Country Garden Offshore Odyssey: Landlord Country Garden (2007. HK), a Chinese business magnate, is getting ready for a big day on Monday when it negotiates two upcoming coupons worth a total of $66.8 million. The business is once again staring into the dark.
These payments are linked to the 6.5% April 2024 and 7.25% April 2026 bonds that Country Garden issued. They are essential. A 30-day grace time is a thin thread of hope, but the developer will have to deal with a tough problem later in the month. Some of its foreign debt could go bad if a $15 million September coupon isn’t paid by October 17, which is the strict due date.
China’s largest private developer has a lot of debt: $10.96 billion in overseas bonds and a huge 42.4 billion yuan ($5.81 billion) in loans in currencies other than yuan. The risk of default is high, which means that the debt will probably have to be restructured, and there is a greater chance that the company or its assets will be sold off by debtors.
As 2021 has gone on, China’s real estate market has become more and more in debt. Companies responsible for 40% of Chinese home salesmostly private property developerswere hurt by this financial chaos. They couldn’t pay their debts, which put a lot of building projects on hold.
The crisis has turned into a maze of economic uncertainty in the past two years. Developers are having a harder time getting cash because people are losing faith in the capital and home markets.
Also Read: Country Garden Debt Relief: A Catalyst for Chinas Property Sector
In reaction to the general industry crisis, Beijing has recently started a number of support measures. They are meant to help a sector that makes up a big part of the world’s second-largest economy get back on its feet. Sceptics, on the other hand, say that more needs to be done.
According to a study note from UBS that came out just this past Friday, even with the help of new measures, it’s likely that property sales growth in key cities was still slow in September. This means that sales have gone up a little, but not enough to make up for the effects of the current real estate problem.
The market is still paying close attention to Country Garden, the giant with a huge list of projects all over the country. Can Country Garden find its way through the dangerous seas and avoid going into default again? Maybe by paying late like it did in September? This is an important question.
The month before, Country Garden got permission from its Chinese creditors to put off paying its yuan bonds. It was especially impressive that it was able to settle payments at the very end of a grace period while still meeting coupon obligations on the foreign markets.
There are still bills that need to be paid, like a $15 million coupon that is due on September 17 and a $40 million coupon that is due on September 27. Both quietly count down the last 30 days of their grace periods while calling out, which emphasizes the risky bet that Country Garden is making.
Our Reader’s Queries
How much debt does Country Garden have?
Country Garden, a highly indebted builder with total liabilities of $186 billion, is facing a critical deadline. The company must make a payment by October 17-18, the end of a 30-day grace period, or risk defaulting.
What happens if Country Garden defaults?
If Country Garden defaults, it could worsen China’s real estate crisis, increase pressure on domestic lenders, and potentially hinder the recovery of both the property market and the broader Chinese economy. This highlights the importance of avoiding default and finding solutions to address any financial challenges.
Who is the owner of Country Garden daughter?
Country Garden’s founder, Yeung Kwok-keung (also known as Yang Guoqiang in Mandarin), and his daughter, Yang Huiyan, have made a generous pledge to donate a total of 5.9 billion yuan. This has landed them at the top of the Hurun Philanthropy List, which was released on Wednesday. Their contribution is a testament to their commitment to giving back to society and making a positive impact on the world.
How much does Country Garden owe?
Country Garden’s financial situation is concerning, with a staggering $15 billion in debt due by June 2024. The company’s total liabilities are a whopping 1.36 trillion yuan ($190 billion). These massive liabilities are cause for alarm and require immediate attention to ensure the company’s long-term stability.