By Clare Jim
HONG KONG (Reuters) -News that big developer Country Garden was not able to make $22 million in bond payments is an alarm call for China's government that more private property companies are close to a tipping point if financial support doesn’t materialise soon.
As Country Garden was the largest developer in the country before this year, industry executives and analysts told Reuters its missed payments this week could prod regulators into rolling out stronger aid measures, but they had little faith such steps would turn the debt-laden sector around any time soon.
Country Garden told Reuters on Tuesday it was not able to make $22.5 million in coupon payments due on Aug. 6 on two, dollar-denominated bonds, though both have 30-day grace periods.
China's property sector, which accounts for a quarter of the economy, has already seen a string of debt defaults by cash-squeezed developers since late 2021, with China Evergrande Group, the world's most indebted property developer, at the centre of the crisis.
Contagion fears in the market re-surfaced last month when four high-profile developers signalled liquidity stress amid slumping home sales nation-wide.
Problems are even spreading at state-backed developers, which are seen as having better access to cheap funding and are more likely to benefit from government support.
State-backed Sino-Ocean Group is seeking to extend some offshore bond payments, while Greenland Holdings defaulted on an amortization payment.
A unit of Dalian Wanda Group, the largest commercial property developer in the country, has also missed a dollar coupon payment, though Greenland and the Dalian Wanda unit managed to make the payments later, avoiding official defaults.
Country Garden's
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