Country Garden, one of China’s largest property developers, is the latest to warn that it may default on its loans. This comes as the corporation posted a record US$6.7 billion loss for the first six months of the year.
Country Garden stated that it was “deeply remorseful for the unsatisfactory performance.” The announcement adds to fears over the world’s second largest economy’s post-pandemic recovery.
Country Garden also disclosed that company has failed to make interest payments on bonds due this month. However, it stressed that it was still within a 30-day grace period to make the payments.
It is also apparently seeking to postpone the repayment of another bond. The company warned that it might default on its loans “if the group’s financial performance continues to deteriorate in the future.”
“The group may be unable to meet the financial covenants of these borrowings, which may result in default in these borrowings and cross-default in certain other borrowings,” Country Garden warned in a Hong Kong regulatory filing.
The corporation warned earlier this month that it could lose up to $7.6 billion in the first six months of the year. The record loss was at the low end of the company’s 45 billion yuan ($6.2 billion; £4.9 billion) to 55 billion yuan estimate.
On Thursday morning, Country Garden shares were up about 1% in Hong Kong the BBC reported.
Problems in China’s property industry, which covers everything from home construction to enterprises producing the products that go into them, are having a significant impact because it accounts for around one-third of the GDP.
In 2020, new restrictions limiting the amount of money that large real estate enterprises may borrow shook China’s real estate market.
Evergrande, previously China’s top-selling developer, amassed debts of more than $300 billion as it rapidly expanded to become one of the country’s largest corporations.
Its financial difficulties have reverberated throughout the country’s real estate market, with a number of other developers defaulting on their payments and abandoning incomplete construction projects around the country.
Evergrande reported a 33 billion yuan loss for the first six months of the year over the weekend. Evergrande shares have lost more than 99% of their value in the last three years as Beijing has cracked down on real estate companies.
Other issues confronting China include slowing economic development, increasing local government debt, and record-high youth unemployment.
Official data released on Thursday indicated that factory activity in China fell for the sixth month in a row.
In August, the Purchasing Managers’ Index was 49.7. It was higher than the previous month, but it was still lower than 50, suggesting contraction.
Country Garden China
Country Garden is a well-known Chinese property developer and management firm. Yang Guoqiang founded the company in 1992, and it has evolved to become one of China’s largest and most well-known real estate developers. Its headquarters are located in Foshan, Guangdong Province.
Country Garden is well-known for its large-scale residential and commercial real estate developments, which include high-rise apartments, townhouses, and mixed-use developments. The company’s operations have grown both domestically and internationally, with projects in cities around China and other nations.
The Forest City project in Malaysia, which intends to build a future eco-friendly city on reclaimed ground, is one of the company’s major developments. This project received a lot of attention because of its creative design and lofty ambitions.
The success of Country Garden can be ascribed to its emphasis on quality construction, innovative design, and a customer-oriented attitude. For its contributions to the real estate business, the company has garnered various awards and medals.