On May 9th, 2024, China’s real estate giant Country Garden Group announced that it could not pay the interest on two domestic bonds issued last year on time, involving a sum of 65.95 million yuan.
According to an announcement made by Country Garden through the Stock Exchange, they are unable to pay the combined interest of 65.95 million yuan for the “23 Country Garden MTN001” and “23 Country Garden MTN002” notes on time and will make every effort to make full payment no later than May 13th.
Last year on May 8th, Country Garden issued two mid-term notes with full, unconditional, and irrevocable joint liability guarantee provided by China Bond Credit Enhancement Corporation.
The notice indicated that the issuance amount for “23 Country Garden MTN001” was 800 million yuan with an interest due of 30.4 million yuan on May 9th, 2024, and “23 Country Garden MTN002” was issued for 900 million yuan with an interest due of 35.55 million yuan on the same date.
Country Garden stated that due to the continuous fluctuations in the industry and the increasingly complex and severe operating environment faced by the company, they are currently making every effort to raise funds. However, due to reasons such as sales not meeting expectations and difficulties in fund allocation, the aforementioned payment cannot be made on time on the interest payment date of May 9th, 2024.
They further mentioned that they will strive to pay the due interest and interest within the grace period of three working days (no later than May 13th). If the payment is not completed, China Bond Credit Enhancement Corporation will fulfill its credit enhancement obligations according to the relevant provisions of the “Credit Enhancement Letter for Private Enterprises’ Bond Financing Support Tools.”
According to the terms set in the documents for the two notes, a grace period of 5 working days is provided for default situations where the debt financing tool principal or interest is not fully paid on time. Failure to fully repay the debt within this period will not constitute a default under the relevant debt financing tool, with interest being calculated and paid at an increased rate of 30 basis points during the grace period.
In addition, the restructuring of Country Garden’s overseas debt is still ongoing.
Country Garden’s Hong Kong stocks have been suspended since April 2nd, and the company has not released its financial report for the year 2023.
On April 26th, Country Garden announced that “due to the continuous industry fluctuations and the increasingly complex operating environment faced by the company, more information is needed to make appropriate accounting estimates and judgments. Based on prudence, the company is expected to be unable to disclose the 2023 annual report on time.”
According to the China Real Estate News, on May 3rd, Country Garden announced on the Hong Kong Stock Exchange that the sales revenue attributable to the company’s shareholders for the month of April was 3.85 billion yuan, with a total sales area of 430,000 square meters. Based on this calculation, Country Garden’s contract sales in April plummeted by 83% year-on-year in sales revenue and 85% in sales area, resulting in an equity contract sales of 17.36 billion yuan in the first four months, which is less than the sales revenue of a single month last year.