Chinese property giant battling debt crisis clears first hurdle

There has been an update regarding Country Garden, China’s largest property development company, which is struggling to survive due to its debts.

The company sought approval from its creditors to extend the maturity of its 3.9 billion yuan ($540 million) bond in a bid to avoid default.

Country Garden has received approval from its creditors to extend its bond payments, according to sources and a document seen by Reuters.

43.64 PERCENT OF CREDITORS AGAINST

In an official document shared with the bondholders, it was indicated in Friday’s vote that 56.08 percent of Country Garden’s creditors approved the request, 43.64 percent opposed and 0.28 percent abstained.

This development, which means the company can repay its debt in installments within three years, was said to be a great relief for both the struggling company and the crisis-affected real estate sector.

ANNOUNCED A RECORD LOSS OF $6.7 BILLION

On the other hand, Country Garden, once China’s largest private real estate developer by sales, posted a record loss of $6.7 billion in the first half of the year as it struggled to recover from the liquidity crisis gripping the industry. country real estate.

The half-year results, published on Wednesday, represent the biggest losses ever recorded by the group, which until recently was considered safer than most of its peers.

COMPARED TO EVERGRANDE…

The company’s current woes are part of a two-year real estate liquidity crisis that began when another Chinese property giant, Evergrande, defaulted in 2021, showing signs of spilling over into the Chinese investment sector.

Until this year, Country Garden was the largest Chinese developer in terms of sales.

The company is considered to be financially strong compared to peers like Evergrande.

Country Garden’s liabilities are 59 percent of Evergrande’s.

The company has 3,103 projects across China, while Evergrande’s had about 800.

THE SECTOR, WHICH WANTS 1 QUARTER OF THE ECONOMY, IS IN CRISIS SINCE 2021

Country Garden’s default will worsen the country’s deepening housing crisis; It is claimed that not only the real estate market, but also the Chinese economy in general may delay the possibility of recovery.

China’s real estate sector, which accounts for about a quarter of the economy, has lurched from one crisis to another since 2021 after authorities thwarted a contractor-debt-fuelled construction boom.

An unprecedented liquidity crisis in the sector poses a great risk to the rapid recovery after Covid-19 in the world’s second largest economy, which has shaken global markets.

The extension of Country Garden’s debt payment gave China’s largest private developer time to avoid default.