Country Garden warns of a possible default
Country Garden Holdings posted a record first-half loss of almost $7 billion and warned it may default on its debt, underscoring how China's deepening real estate slump has battered one of its former property giants.
Country Garden said that if its financial performance continues to deteriorate, the group might not be able to fulfill its debt obligations, «which may result in default,» according to a filing Wednesday. The developer also cited «material uncertainties» that may cast «significant doubt on the group's ability to continue as a going concern.»
The warnings highlight how China’s deepening real estate crisis has battered one of its property giants.
Once the country’s biggest developer by sales, Country Garden is in a debt spiral that may be worse than rival China Evergrande Group because it has four times as many property projects.
The housing slump adds to wider concerns about the world’s second-largest economy, where authorities remain reluctant to adopt stronger stimulus to reverse the slowdown. Signs of contagion from the housing woes have grown in recent weeks, from missed payments by one of China’s biggest shadow banks to a bond rout among Hong Kong developers.
Country Garden said it continues to negotiate with bond investors and banks to extend debt maturities to keep it afloat.
The firm has missed interest payments on some dollar bonds and faces a series of key dates in coming weeks. Holders of a yuan bond are scheduled to vote this week on its plan to extend payment on a note effectively due Sept.
4. The developer also faces the end of grace periods to pay a combined $22.5 million of dollar-note coupons in early September.
Country Garden’s bonds are already trading at severely distressed levels, with a
