Chinese property firm Country Garden’s bonds, stocks slump amid repayment worry

Chinese property firm Country Garden's bonds, stocks slump amid repayment worry
The company logo of Chinese developer Country Garden is displayed at a news conference in Hong Kong, China on Mar 20, 2018. (File photo: REUTERS/Bobby Yip)

SINGAPORE: Bonds and stocks of major Chinese property developer Country Garden fell on Friday (Jul 21), as investors became increasingly concerned about its finances and repayment ability.

The slide in Country Garden’s bonds come days after a selloff in the bonds of the Dalian Wanda Group, owned by China’s once-richest man Wang Jianlin.

Wanda’s repayment woes are making investors jittery because it was one of the few private developers that survived the property downturn over the past three years. It also managed to issue two bond tranches this year in rare market issuances.

Country Garden is one of China’s top market players and any hint of trouble there could send shockwaves through the property sector, even as embattled China Evergrande Group, the world’s most indebted property developer, goes through a debt restructuring process.

Country Garden’s dollar bond due on January 2024 fell 6 cents to roughly 42 cents to the dollar, while its onshore bonds, slumped roughly 30 per cent each. Hong Kong-listed shares of Country Garden also declined more than 4 per cent.

The Chinese developer said on Thursday it reached agreements with various financial institutions to refinance part of a 2019 loan facility it had borrowed from them.

“That doesn’t get them completely out of the woods,” said one Country Garden bondholder who declined to be identified, adding that the developer was facing a further batch of bonds maturing in coming months.

Other high profile but debt-strained China property firms, including Dalian Wanda Group and Sino-Ocean Group, also suffered sizable sell-offs this week.

More negative news has emerged around the sector that contributed about 25 per cent of China’s gross domestic product before it was battered by a government crackdown and a collapse in home sales over the last couple of years.

China’s property sector has entered its longest downtrend in the past two decades and the worst may not be over. Developers’ USD bond repayment pressure remains high the second half, with US$12.8 billion due, analysts at ANZ said in a note to clients on Friday.

“New measures, while helpful, are no panacea for the sector’s woes. Other efforts are needed to boost buyers’ sentiment about the long-term trajectory of the property market,” they said.

Source: Reuters/px