China's Country Garden warns of default again as property sales plunge
China's Country Garden warns of default again as property sales plunge
For the second time in just over two months, Country Garden has warned investors that it could default on its $190 billion debt in a reminder that China’s real estate crisis is far from over.
Chinese property development groups financial difficulties are not over yet
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But persistent weakness in the property market and a difficult refinancing environment have hobbled its ability to raise enough cash to service its billions of dollars of debt.
Country Garden “expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods,” it said in a Tuesday filing to the Hong Kong Stock Exchange.
The risks were underscored when a group of creditors of Evergrande, which defaulted in 2021 and is trying to fend off liquidation, said in a statement sent to CNN that the developer could suffer an “uncontrollable collapse” because of “botched” efforts to restructure its vast debts.
Such a scenario could hit households and further undermine confidence in the battered real estate market, setting back Beijing’s efforts to revive the sector.
Country Garden said it had hired advisers to evaluate the company’s liquidity conditions and formulate a “holistic solution” intended to address its current offshore debt risk and enable it to restore business operations.
But those plans were thrown into disarray six months later when Evergrande surprised investors by announcing that its founder and chairman Xu Jiayin had been detained by the Chinese authorities on suspicion of crimes, casting serious doubt over the future of the company.
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