China’s Country Garden eyes debt deal

The news: Troubled Chinese property developer Country Garden may announce a restructuring of its offshore debt soon, Reuters has reported, quoting local media.

The numbers: The company, which missed two dollar interest payments last month, has another two coupons totalling USD66.8 million ($104 million) coming due next week. It has USD10.96 billion offshore bonds and another USD5.81 billion worth of loans not denominated in yuan. If it defaults, these debts will need to be restructured, and the company or its assets also risk liquidation by creditors. Hong Kong-listed shares in Country Garden fell more than 6% on Monday, while those of rival Evergrande Group tumbled 11%.

The context: China's property sector has been hit by a debt crisis since 2021. Companies accounting for 40% of Chinese home sales — mostly private property developers — have defaulted on debt obligations, leaving many homes unfinished. Country Garden, China's largest private property developer, last month won approval from its onshore creditors to extend yuan bond payments, and also made coupon payments on the offshore markets in the last hours of a grace period. But it is yet to pay a $15 million coupon due 17 September and another $40 million coupon due on 27 September, both of which are in 30-day grace periods.