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Large Chinese property developers Country Garden (COGARD) and China Vanke reported a sizeable drop in its July contracted sales. COGARD and Vanke reported a 60% and 35% drop in contracted sales to $1.7bn and $3.1bn respectively. Contracted sales have been weak across the sector and could exacerbate the existing liquidity crisis in the sector. Analysts note that improving sales would be the key to solving the developers’ liquidity problem in the long-term. As per CRIC, contracted sales of China’s top 100 developers totaled RMB 350.4bn ($48.9bn) in July, falling 33.1% YoY. With no details yet on the government’s measures to further ease conditions for developers, the ability to repay dues in the near-term remains to be seen. PBOC governor Pan Gongsheng held a meeting with executives of several private firms including Longfor and CIFI Holdings, where he pledged to offer more financial support for the country’s private enterprises, including broadening bond issuances and guiding banks to offer more support to private developers.
Most of Country Garden’s dollar bonds are trading at deeply distressed levels of 12-15 cents on the dollar and its 8% 2024s were down 2.8 points to trade at 24.75. Country Garden is rated B1/B+/BB-. Vanke given its higher credit rating of Baa1/BBB+/BBB+ saw its dollar bonds trade flat with its 4.2% 2024s at 96.51, yielding 8.63%.
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