Country Garden, one of China’s strongest real estate developers, has fallen into financial trouble as it defaulted on interest payments on its onshore bonds for the first time. This default marks a major setback for the company, which has been struggling due to the downturn in China’s real estate market.
The company failed to pay approximately $13.4 million in interest on a yuan bond due in 2026, according to a statement to The Wall Street Journal. This default on onshore bonds comes after previous defaults on payments to overseas creditors, including a U.S. dollar bond in October. Country Garden is currently facing a liquidation application in Hong Kong involving around $200 million in loans.
The slump in China’s real estate market has had far-reaching implications, impacting the country’s economy and causing stock and bond prices in the sector to plummet. Just earlier this year, a Hong Kong court ordered the liquidation of industry heavyweight China Evergrande, further highlighting the challenges faced by real estate developers in China.
Country Garden attributed its failure to make the interest payments to disappointing sales recovery and financial pressures. Despite the default, the company has stated that it will make every effort to raise funds within the 30-day grace period to rectify the situation.
The news of Country Garden’s default on its onshore bonds has sent shockwaves through the real estate industry in China and raised concerns about the stability of other property giants in the country. With the real estate market facing ongoing challenges, it remains to be seen how Country Garden and other developers will navigate these turbulent times.