Country Garden: How bad are the Chinese property developer's debt problems?
By Xie Yu
HONG KONG (Reuters) -China is grappling with a slowdown that has rattled global markets, with the spotlight now focused on troubled developer Country Garden's debt crisis in the property sector, which accounts for roughly a quarter of the economy.
On Thursday, Country Garden delayed a deadline for creditors to vote on whether to postpone payments for an onshore 3.9 billion yuan ($537 million) private bond until Friday 1400 GMT, saying it wanted to give bondholders sufficient time to prepare for the vote.
The vote is a key hurdle as Country Garden strives to avoid default, with one holder of its dollar bonds saying if the company cannot extend its domestic debt, it will be unable to service external bondholders.
Who is Country Garden and why do people care about its debt woes?
Until this year Country Garden was the largest Chinese developer by sales. The company was considered financially sound compared with peers like China Evergrande (HK:3333) Group which defaulted on its debt in 2021.
While Country Garden's liabilities are only 59% of those at Evergrande, it has 3,103 projects across China, compared with around 800 for Evergrande — making the company matter to systemic stability while also fueling contagion fears as it shows signs of financial stress.
A default by Country Garden would exacerbate the country's spiraling real estate crisis, put more strain on its onshore lenders, and could delay the prospect of a recovery of not only the property market, but the overall Chinese economy.
How bad is Country Garden's financial situation?
Country Garden's total liabilities were about $194 billion by the end of June, unchanged from the end of 2022, based on its first-half financial results.
It faces 108.7 billion
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