Country Garden gets more respite as repayment on US$1.4 billion of bonds extended
DISTRESSED Chinese developer Country Garden Holdings won creditor support to extend repayment on US$1.4 billion of local bonds, a significant respite that cuts debt due in coming months.
Holders of the securities voted in favour of the company’s plan to stretch principal repayments by three years, people familiar with the matter said, asking not to be identified discussing a private matter.
The result leaves just about two billion yuan (S$375 million) of principal and interest for local notes with maturities or put options remaining in 2023.
Chinese property developer shares jumped, with Country Garden up 6.5 per cent.
The seven notes are among a group of eight bonds the company was seeking approval to extend in voting that started on Sep 7.
Voting on the eighth note, from unit Guangdong Giant Leap Construction, was extended to Thursday (Sep 14) 10 pm, Beijing-time, according to a holder who said he was given the information by a company representative.
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That security has 492 million yuan of outstanding principal, and matures on Oct 21, according to data compiled by Bloomberg.
Country Garden’s victories, however, don’t alleviate looming longer-term challenges.
Helmed by one of China’s richest women, Yang Huiyan, the company has become a symbol of a broader property debt crisis that’s led to record defaults and prompted the authorities to adjust policy to avoid more contagion.
It still needs to repay interest due on the yuan notes, including a 62.1 million yuan coupon due on Thursday.
The builder also faces several offshore bond interest payments before its next major test when a US$1 billion bond matures in January.
Country Garden has so far avoided defaulting but recently warned that it still could, after posting a record first-half loss of almost US$7 billion.
In a sign of how seriously bond traders are taking that risk, the company’s dollar securities have continued to hover at deeply distressed levels, from about nine to 14 US cents.
The outstanding principal of all eight yuan securities in the votes totals 10.8 billion yuan, including the seven that have been extended which were issued by unit Country Garden Real Estate.
The company has left much smaller payments right up until final deadlines recently, including a combined US$22.5 million in interest it paid in the final hours of grace periods ended Sep 5-6.
Country Garden’s tumble deeper into crisis from last month, when it missed the initial deadline on that dollar note interest, has shocked China’s financial markets.
The company is a household name, known for building homes in smaller cities.
The developer didn’t immediately offer a comment when reached on Wednesday.
The voting outcome adds to more positive news in recent days, even as Country Garden is far from being out of the woods.
Along with other developers whose shares have traded at or near penny-stock levels, it has extended gains in the stock market this week after the authorities introduced bolder measures recently including lowering downpayments and loosening some mortgage rules.
And it’s navigated other recent deadlines beyond the interest on the dollar bonds.
The developer gained approval in a separate creditor vote that ended earlier this month to extend payments into 2026 on a local bond with 3.9 billion yuan of outstanding principal.
The builder also wired a RM2.85 million (S$829,245) coupon coming due on a bond in the Malaysian currency.
Still, any future failures to honour debts could impact China’s housing market even more than a landmark default in late 2021 by China Evergrande Group, as the builder has four times as many projects.
Cailian reported earlier that Country Garden had won approval to extend one of the yuan bonds. Reuters reported on Tuesday that it had gotten approval to extend six of the securities. BLOOMBERG
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