2023-09-03 15:47:57
Troubled real estate developer Country Garden has paid off an outstanding Malaysian ringgit bond, according to people familiar with the matter, in its latest effort to avoid default.
The real estate developer, which received approval last Friday to roll over a separate yuan bond, has notified creditors that it has paid off the ringgit bond, said the insiders, who asked not to be identified for confidentiality. The 2.85 million ringgit ($611,365) bond actually matures on September 4, according to data compiled by Bloomberg.
The company, which is led by Yang Huiyan and one of China’s richest women, rattled the country’s financial markets last month after it missed an initial deadline to pay interest on $22.5m dollar bonds. The company is racing to make those payments before a grace period ends Sept. 5-6 or it risks default.
The people familiar with the matter said the company has notified creditors that it has not yet made those payments. Country Garden did not immediately comment when contacted over the weekend.
The company, which was the largest developer in China, posted record losses. That raised growing concerns about a worsening of China’s broader real estate debt crisis, which is heading into its fourth year. The company’s recent malaise has pushed sub-investment-grade dollar-denominated Chinese bonds — mostly issued by real estate firms — to their lowest levels in 2023.
New China crisis.. “Country Garden” is trying to avoid default
Impact on the economy
Country Garden is closely watched due to its importance to the broader economy due to its sheer size, with more than 3,000 residential projects in small towns and approximately 70,000 employees. That situation has helped it weather a cash crunch in the industry that has led to record defaults since China Evergrand Group defaulted for the first time on bond payments in 2021.
But renewed declines in the housing market threaten this trajectory. A default by Country Garden, which is now China’s sixth-biggest developer by contract sales, would risk repercussions worse than the Evergrande crisis, given that it has four times as many real estate projects.
The company recently incurred an unprecedented net loss of 48.9 billion yuan ($6.7 billion), while related sales – a major source of funding for developers – fell 35% through July. Meanwhile, the company still faces about $2 billion in bond obligations for the rest of the year.
The ringgit bond in question is 5.7% due 2027 and was issued by Country Garden Real Estate Sdn in 2020, according to data compiled by Bloomberg.
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