Country Garden failed to pay interest on $15.4 million in bonds. It means he missed his last chance to avoid default on dollar bonds. The deadline was missed last week, and the victims are clients of Citicorp International Ltd.
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Country Garden failed to pay the interest
Country Garden’s insolvency is not a complete surprise, as the company had already warned last week that it would not be able to meet all its obligations on time. The most likely consequence of insolvency will be restructuring. The future of Country Garden may be determined by the attitude of its creditors. Today they have not yet made demands for repayment of the entire capital.
Country Garden is not only one of the largest developers, but one of the foundations of the Chinese economy. The construction industry is responsible for as much as 20%. China’s domestic product.
China responds. An unusual change in the budget
It is therefore not surprising that the authorities of the Middle Kingdom are taking many actions to avoid the insolvency of the industry – President Xi Jinping decided to increase the budget deficit from 3 to 3.8 percent.
These types of budget changes don’t happen often. However, the scale of the problems experienced by the Chinese construction sector is so large that an amendment was necessary.
The fall of a giant
China intends to spend a lot of money to rescue developers. The Chinese government intends to issue treasury bonds worth one trillion yuan every quarter. The money is also to be used to combat the effects of natural disasters.
The Chinese developer has maintained its leading position for years. In 2023, it unexpectedly dropped to seventh place in terms of contract sales. However, it still runs 3,000 residential projects and employs 70,000. people.
Other market giants are also in trouble. In August, Evergrande filed for protection from creditors in U.S. Bankruptcy Court. The most indebted developer in the world has become a symbol of the Chinese real estate crisis.
The collapse of Evergrande at the end of 2021 is the most spectacular event related to the bursting bubble on the Chinese real estate market. The problems of this sector are treated as one of the main problems affecting the entire Chinese economy, which has recently been getting into more and more trouble. The bankruptcy of Country Garden could be a much bigger blow to the Chinese economy, as there is a greater risk that it would trigger a real wave of similar bankruptcies.
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2023-10-25 08:25:32
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