In a bid to stave off an impending debt default, the beleaguered Chinese real estate giant, China’s Country Garden, has made crucial late interest payments on two of its US dollar bonds, narrowly escaping financial disaster. Multiple state media reports confirm that the company successfully settled the overdue interest of $22.5 million on the bonds just before the expiration of a 30-day grace period.
The China Securities Journal, reporting on this development, cited sources close to the company, instilling a sense of optimism among some investors who now believe that Country Garden may manage to secure the necessary funds to weather China’s ongoing real estate crisis.
This news comes on the heels of last-minute support from Chinese investors received by Country Garden late last week, enabling the postponement of payment on a maturing yuan-denominated bond.
While Country Garden, which held the distinction of being China’s largest residential developer by sales last year, has not officially commented on the situation, the successful resolution of the two dollar bonds’ payments suggests a temporary respite.
It’s worth noting that despite these crucial payments, the company’s financial troubles persist. Having reported a staggering loss of $7 billion in the first half of this year, Country Garden still faces numerous other looming debt deadlines.
With a total debt load of nearly $200 billion, the company is under mounting pressure to manage its financial obligations. Moody’s data indicates that it has approximately 31 billion yuan ($4.3 billion) in bonds set to mature by the end of 2024.
In a bid to navigate this financial quagmire, Country Garden is currently seeking approval from its creditors to delay payment on eight yuan-denominated onshore bonds, as reported by state-owned Yicai. These eight bonds collectively amount to 10.8 billion yuan ($1.5 billion) and are slated to mature later this year.
A pivotal meeting is scheduled for Thursday, where bondholders will vote on whether to delay payment on one of the eight bonds, adding further complexity to the company’s financial outlook.
In a candid admission last week, Country Garden acknowledged the possibility of default if financial conditions continue to deteriorate, underscoring the gravity of the challenges it faces in China’s turbulent real estate landscape.
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