Chinese Property Giant Country Garden’s Shares Sink on Default Fears
By Channel News Asia
BEIJING: Shares in Chinese property giant Country Garden plunged on Monday (Aug 14) after it missed bond payments and warned of billions of dollars in losses, deepening fears about the country’s heavily indebted real estate sector.
Like its troubled competitor Evergrande, any collapse of Country Garden would have catastrophic repercussions for the Chinese financial system and economy.
The privately owned firm estimated its debt at some 1.15 trillion yuan (US$159 billion) at the end of 2022, and had said on the weekend that it would suspend trading of onshore bonds from Monday.
“We’re facing the greatest difficulties since our establishment,” Country Garden boss Yang Huiyan said in a statement on Friday.
Its shares plummeted more than 18 per cent in Hong Kong on Monday.
Country Garden is on Forbes’ list of the 500 largest companies in the world, and Yang was until recently one of the richest women in Asia.
The firm has long been deemed financially solid but was unable last Monday to make two bond payments, and after a 30-day grace period, it risks defaulting in September if it still cannot pay.
Additional liabilities mean other estimates of its overall debt are as high as 1.4 trillion yuan (US$193 billion), according to Bloomberg.
Adding to the pressure, 31 billion yuan (US$4.27 billion) in the firm’s bonds are set to mature in 2024, according to rating agency Moody’s, which last Thursday downgraded its rating for the group to “Caa2”, indicating “very high credit risk”.
Country Garden said this month that it expected a net loss for the first half of this year of 45 billion to 55 billion yuan (about US$6.2 billion to US$7.6 billion).
“Due to the recent deterioration of sales and refinancing environment, the available funds in the book of the Company have been continuously reduced, resulting in a phased liquidity pressure,” Country Garden said in an announcement at the Hong Kong Stock Exchange.
In the last month, 42 per cent of the company’s value has been wiped out.