Country Garden Faces Imminent Default Risk as Debt Deadline Looms


Summary: Shares of Chinese property developer Country Garden plummeted to their lowest point in eight months amid concerns over its mounting debt. If the company fails to make a $15 million coupon payment on Tuesday, all of its offshore debt could potentially be in default. Country Garden narrowly avoided default in September after paying $22.5 million in bond coupon payments and extending repayments on six onshore bonds. The company’s founding family reportedly provided an interest-free loan of $300 million, while other large Chinese real estate developers, such as Evergrande, have also struggled with debt issues.

Shares of Chinese property developer Country Garden sank to fresh eight-month lows as worries over its debt crisis intensified. The company is facing a critical deadline on Tuesday, where it must make a $15 million coupon payment to avoid potential default on all of its offshore debt. Country Garden narrowly escaped default earlier this year by managing to pay $22.5 million in bond coupon payments and securing a repayment extension on several onshore bonds. However, the situation remains precarious. Last week, the embattled real estate giant warned that it may not be able to meet all its offshore repayment obligations, which include U.S. dollar notes.

In a move to raise funds, the founding family of Country Garden is said to have provided an interest-free loan of $300 million to the company and is reportedly trying to sell another private jet. This comes as other major Chinese property developers, such as Evergrande and Country Garden, have also been grappling with mounting debt issues. Should Country Garden fail to make the Tuesday payment, it would join the growing list of Chinese real estate companies that have defaulted on their debt, further eroding consumer confidence in the sector.

Despite the daunting circumstances, Country Garden’s shares rose 1.37% in early trading, tracking a slight increase in the broader Hang Seng Index.

Tags: Country Garden, debt crisis, default risk, Chinese property developer, offshore debt, bond coupon payment, founding family, Evergrande, real estate sector, financial market