Chinese developer Country Garden delays bond extension deadline to August 31

the chinese promoter Country Garden Holdings pushed back from Friday to August 31 the deadline for holders of a yuan private bond to vote on its new plan to extend its amortization schedule, according to a notice seen by Reuters.

The deadline was postponed to give bondholders more time to consider the plan, according to the filing.

China’s largest private developer missed two $22.5 million coupon payments earlier this month, raising fears the country’s growing real estate debt crisis will hamper the financial sector and a broader economic recovery.

According to the new amortization schedule, Country Garden will repay the private “onshore” bond maturing on September 2 in seven installments that will end in September 2026. This year three initial installments will be paid, with 2% of the principal each. The coupon will remain at the same rate of 5.65% and will be paid annually.

Country Garden declined to comment.

A source inside the firm said that since most of its funds are locked up in an account to guarantee the delivery of homes over the next two years, there is little cash left to repay debt at the group level.

The person, who declined to be named because he was not authorized to speak to the media, added that 60% of the company’s total “onshore” bond maturities are concentrated in the remainder of the year, so the extensions of the refunds could give you time to improve your operations and cash flow.

Since August 14, the promoter has suspended trading in 11 of its onshore bonds worth more than 16 billion yuan, a move that traders say often signals an intention to request redemption extensions.

Only in September Country Garden it has a 5.8 billion yuan bond maturing and a 48 million yuan coupon, as well as put options on another 3.4 billion yuan.

Source: Reuters