HomeMarket NewsCountry Garden's Debt Restructuring Provides Relief for China's Real Estate Sector

Country Garden’s Debt Restructuring Provides Relief for China’s Real Estate Sector

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Creditors of Country Garden, a troubled Chinese real estate developer, have allowed the company to avoid default by extending the payment deadline for an onshore private bond. This development brings some relief to Chinaโ€™s debt-ridden property sector.

The payment deadline for the 3.9 billion yuan ($536.4 million) bond has been extended to 2026, according to multiple media reports. The original deadline was set for Saturday.

Additionally, Country Garden has informed lenders that it has made the coupon payment of 2.85 million ringgit ($612.2 thousand) due on a separate ringgit-denominated bond, as reported by Bloomberg.

Chinaโ€™s real estate sector has been experiencing a liquidity crisis, with Country Garden missing payments on dollar-denominated notes and China Evergrande filing for Chapter 15 bankruptcy protection.

Despite the fact that Country Gardenโ€™s liabilities are only 59% of Evergrandeโ€™s, it has significantly more projects across China (3,100 projects compared to Evergrandeโ€™s ~800), as reported by Reuters.

Following the debt restructuring agreement and Beijingโ€™s stimulus actions, Country Gardenโ€™s shares on the Hong Kong Stock Exchange rose by 14.9% on Monday, although they have declined by 62.1% year-to-date.

It is worth noting that Moodyโ€™s recently downgraded Country Gardenโ€™s ratings and maintained a negative outlook due to the companyโ€™s โ€œtight liquidity and the likely weak recovery prospects for bondholders.โ€

Nevertheless, the debt deal, along with Beijingโ€™s stimulus measures, has had a positive impact on the Hang Seng Mainland Properties Index, which increased by 8.2%. The Shanghai Composite Index (SHCOMP) closed 1.4% higher and the Hang Seng Index (HSI) rose by 2.5%.

More on Chinaโ€™s Property Crisis

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