Distressed Chinese developer Country Garden Holdings Co. is approaching another deadline for voting by bondholders on its request to extend repayment, after winning such support on 10.3 billion yuan ($1.4 billion) of other local notes.
(Bloomberg) — Distressed Chinese developer Country Garden Holdings Co. is approaching another deadline for voting by bondholders on its request to extend repayment, after winning such support on 10.3 billion yuan ($1.4 billion) of other local notes.
The voting on the security, issued by unit Guangdong Giant Leap Construction, is set to conclude Thursday night 10 p.m. Beijing-time. The bond is the last in a group of eight notes that it asked to stretch repayment on by three years, with extension of the other seven having already been approved.
The security has 492 million yuan of outstanding principal due Oct. 21, meaning any failure to win extension would leave the builder facing a sizable repayment. Separately, two holders of a yuan bond received interest due Thursday, they said late Wednesday, asking not to be identified speaking about a private matter. The amount of interest due is 62.1 million yuan.
Country Garden has been buoyed by the other extensions, which left it with just about 2 billion yuan of principal and interest for local notes with maturities or put options remaining in 2023. Along with other developers whose shares have traded at or near penny-stock levels, the company’s stock has extended gains in the past few weeks after government steps for the sector — including lowering down payments and loosening some mortgage rules.
Country Garden’s victories, however, don’t alleviate longer-term challenges. Helmed by one of China’s richest women, Yang Huiyan, the firm has become a symbol of a broader property debt crisis that’s led to record defaults and prompted authorities to adjust policy to avoid more contagion. The builder must sort through 1.36 trillion yuan ($187 billion) of total liabilities, including several offshore bond interest payments before its next major test when a $1 billion note matures in January.
The firm has so far avoided defaulting but recently warned it still could, after posting a record first-half loss of almost $7 billion. In a sign of how seriously credit traders are taking that risk, the company’s dollar securities have continued to hover at deeply distressed levels from about 9 to 14 cents.
Investors will keep close tabs on Country Garden’s progress managing its liabilities, which make it one of the world’s most indebted developers. Any stumble 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.
Below is a calendar of Country Garden yuan bond principal and interest payments with maturities or put options remaining in 2023:
–With assistance from Shuiyu Jing.
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