This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
Country Garden (COGARD), the largest Chinese developer by sales, has missed coupon payments on two of its dollar bonds. The bonds in question are its 4.2% 2026s and 4.8% 2030s where a 30-day grace period has been triggered for both notes. The total coupons on the notes amounted to $22.5mn. CreditSights analyst Nicholas Chen said, “The fact that (Country Garden) is struggling to address an interest payment, rather than a full bond principal repayment, perhaps underscores its very tight liquidity… we think such an event will have a negative spillover effect for the sector”. Bloomberg Intelligence analysts note that COGARD’s chairwoman might help the company make the payments by using part of an RMB 453mn ($62.8mn) dividend payout on her stake in Country Garden Services, the developer’s property management service provider.
The Chinese property sector has been suffering with the top 100 developers’ pre-sales falling 33.1% YoY to RMB 350.4bn ($48.9bn) in July. COGARD’s contracted sales fell 60% YoY in July to $1.7bn. Besides, tight financing conditions and liquidity constraints have only worsened developers’ finances. The company was downgraded last week to B1 from Ba3 by Moody’s citing the above. With over $2.9bn in bond payments due by year-end, including $2.3bn in onshore notes, COGARD also warned of a net loss in 1H 2023 earlier last week.
Country Garden’s dollar bonds due 2025 and beyond fell 3-4 points to trade at just over 9 cents on the dollar. Its 8% 2024s plummeted by 10 points to now trade at just 13 cents on the dollar.
For more details, click here