China's Country Garden dodges another default in relief for property sector
China's Country Garden made interest payments on U.S. dollar bonds hours ahead of a grace period deadline, a person close to the firm said, pulling back from the brink of default for the second time in four days and bringing some relief to the country's crisis-hit property sector.
China's largest private property developer failed to pay coupons on the bonds totalling $22.5 million due on Aug. 6, exacerbating fears over how much cash it has left and keeping markets on tenterhooks throughout the bonds' 30-day grace periods.
Though the amount was modest, failure to pay would have undermined fragile hope in financial markets that China's steady drip feed of policy stimulus was starting to stabilise the economy and its struggling property market.
It would also have raised the prospect of default on other dollar bonds as well as creditor calls to accelerate payments, bondholders and lawyers said, while heightening concern of a spillover into the banking system in the world's second-largest economy.
Country Garden also offered on Tuesday to extend repayment of eight onshore bonds worth 10.8 billion yuan ($1.48 billion) by three years, according to people with knowledge of the matter and documents seen by Reuters.
Country Garden warns of a possible default
Those bonds, issued by Country Garden and a unit, were set to mature and be puttable — an option given to bondholders to sell the notes back to the borrower at a fixed date — in 2023 and 2024, showed the documents sent to onshore creditors.
Country Garden did not respond to a request for comment.
The people familiar with the matter declined to be identified as they were not authorised to speak with media.
«Country Garden is trying hard to fulfil debt
