Cash-squeezed developer Country Garden faces another dollar coupon deadline

Cash-squeezed developer Country Garden faces another dollar coupon deadline

HONG KONG: After twice avoiding default at the last minute earlier this month, embattled Chinese property developer Country Garden must pay US$ 15 million in interest linked to an offshore bond by Monday’s ( Sep 18 ) deadline.

The No. 1 exclusive developer in the nation will have 30 days to pay the coupon before it is deemed default. Beijing’s economic difficulties have worsened the outlook for the real estate market and prompted Beijing to announce a number of support measures.

According to Sandra Chow, co-head of Asia-Pacific research at CreditSights, if Country Garden doesn’t pay the US$ 15 million by the end of the grace period in mid-October, the principal may become expected right away and cross-default terms will be in effect.

Due to its declining cash flow at a time when home sales in the second-largest saving remained extremely weak, Chow said,” It’s going to be actually hard” for Country Garden to meet loan obligations.

When Reuters asked for comment on its most recent debt payments duties on Monday, a Country Garden spokeswoman did not immediately respond.

Last month, Country Garden issued a warning about proxy risks if its economic efficiency keeps getting worse. It owes 108.7 billion yuan( US$ 14.9 billion ) in debt that is due within the next 12 months, but as of June, it had only about 101 billion dollars in cash.

By obtaining the consent of its creditors to extend payments for an inland private connection, it was able to avoid default, greatly relieving both the distressed Chinese developer and the property sector that had been hit by the financial crisis.

The engineer missed US$ 22.5 million in coupon payments tied to two dollar bonds in August, but he still managed to wire money before the grace period expired earlier this month, avoiding a definition.

Seven additional Country Garden bonds’ three-year repayments were approved by upstream bondholders last week.

Shares of Country Garden, one of the few major Chinese engineers who have not defaulted on loan obligations, were trading up roughly 1 % in Hong Kong while the overall market was down 0.9 percent.

If Country Garden doesn’t receive liquidity support immediately, many creditors think it will need to restructure its onshore debt.

If the property developer wants to restructure its debt, some of Country Garden’s offshore lenders have begun discussions with New York-based law firms Kobre & dc, Kim LLP, and Ashurst in London. They are considering forming groups.