China’s Country Garden asks for more time to pay off debts to dodge default
Chinese property developer Country Garden has asked investors for more time to pay off its debts in a desperate bid to dodge default.
According to Bloomberg, the firm has asked bondholders for a 40-day grace period with a vote on the proposals set to be held before Thursday. The bond’s outstanding principle totals RMB3.9bn (£424m) with a maturity date of 4 September.
The request for a grace period follows a plea made earlier this month asking creditors to extend the repayment terms for the bond by three years. Investors will also decide on this proposal in the upcoming vote.
Attempts by Country Garden to restructure its debt demonstrates the liquidity problems currently facing some of the largest Chinese real estate developers.
The sector has been engulfed in crisis after the Chinese government enforced policies designed to reduce leverage in the heavily indebted sector. The intervention, which was designed to deflate the bubble, was too aggressive, slashing demand and leaving developers like Country Garden without a sufficient income stream to pay off their enormous debts.
Country Garden, which was previously considered one of the most reliable developers, already missed interest payments of $22.5m on international bonds earlier this month.
It is the largest developer in the country, involved in four times as many projects as Evergrande, the developer whose default shocked the world in 2021.
Speculation has grown that the government will be forced to intervene in the sector in order to prevent it from tanking the entire economy.
However, the government has shunned major stimulus measures with many analysts warning that large scale fiscal interventions would simply store up trouble for the future.