China’s Country Garden slumps to record low after halting bond trading
Investing.com — Hong Kong shares of Chinese property developer Country Garden Holdings (HK:2007) slumped to a new record low on Monday after the firm said it will suspend trading in its onshore bonds amid growing debt problems.
The firm — one of China’s biggest property developers — said in a filing released over the weekend that it will suspend the trading in onshore bonds of 11 of its units, after it missed payments on two dollar bond coupons worth $22.5 million earlier in August.
The move also comes amid Chinese media reports that the firm is seeking a potential debt restructuring, after it flagged a massive, up to nearly $8 billion loss for the first half of 2023.
Country Garden’s shares slumped 17.4% to a record low of HK$0.81 by the midday break. It was the worst performer on the Hang Seng index, which fell 2.5%.
Other major property developers also sank, with Longfor Properties Co Ltd (HK:0960) and Sunac China Holdings Ltd (HK:1918) losing 1.7% and 3.4%, respectively. China Jinmao Holdings Group Ltd (HK:0817), which had also warned last week of a sharp drop in its half-year profit, slumped over 7% on Monday.
Country Garden’s woes mark a reversal for the firm’s position over the past three years, where it was seen as having largely avoided a downturn in China’s massive property market.
Declining construction activity, limited funding sources, and a sharp drop in sales battered China’s property sector over the past three years, with the default of China Evergrande being a particular highlight.
A potential default by Country Garden could end up becoming the most high-profile default in China since Evergrande, and bodes poorly for the country as it struggles with post-COVID economic recovery.
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