Shares of Country Garden Holdings Co. rallied after Reuters reported the distressed Chinese property developer won approval from creditors to extend repayment on six yuan bonds by three years.
(Bloomberg) — Shares of Country Garden Holdings Co. rallied after Reuters reported the distressed Chinese property developer won approval from creditors to extend repayment on six yuan bonds by three years.
The deadline for votes on two of eight securities Country Garden had sought to extend will be pushed back until later Tuesday, people familiar with the matter told Bloomberg News earlier in the day. A Country Garden media representative didn’t comment.
The builder’s shares rose 5.8% as of 11:51 a.m. in Hong Kong, after the Reuters report, which cited two sources familiar with the matter and didn’t specify which notes had gotten extended. The company’s dollar bonds have continued to hover at deeply distressed levels from about 9 to 13 cents.
The country’s former largest builder had been asking to stretch principal payments of eight yuan notes by three years, just days after it dodged a default on dollar securities at the last minute. The yuan noteholders started voting Sept. 7 and were due to finish by 10:00pm Beijing-time Sept. 11. The outstanding principal of the securities totals 10.8 billion yuan ($1.5 billion).
The bonds on which voting was extended until later Tuesday were a note due in October and issued by unit Guangdong Giant Leap Construction, and a bond issued by Country Garden Real Estate that’s puttable in November.
One security that has been a key focus was not among those two: a 1.435 billion yuan note with a put option Sept. 14.
If Country Garden wins approval to extend that bond, it would avoid the risk that holders could demand early repayment Thursday. The firm has left much smaller payments go right up until final deadlines recently, including a combined $22.5 million in interest it paid in the final hours of grace periods ending Sept. 5-6.
Country Garden’s tumble into crisis has shocked China’s financial markets because it’s a household name, known for building homes in smaller cities. Helmed by one of the country’s richest women Yang Huiyan, the builder has become a symbol of a broader property debt crisis that’s led to record nonpayments and prompted authorities to adjust policy to try to avoid more contagion.
The firm has so far avoided defaulting but recently warned it still could, after posting a record first-half loss of almost $7 billion.
Country Garden had some more positive news in recent days, even as it’s far from out of the woods. Along with other developers whose shares have traded at or near penny-stock levels, it surged in the stock market last week after authorities introduced bolder measures recently including lowering down payments and loosening some mortgage rules.
And it’s navigated other recent deadlines beyond the interest on the dollar bonds. It 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 2.85 million ringgit ($609,430) coupon coming due on a bond in the Malaysian currency.
Yet, the firm, now China’s sixth-biggest developer as sales have slumped, had still faced nearly $2 billion of bond payments across different currencies due through the rest of the year.
Any payment failures 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.
The bonds involved with the extension plan that had been under voting included seven issued by unit Country Garden Real Estate and the one by unit Giant Leap.
–With assistance from Charlotte Yang.
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