Country Garden China’s largest private property developer won approval from its creditors to extend repayments on six onshore bonds by three years, on Tuesday as per sources familiar with this. The news have sent Country Garden shares up as much as 10 percent.
The bondholder reprieve came as investors are closely monitoring whether China’s latest government stimulus measures including lowering existing mortgage rates and offering preferential loans for first-home purchases in big cities might be enough to restore consumer confidence and sow the seeds for an eventual property market recovery.
Country Garden voting
Country Garden’s onshore creditors voted on Monday for proposals by the distressed developer to extend repayments on eight onshore bonds worth 10.8 billion yuan (US$1.48 billion) by three years, sources said, marking the latest relief to China’s crisis-hit property sector.
The creditors approved extending six out of the eight bonds in the voting, which concluded by 10 p.m. Hong Kong time (1400 GMT) on Monday, as per sources.
Still there is no update from Country Garden.
The latest voting came after Country Garden on Sep 1 gained approval from creditors to extend payments by three years for a 3.9 billion yuan (US$533 million) onshore private bond.
It also made a last-minute dollar coupon payment offshore last week to avoid an immediate default.
Country Garden trying to stay afloat
One of the few large Chinese developers Country Garden that has not defaulted on debt obligations, has faced liquidity pressure with reduced available funds as sales plunged, as per its interim financial statements.
China’s Country Garden has 108.7 billion yuan (US$14.9 billion) of debts due within 12 months, while its cash level are around 101.1 billion yuan as of end-June.
China’s Country Garden in the offshore bond market has at least five coupon payments due this month, including two relatively sizable dollar bond coupons worth US$15 million due on Sep 17, and US$40 million on Sep 27, each with a 30-day grace period.
Any default by Country Garden China’s largest developer would exacerbate the country’s spiraling real estate crisis, put more strain on its struggling banks and could delay the recovery of not only the property market, but the overall Chinese economy.
Country Garden shares
Country Garden shares in Hong Kong listing surged after the news but are down nearly 60per cent since the start of the year. The broader Hang Seng Mainland Properties Index also reversed earlier losses and was up by 0.75per cent.
