Country Garden Group, one of the largest real estate development groups in China, has granted its creditors approval to extend the deadline for making payments, allowing it to avoid default.
And Bloomberg reported today, Saturday, that the creditors voted to extend the deadline for repayment of loan bonds worth 3.9 billion yuan (about 500 million euros) to 2026.
Extending the payment period
Had they refused, the company would have defaulted and become the largest Chinese real estate group to default since Evergrande in 2021.
However, the creditors agreed late on Friday to extend the payment deadline, which was expiring on Saturday, by three years, but the group did not confirm the result of the vote, according to what was reported by “Bloomberg” agency.
Despite receiving an additional deadline, Country Garden, which was the largest real estate developer in China last year, is not completely out of danger, as it faces next week the expiry of two loan interest payments worth $22.5 million.
At the beginning of last month, the group was unable to pay the two dues, and it obtained a grace period of thirty days, which ends on Tuesday.
The “Country Garden” real estate development company, which was considered for a long time financially solid, suffers from huge debts that raise fears of defaulting on payment, which will affect the financial system in China, two years after its competitor, Evergrande, failed to pay its dues.
The difficulties facing the two groups add to the crisis of a sector that has already suffered from the health crisis and the economic slowdown in China.
A week ago, the shares of the troubled Chinese real estate giant, Evergrande, fell by nearly 80% in Hong Kong, after the suspension of trading in its shares for 17 months ended.
The resumption of trading came after the company said it had met the guidelines set by the stock exchange, including publishing its financial results, albeit late, and complying with other listing rules.
In a sign of the company’s difficult financial situation, Moody’s downgraded Country Garden further this week, citing financial liabilities that are “highly speculative and likely to be in or very close to default.”
Record losses in the first half of the year
The group recorded record losses in the first half of the year exceeding 6.1 billion euros, compared to a slight profit a year ago amounting to 77 million euros, according to its current value.
And the company warned, last Wednesday, when publishing its financial results, that it had “done everything in its power” to pay its dues and did not rule out “defaulting in payment.”
China’s real estate sector is a stumbling block in the world’s second-largest economy’s attempt to emerge from the post-Covid slowdown.
Reforms in the Chinese housing sector in the late 1990s led to a boom in the real estate sector, which was contributed to by social traditions that consider owning a property a condition for marriage.
However, in recent years, Beijing has considered the huge debts accumulated by major companies in the sector to be an unacceptable source of danger to the state’s financial system and its overall economic soundness.
2023-09-02 08:39:44
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