace period, investors said, citing prospectuses. The coupons were worth a total of $22.5 million.

China’s giant real estate sector has suffered a series of defaults from developers under cash crunch since late 2021, with the China Evergrande Group, the world’s most indebted real estate developer, at the center of the crisis.

Country Garden, which had total liabilities of 1.4 trillion yuan ($194 billion) at the end of 2022, told Reuters in a statement that its usable cash had declined due to a worsening sales and refinancing environment and the impact of various fund regulations.

Stocks and bonds of the Guangdong-based company, which ranks third in national sales this year, have faced sell-off pressures in recent weeks as liquidity problems resurfaced.

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One of the company’s onshore bonds was temporarily suspended from trading in Shenzhen after falling 28.6% in the morning. January 2024 dollar bonds were trading at 18.331 cents per dollar, up from 25 cents on Monday, according to Duration Finance.

Hong Kong-listed shares lost 15% as of 0708 GMT.

Last week, Country Garden aborted a $300 million stock placement at the last minute after failing to reach a “final agreement” to go through with the deal.

The homebuilder also warned last week that it would post an unaudited net loss for six months ended June 30, compared to a net profit of 1,910 million yuan ($267 million) a year earlier.

($1 = 7.2117 Chinese Yuan Renminbi)

(Reporting by Clare Jim; additional reporting by Jason Xue in Shanghai; editing by Muralikumar Anantharaman, Kim Coghill, and Lincoln Feast.)

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