Chinese property developer Country Garden (2007.HK), which missed two dollar interest payments last month, faces another deadline on Monday with two coupons totalling $66.8 million due.
The coupons due on Monday are linked to Country Garden’s 6.5% April 2024 and 7.25% April 2026 bonds.
The payments have a 30-day grace period, but the developer faces a big test later this month when its entire offshore debt could be deemed in default if it fails to pay a $15 million September coupon by 17 October.
China’s largest private developer has $10.96 billion of offshore bonds and 42.4 billion yuan ($5.81 billion) of non-yuan denominated loans. If it defaults, these debts will have to be restructured and the company or its assets also risk liquidation by creditors.
China’s property sector has been in a debt crisis since 2021. Companies that account for 40% of Chinese home sales – mostly private developers – have defaulted on their debt obligations, leaving many homes unfinished.
More than two years on, the crisis has deepened as confidence in both housing and capital markets has dried up, further squeezing developers’ liquidity.
Beijing has rolled out a series of support measures in recent months to revive the sector, which accounts for about a quarter of the world’s second-largest economy.
But some analysts say more measures are needed.
In a research note on Friday, UBS said property sales growth in major cities was likely to remain weak in September, suggesting a limited recovery in sales despite more supportive measures to ease the property crisis.
The market is watching closely to see if Country Garden, which owns projects across the country, can avoid another default by making last-minute payments.
In September, Country Garden won approval from its onshore creditors to extend payments on its yuan bonds, and in the same month it made coupon payments in offshore markets in the final hours of a grace period.
But the developer has yet to pay a $15m coupon due on 17 September and another $40m coupon due on 27 September, both of which have 30-day grace periods.
