Creditors of Country Garden Holdings are doubtful the Chinese developer will be in a position to service debt that will come due later this year without liquidity support, after it averted a catastrophic default this week at the last minute. With its financial situation precarious and prospects of China's property sector remaining grim, the offshore creditors expect the country's largest private developer to get liquidity support soon or for it to undergo a debt revamp. Country Garden's financial woes have become the latest to hit China's property sector, which was once a pillar of growth for the world's second-largest economy but has become its biggest drag since 2021 amid an unprecedented liquidity crisis.
HONG KONG/NEW YORK - Creditors of Country Garden Holdings are doubtful the Chinese developer will be in a position to service debt that will come due later this year without liquidity support, after it averted a catastrophic default this week at the last minute.
The company paid $22.5 million in dollar bond coupons on Tuesday hours ahead of a grace period deadline, pulling back from the brink of default for the second time in four days and bringing relief to the property sector. Country Garden has at least five coupon payments due this month, including two relatively sizable dollar bond coupons worth $15 million due on Sept. 17, and $40 million on Sept. 27, each with a 30-day grace period.
Those measures included lowering existing mortgage rates and preferential loans for first-home purchases in big cities, but analysts say more was needed to stabilise the sector, restore consumer confidence and sow the seeds for an eventual recovery.
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