© Reuters. FILE PHOTO: A person walks past a construction site of residential buildings by Chinese developer Country Garden, in Beijing, China August 11, 2023. REUTERS/Tingshu Wang/File Photo
By Xie Yu, Kevin Huang and Li Gu
HONG KONG/BEJING (Reuters) -Country Garden has won approval from its creditors to extend payments for an onshore private bond, two sources said on Saturday, in a major relief for the embattled Chinese property developer as well as the crisis-hit property sector.
Country Garden was seeking approval from its creditors to extend the maturity for a 3.9 billion yuan ($540 million) onshore private bond in a vote that ended on Friday night.
China’s largest private property developer had proposed to repay the debt in instalments over three years instead of meeting its obligations by Saturday. The bond is not publicly traded.
The development buys time for the firm to avoid default in what will likely be a major relief for financial markets and the Chinese government, which has announced a raft of measures to support the indebted property sector.
Country Garden did not immediately respond to a request for comment. The sources asked not to be named as they were not authorised to speak to the media.
A default by Country Garden would have exacerbated the country’s real estate crisis, put more strain on its onshore lenders and further delayed the prospect of a recovery of the property market.
The developer’s financial woes became public last month after it missed two dollar-coupon payments totalling $22.5 million, raising fears that the country’s deepening property debt crisis would spill over to the broader financial sector.
China’s property sector, which accounts for roughly a quarter of the economy, has lurched from one crisis to another since 2021 after the authorities cracked down on developers’ debt-fulled building boom.
As Country Garden’s financial woes spiralled over the past month, Beijing has rolled out a string of support measures including cutting mortgage rates and removing some curbs on home purchases.
The authorities are set to take further action, including relaxing home-purchase restrictions as they scramble to tackle a deepening crisis in its massive debt-riddled property sector, Reuters reported on Friday.
Country Garden still faces another major challenge next week, when the grace period ends for last month’s missed coupon payments worth a total of $22.5 million on the two offshore dollar bonds.
Read the full article here
