Distressed Chinese developer Country Garden Holdings Co. is delaying a deadline for holders of a yuan bond to vote on its plan to extend payment, a last minute change as the company seeks to avert its first default.
(Bloomberg) — Distressed Chinese developer Country Garden Holdings Co. is delaying a deadline for holders of a yuan bond to vote on its plan to extend payment, a last minute change as the company seeks to avert its first default.
The country’s former largest builder is pushing the deadline back to Aug. 31 from Aug. 25, according to a filing to the Shanghai Stock Exchange’s private disclosure platform that was seen by Bloomberg News. That comes just hours before the previously scheduled voting deadline of 10 p.m. Beijing time Friday.
Country Garden, whose worsening cash crunch has shaken Chinese markets in recent weeks, asked to stretch payment of the 3.9 billion yuan ($535 million) of outstanding principal into 2026. The delay on the voting deadline is to give sufficient time for bondholders to discuss and decide on the proposals, according to the private filing.
Some noteholders had demanded full repayment by the effective due date of Sept. 4, the first business day following the note’s maturity date two days earlier. The offering document doesn’t say if there are grace periods for the bond. Meanwhile, a grace period for Country Garden to pay a combined $22.5 million of dollar-note coupons ends shortly after the yuan bond is due.
A missed payment could impact China’s housing market even more than China Evergrande Group’s late 2021 default as Country Garden has four times as many projects. The firm, now China’s sixth-biggest developer as sales have slumped this year, faces a liquidity crisis and has as much as $2.9 billion of note obligations the rest of 2023. The firm has warned about “major uncertainties” about bond redemptions.
Country Garden didn’t immediately offer a comment when reached outside of office hours.
China’s property sector has been worsening anew, with July’s decline in new home sales the biggest in a year. Months earlier, the industry had returned to growth following the dropping of pandemic-related restrictions. Fresh worries about whether builders have enough money to complete construction of purchased residences has weighed on demand and prices, prompting calls for policy and other support from Beijing as the economy slows. But to date, there has been a lack of broad stimulus.
The uncertainty surrounding Country Garden has sent nearly all of its dollar bonds to below 10 cents and made the firm the worst performer this month in a Bloomberg index of such debt issuers in Asia. The firm’s note due in January was at 78 cents two months ago, according to prices compiled by Bloomberg.
Meanwhile, the builder’s shares have plunged 52% from a July 28 peak, hitting record lows this week.
–With assistance from Emma Dong.
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