The Chinese promoter Country Garden affirmed this Wednesday that there are “important uncertainties” about the payment of his bonuses, which raised fears about the health of the real estateheavily in debt in the country.
Country Garden, included in the Forbes list of the 500 largest companies in the world, warned of losses of billions of dollars and could go into receivership.
Just like Evergrande, his rival and also with a multi-million dollar debt, yes Country Garden sinks, the repercussions on the financial and economic system of China they would be catastrophic.
“Currently there are significant uncertainties about the payment of corporate bonds”, the company indicated in a document sent to the Shanghai Stock Exchange on Wednesday.
The group boasted of financial strength but failed to pay off two loan interest repayments last week. After a 30-day grace period, the company could go into receivership in September if it fails to pay.
Country Graden It estimated its debt at about 1.15 trillion yuan (159 billion euros) at the end of 2022, but according to the Bloomberg agency, the figure would be about 1.4 trillion yuan (US$ 193 billion).
In addition, there are company bonds, for 31,000 million yuan (4,270 million euros) that mature in 2024, according to the Moody’s rating agency, which lowered the group’s grade last Thursday to “Caa2”, pointing to a “very high credit risk”.
The situation of Country Garden it is a direct consequence of an unprecedented crisis in the real estate sector, an area that, along with construction, has long accounted for a quarter of China’s GDP.
To reduce the level of debt in the sector, since 2020, the authorities have tightened the conditions for developers to access credit, exhausting the sources of financing for groups already in debt.
The measure led to a series of non-payments, such as that of evergrandewhich undermined the confidence of potential buyers and had repercussions throughout the industry.
Source: AFP
Source: Gestion
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