China’s Country Garden pays dollar-bond coupons, avoids default

  • Chinese real estate developer Country Garden Holdings made coupon payments on two U.S. dollar bonds ahead of a 30-day grace period deadline on Tuesday, avoiding a default that would have further pressured the nation’s ailing property sector.
  • Its coupon payments on Tuesday may, however, only delay the pain. “The bond servicing by year-end is heavy at 18 billion yuan. With sales remaining weak, we think the risk of a default or distressed exchange or restructuring is rising,” J.P. Morgan analysts said in a note in early August, citing weak sales data.
  • The China developer’s projects in other markets are also in the spotlight. The group had 912.2 billion yuan of properties under development at the end of last year spanning the mainland, Australia, Indonesia, Hong Kong and the U.S., according to its latest full-year results.

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