The company logo of Chinese developer Country Garden is pictured at the Shanghai Country Garden Center in Shanghai, China, 9 August 2023. Portal/Aly Song/File Photo Acquire License Rights
SYDNEY, Oct 18 (Portal) – Country Garden Holdings (2007.HK), China’s largest private real estate developer, is just hours away from defaulting on its $11 billion in foreign debt, but will face the make the coupon payment due on Wednesday to its bond investors.
The looming default, which would be the latest in a string of bankruptcies by Chinese developers, would deepen the crisis in the real estate sector, which accounts for about a quarter of the world’s second-largest economy.
Country Garden will default on its foreign debt if it does not make a $15 million payment on a September 2025 bond by midnight in New York (0400 GMT).
The repayments had not been made as of early Wednesday, Portal reported. The company warned last week of its inability to meet its offshore debt obligations.
Country Garden did not immediately respond to a request for comment from Portal on Wednesday.
The latest indicator of the health of China’s struggling real estate market will become clear on Wednesday when property sales by square footage are released. The national prices for new build properties for September will be published on Thursday.
With nearly $11 billion in offshore bonds and $6 billion in onshore loans, a default by Country Garden would lay the groundwork for one of the largest corporate debt restructurings in China.
Country Garden has also missed other offshore payments in recent weeks, although the 30-day grace period for those payments has still not expired.
A default would pave the way for Country Garden’s offshore creditors to begin negotiations with the company’s financial advisers to begin a restructuring process that could take many months given the scale of the debt.
A report from CreditSights released on Tuesday concluded that China’s state-owned developers still had access to financing markets, while private firms were having the most difficulty raising new capital.
“With homebuyers still biased towards state-owned developers, the privately owned developers who have not yet defaulted are likely to find it increasingly difficult to stay afloat, hampered by both insufficient contractual revenue generation and the “Inaccessibility to financing opportunities is under pressure,” the report says.
Reporting from Scott Murdoch in Sydney; Editing by Sonali Paul
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