Country Garden Has Wired Ringgit Bond Coupon

Distressed Chinese builder Country Garden Holdings Co. has wired a coupon payment coming due on a ringgit-denominated bond, according to people familiar with the matter, in its latest effort to avoid default.

(Bloomberg) — Distressed Chinese builder Country Garden Holdings Co. has wired a coupon payment coming due on a ringgit-denominated bond, according to people familiar with the matter, in its latest effort to avoid default. 

The developer, which won approval Friday to extend a separate maturing yuan bond, told creditors that it has made the ringgit coupon payment, the people said, asking not to be identified speaking about a private matter. The 2.85 million ringgit ($613,365) coupon is effectively due Sept. 4, according to data compiled by Bloomberg.

Helmed by one of China’s richest women Yang Huiyan, the firm jolted the nation’s financial markets last month after missing an initial deadline to pay a combined $22.5 million of interest on two dollar bonds. The clock is ticking to make those payments before a grace period that ends Sept. 5-6 or risk default.

The firm told creditors it has yet to make those payments, the people familiar said.

Country Garden didn’t immediately offer a comment when reached over the weekend.

Formerly China’s biggest developer, Country Garden has fallen into distress amid record losses. That’s fueled mounting concerns about worsening of China’s broader property debt crisis that’s heading into its fourth year. The firm’s recent distress dragged Chinese junk dollar bonds—mostly issued by property firms—to their lowest levels of 2023.

Country Garden is being closely monitored in part given its importance to the broader economy due to its sheer size, with more than 3,000 housing projects in smaller cities and about 70,000 employees. That status had helped it withstand an industry cash crunch that led to record defaults since China Evergrande Group first missed bond payments in 2021. 

But renewed housing market declines are threatening that streak. Any stumble by Country Garden, now China’s sixth-largest builder by contracted sales, risks worse fallout than from Evergrande given it has four times the property projects. 

It recently posted an unprecedented net loss of 48.9 billion yuan ($6.7 billion) while attributable sales – a key source of developer funding – fell 35% through July. Meanwhile, it still faces nearly $2 billion of note obligations for the rest of this year.

The ringgit bond in question is a 5.7% note due 2027 that was issued by unit Country Garden Real Estate Sdn. in 2020, according to Bloomberg-compiled data. 

Below is a calendar of Country Garden bond principal and interest payments across currencies due in September, including the ringgit interest:

–With assistance from Emma Dong and Dorothy Ma.

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