Chinese developer Country Garden Holdings Co. faces its next major test Monday when creditors finish voting on company requests to extend more bonds, just days after dodging a default with last-minute payments.
Voting starts Sept. 7 and concludes Monday Sept. 11 on the builder’s proposal to extend principal payments for a group of yuan bonds by three years. The most urgent focus among them is a 1.435 billion yuan note with a put option Sept. 14 allowing investors to demand repayment.
That all means a lot is riding on the outcome Monday of the extension vote, given any failure to win approval could leave it staring down one of its most sizeable repayments in months just next Thursday. There’s also an even bigger 2 billion yuan bond puttable Sept. 24 among the securities on the ballot for extension.
“Country Garden remains at very high risk of future defaults, and every future coupon payment date is a risk event,” wrote Leonard Law, senior credit analyst with Lucror Analytics on Wednesday. “The company will have to seek an extension or restructuring for its offshore debt maturities going forward.”Country Garden is a household name in China, known for building homes in smaller cities.
The largest portion among bond interest falling due in less than two weeks is a $15.4 million coupon on a dollar bond. That interest payment should be by Sept. 17 but effectively comes due Sept. 18, the next business day. There’s a 30-day grace period.
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