By WANG Yuhan
Country Garden will pay the interest on a one billion yuan (US$140 million) bond on December 26.
The bond is the second tranche of one billion yuan in medium-term domestic notes issued by Country Garden in December 2022 at 4.3 percent, an annual payment of 43 million yuan.
CG issued several domestic bonds at the end of 2022 to alleviate financing pressure. The funds raised from the bond were used for construction work, and servicing US dollar bonds. CG Real Estate’s active bonds total 15.32 billion yuan.
On December 13, CG narrowly avoided default in the domestic bond market by selling a 1.8 percent stake in Zhuhai Wanda Commercial Management, worth 3 billion yuan.
With no substantial improvement in sales, pressure to repay principal and interest on these bonds will only increase. In August, a liquidity crisis necessitated extension agreements with bonds exceeding 10 billion yuan.
This year, the company has slashed executive salaries and reduced administrative expenses, while repurchasing domestic bonds and selling assets. The pressure faced by CG Real Estate has now been transmitted to Country Garden Services. The profit situation of the property management company will undoubtedly be significantly affected.
For Country Garden, the focus is still on delivering property. However, negotiations for extending other bonds, especially US dollar bonds, still have a long way to go.
