SYDNEY, Oct 18 (Reuters) – Country Garden Holdings Ltd (2007.HK), China’s largest private property developer, is hours away from defaulting on $11 billion of overseas debt, but is still on bond. It has not yet made coupon payments due Wednesday to investors.
The impending default would be the latest in a number of defaults by Chinese developers and deepen the crisis rocking the real estate sector, which accounts for about a quarter of the world’s second-largest economy.
Country Garden will be deemed to be in default on its foreign debt if it does not pay the $15 million September 2025 bond by midnight New York (4 p.m. Japan time).
According to Reuters, the repayment had not been made by early Wednesday. The company warned last week that it would not be able to meet its offshore obligations.
Country Garden did not immediately respond to a request for comment from Reuters on Wednesday.
The latest indicator of the health of China’s struggling real estate market will be revealed on Wednesday, when real estate sales by floor space are announced. National new home prices for September will be announced on Thursday.
A default by Country Garden, which has nearly $11 billion in offshore bonds and $6 billion in onshore loans, would set the stage for China’s largest corporate debt restructuring.
Country Garden has also fallen behind on other offshore payments in the past few weeks, but these payments have not yet passed the 30-day grace period.
A default would pave the way for Country Garden’s offshore creditors to begin negotiations with the company’s financial advisors to begin a restructuring process, which could take months given the size of the debt. .
A Credit Sites report released on Tuesday found that while private companies are having the most trouble raising new financing, China’s state-owned developers may still be able to access funding markets. .
The report said: “Homebuyers remain skewed towards state-owned developers, and independent developers who have not yet defaulted on their debts are under pressure from both a lack of contracted sales and difficulty raising financing, making it difficult for them to survive.” “It is likely to become increasingly difficult.”
Reporting by Scott Murdoch in Sydney.Editing: Sonali Paul
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