Country Garden says it may not meet all debt obligations

BEIJING

Debt-saddled Chinese property giant Country Garden said yesterday that it did not expect to meet all of its offshore payment obligations in time as it edges towards a potential default.

Country Garden - one of China's biggest property developers - had racked up debts estimated at 1.43 trillion yuan ($196 billion) by the end of 2022.

Its cash flow problems have ignited fears that it could collapse with consequences for China's economy, which is already suffering from record-high youth unemployment, flagging consumption and a broader crisis in the real estate sector.

Country Garden, which was already formally at risk of default in September, last month repaid $22.5 million in interest on loans at the last minute during a 30-day grace period.

It then negotiated the rescheduling of several repayments with creditors, with several more deadlines looming over the coming weeks.

The firm yesterday missed a payment of $60 million.

In a filing with the Hong Kong Stock Exchange, the firm said it "expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods."

It promised to develop a "holistic solution in a fair and equitable manner" in repaying its debt obligations.

To that end, it said it has hired financial advisers "to evaluate the capital structure and liquidity" of its subsidiaries.

Many leading Chinese property developers have come under increasing financial pressure lately, with their astronomical levels of debt bringing bankruptcy concerns to the fore in a sector already damaged by the coronavirus pandemic and a broader economic slowdown in China.

Moody's last month downgraded Country Garden's credit rating.

Country Garden has four times as many projects as its rival Evergrande, which defaulted in 2021.