Chinese Country Garden may be unable to make foreign debt payments

China’s largest real estate development company, Country Garden, announced that it may not be able to meet all of its overseas bond payment obligations.

Country Garden, which will join Chinese real estate development companies in default, is preparing for one of China’s largest debt restructurings.

Companies that make 40 percent of home sales in China defaulted after the liquidity crisis that severely affected the real estate sector in 2021, and the construction of many houses was left unfinished.

Country Garden has not defaulted so far, but has not paid coupons on some of its dollar-denominated bonds since last month and will have a 30-day grace period to pay its debt starting next week.

Country Garden was supposed to pay $66.8 million in coupons yesterday on its 2024 and 2026 dollar bonds, but the company did not disclose whether it paid these coupons.

In its statement today, the company said it was unable to make a principal payment of HK$470 million (US$60.04 million) on certain debts.

If Country Garden fails to pay its $15 million September bond coupon by Oct. 17 next week, at the end of a 30-day grace period, all of the company’s foreign bonds could be considered defaulted.

Country Garden stated that it “will not be able to meet all of its foreign bond payment obligations when due or within additional periods to repay its debt” and that non-payment may lead creditors to request acceleration of payment of debts. or initiate enforcement proceedings.

Country Garden has foreign bonds worth US$10.96 billion and foreign loans worth 42.7 billion yuan ($5.86 billion). (REUTERS)