China is facing a strong real estate crisis
Country Garden, one of the largest real estate development groups in China, which is experiencing financial difficulties, is negotiating with its creditors again to reschedule payments owed to it in an effort to avoid a default.
The company, which has always been considered financially solid, has been suffering in recent months from the real estate crisis in China, which has begun to threaten the survival of many parties in the sector.
Country Garden, which was at risk of default in early September, repaid loans totaling $22.5 million before the deadline.
The group is now seeking a grace period from its creditors as the deadlines for additional payments approach.
Country Garden requested the rescheduling of installments related to eight bonds with a total value of 10.8 billion yuan (approximately $1.4 billion), with the deadline for repaying one of them being Thursday, according to Bloomberg.
Creditors have until 14:00 GMT to decide on a proposal to postpone maturity.
A few days ago, creditors agreed to postpone the maturity of a bond loan worth 3.9 billion yuan, or about 500 million euros, until 2026.
Until last year, Country Garden was still the largest developer in China.
Its default on its debts raises concerns in the markets and increases the difficulties of the real estate sector, which has already suffered from the health crisis and economic slowdown in China.
At the end of 2022, the company’s debts were estimated at about 1,430 billion yuan (about 193 billion dollars).
At the end of June, the group’s available liquidity was estimated at approximately 147.9 billion yuan (about 20 billion dollars), an amount it was using to complete housing that the owners had paid for before they were built.
Chinese real estate development groups have long relied on this financing model, but in recent years the authorities have come to consider that their huge debts pose a great risk to the economy and financial system in China.
Consequently, since 2020, Beijing has gradually tightened the conditions for these groups to obtain loans, limiting the sources of financing for companies that already face debt.
This led to several companies defaulting on payments, most notably Evergrande Group, which undermined citizens’ confidence and had a negative impact on the sector as a whole.
2023-09-11 09:17:15
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