State Media Reports: Country Garden Successfully Avoids Default with Last-Minute Debt Payments

Country Garden, the embattled Chinese real estate firm, has made late interest payments on two US dollar bonds, avoiding an imminent debt default. According to multiple state media reports, the company made the payments shortly before the end of a 30-day grace period. The China Securities Journal reported that the overdue interest of $22.5 million on the bonds has been paid, citing people close to the company. This development has fueled optimism among some investors that Country Garden may be able to find enough cash to see it through the country’s real estate crisis.

This comes after the company won last-minute support from Chinese investors to delay payment of a maturing yuan-denominated bond. However, the crucial payments do not mean that Country Garden is completely out of the woods. The company posted a loss of $7 billion in the first six months of the year and still faces a number of other debt deadlines. With nearly $200 billion in total liabilities, the company faces mounting pressure to pay off its debts. Moody’s reports that it has about 31 billion yuan ($4.3 billion) in bonds set to mature through the end of 2024.

Currently, Country Garden is seeking approval from its creditors to delay payment on eight onshore bonds denominated in yuan. The company is expected to hold a meeting on Thursday with bondholders to vote on whether to delay payment on one of the eight bonds. These bonds have a total outstanding balance of 10.8 billion yuan ($1.5 billion) and are set to mature later this year. Country Garden’s financial condition continues to deteriorate, and it admitted last week that it could default if the conditions persist.

Shares in Country Garden experienced a drop of up to 5% on Tuesday but pared losses following the publication of the media reports. The stock closed down 1% in Hong Kong and has lost 62% of its value this year. The company, which was China’s largest residential developer by sales last year, has not responded to CNN’s request for comment.

As the real estate crisis in China persists, investors will closely monitor Country Garden’s ability to manage its debt obligations and navigate the challenging market conditions. The outcome of the bondholders’ meeting on Thursday will provide further insight into the company’s financial prospects.

Original Story at www.cnn.com – 2023-09-05 08:19:00