Country Garden to issue nearly US$13 billion in bonds as part of restructuring plan

CHINA’S Country Garden said on Friday it would issue bonds worth about US$13 billion as part of offshore debt restructuring, a move aimed at easing one of the biggest defaults in the country’s property sector.

The restructuring, which also includes issuance of warrants and new shares, could cut more than US$11 billion in debt if fully implemented, the company said.

The developer plans to issue zero-coupon mandatory convertible bonds (MCB), consisting of US$7.5 billion (MCB A) for scheme consideration payments and US$5.4 billion (MCB B) for additional creditor settlements, according to a filing.

A smaller tranche of US$39.5 million (MCB C) will resolve a bilateral loan, the company said.

The conversion price for the bonds is set well above the current share price, and the instruments will convert into equity over time, significantly diluting existing shareholders but offering creditors a path to recovery.

The plan follows creditor approval earlier this month and underscores efforts to stabilise China’s real estate sector after years of turmoil triggered by Evergrande’s collapse in 2021.

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Country Garden, once China’s largest homebuilder, has faced mounting liquidity stress amid weak home sales and tighter funding channels.

Shareholder and regulatory approvals are pending, with completion targeted by the year-end. REUTERS