Country Garden has wired ringgit bond coupon
DISTRESSED Chinese builder Country Garden Holdings has wired a coupon payment coming due on a ringgit-denominated bond, according to people familiar with the matter, in its latest effort to avoid default.
The developer, which won approval on Friday (Sep 1) to extend a separate maturing yuan bond, told creditors that it has made the ringgit coupon payment, the people said, asking not to be identified speaking about a private matter. The RM2.85 million (S$830,000) coupon is effectively due Sep 4, according to data compiled by Bloomberg.
Helmed by one of China’s richest women Yang Huiyan, the firm jolted the nation’s financial markets last month after missing an initial deadline to pay a combined US$22.5 million of interest on two dollar bonds. The clock is ticking to make those payments before a grace period that ends Sep 5-6 or risk default.
The firm told creditors it has yet to make those payments, the people familiar said.
Country Garden didn’t immediately offer a comment when reached over the weekend.
Formerly China’s biggest developer, Country Garden has fallen into distress amid record losses. That’s fuelled mounting concerns about worsening of China’s broader property debt crisis that’s heading into its fourth year. The firm’s recent distress dragged Chinese junk dollar bonds – mostly issued by property firms – to their lowest levels of 2023.
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Country Garden is being closely monitored in part given its importance to the broader economy due to its sheer size, with more than 3,000 housing projects in smaller cities and about 70,000 employees. That status had helped it withstand an industry cash crunch that led to record defaults since China Evergrande Group first missed bond payments in 2021.
But renewed housing market declines are threatening that streak. Any stumble by Country Garden, now China’s sixth-largest builder by contracted sales, risks worse fallout than from Evergrande given it has four times the property projects.
It recently posted an unprecedented net loss of 48.9 billion yuan (S$9.24 billion) while attributable sales – a key source of developer funding – fell 35 per cent through July. Meanwhile, it still faces nearly US$2 billion of note obligations for the rest of this year.
The ringgit bond in question is a 5.7 per cent note due 2027 that was issued by unit Country Garden Real Estate in 2020, according to Bloomberg-compiled data.
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