Country Garden, one of China’s biggest debt-ridden real estate groups, won in a crucial vote the rescheduling of a repayment to avoid a default, the financial news agency Bloomberg wrote on Saturday. The promoter, who has long been deemed financially sound, was unable in early August to repay two interests on loans, at a time when the real estate sector is experiencing an unprecedented crisis in China.
After record losses recorded in the first half, it had to pay this Saturday the repayment of a bond loan for a total amount of 3.9 billion yuan (about 500 million euros). According to Bloomberg, the creditors gave their agreement in extremis Friday evening to postpone the deadline to 2026 in a crucial vote. Country Garden did not immediately communicate.
The group, which was still the biggest developer in China last year, is not out of the woods. Another deadline looms next week for the repayment of $22.5 million on two loan interests. Country Garden is formally at risk of default, after a 30-day grace period which will end on Tuesday. At the end of 2022, Country Garden had a considerable debt estimated at 1.430 billion yuan (180 billion euros). His situation raises fears of a bankruptcy with immeasurable consequences for the financial system in China, two years after the descent into hell of its competitor Evergrande.
Country Garden “does not have sufficient sources of cash to meet the upcoming maturity of its obligations,” said rating agency Moody’s, which on Thursday lowered the group’s strength rating by three notches. The setbacks of Evergrande and Country Garden, two real estate giants, further weaken a sector already scalded by the health crisis and the economic slowdown in China. This situation fuels distrust among potential buyers, which further worsens the financial situation of developers, including public groups deemed solid.
