Real Estate Market Sluggish, Country Garden Plans to Extend Nine Tranches of Domestic Bonds Worth Nearly 15 Billion Yuan

In a recent message, mainland China’s major real estate developer, Country Garden, mired in a debt crisis, announced its intention to seek a grace period of 6 months for the repayment responsibility of nine domestic debts until March next year. The total amount of the nine domestic debts is estimated to be nearly 15 billion yuan, with three bonds already extended three times.

Country Garden responded to Chinese media reports by stating that challenges such as sales recovery and financial control issues still objectively exist. The company emphasized the uncertainty in raising funds in the short term and hoped that investors would grant a 6-month extension, allowing the company to communicate fully with investors during this period and formulate comprehensive solutions for the next steps.

According to reports by The Paper, documents obtained from creditors show that Country Garden will postpone the installment payments of nine domestic corporate bonds until March 2025. Previously, three bonds, including “H1 Bidi 01,” had already been extended twice, marking the first time that Country Garden has extended its bonds three times since the debt restructuring.

Regarding this situation, Country Garden stated that the industry continues to face challenges due to market expectations weakening and soft demand, resulting in continued pressure on the company’s sales performance. The total equity sales amount for the company in the first eight months of 2024 was approximately 32.8 billion yuan, down by about 78% year-on-year. With various factors such as industry-wide sales pressure and limited capital reallocation, the company has not been able to raise sufficient funds for the repayment of its corporate debt.

Country Garden expressed that sales recovery and financial control issues still persist, and uncertainties remain in raising funds in the short term. Therefore, through this extension arrangement, the company aims to raise funds by improving sales, revitalizing assets, reducing unnecessary administrative expenses, and through active communication and negotiation with investors to devise a comprehensive plan for debt management.

The nine domestic debts include “16 Biyuan 05,” “H1 Bidi 03,” “20 Bidi 03,” “19 Bidi 03,” “H1 Bidi 04,” “H1 Bidi 01,” “H1 Bidi 02,” “20 Bidi 04,” and “16 Tengyue 02,” totaling nearly 15 billion yuan according to previous announcements.

Earlier, on September 2, Country Garden Real Estate Group Co., Ltd. announced that due to recent arrangements related to the repayment of corporate bonds, it would hold a bondholders’ meeting. Following the company’s application, trading for “H19 Bidi 3,” “H1 Bidi 01,” “H1 Bidi 04,” and “22 Bidi 03” was suspended from September 3, 2024, with the resumption date to be determined later. Additionally, “H20 Bidi 3,” “H20 Bidi 4,” “H1 Bidi 02,” and “H1 Bidi 03” continued to be suspended, having halted trading on August 20.

On August 30, Country Garden announced on the Hong Kong Stock Exchange that it would further delay the publication of its 2023 annual results. Simultaneously, the company’s 2024 annual shareholders’ meeting was postponed.

According to the rules of the Hong Kong Stock Exchange, listed companies are required to publish their interim results for the six-month period ending on June 30, 2024, no later than August 31, 2024, which Country Garden failed to meet due to the delay in releasing the 2023 annual results.

Previously, Country Garden’s stock trading was suspended on April 2, 20204, due to the delayed release of the 2023 financial report. The suspension remains in place until further notice is given.