HONG KONG (AP) — Country Garden, a property developer from China, cautioned on Tuesday that it might not repay a 470 million Hong Kong dollar ($60 million) loan punctually. This comes as a result of the crisis following Beijing’s crackdown on increasing debt in the industry. .
Thank you for reading this post, don't forget to subscribe!In a filing to the Hong Kong Stock Exchange, the company stated that it “anticipates not being able to fulfill all of its offshore payment obligations within the relevant grace period or when due,” which also encompasses US dollar notes issued by the firm. Are included.
The company mentioned that its sales are facing “significant pressure”.
Country Garden was formerly praised as an exemplar real estate company by Chinese authorities. Despite the fact that competitors, such as China Evergrande, the world’s most heavily indebted property firm, defaulted in 2021 after the Chinese government introduced restrictions on borrowing by developers, Country Garden had managed to avoid loan defaults.
The company’s shares traded in Hong Kong fell by 10.7% on Tuesday.
The liquidity crisis it is experiencing demonstrates that developers are still under immense pressure even after regulators eased some controls on housing purchases in an effort to alleviate the troubles in the industry. Concerns have emerged that the industry’s difficulties could disrupt financial markets or spread to the broader economy. However, the crisis has been unfolding at a slow pace. Hong Kong’s Hang Seng index rose by 0.8% on Tuesday. Evergrande shares decreased by 3.6%.
Country Garden has recently received loans from several banks, including a $50 million loan from China Minsheng Banking Corporation earlier this year and a separate $280 million loan from the Hong Kong arm of the Industrial and Commercial Bank of China that is due in December 2022.
According to the company, Country Garden sales from January to September declined by nearly 44% compared to the same period a year ago. Since there hasn’t been an industry-wide improvement in asset sales, Country Garden stated that “its liquidity position is expected to remain very tight in the short to medium term.”
Nevertheless, the company continues to design and deliver residential housing projects. It announced that it has delivered 420,000 apartments from January to September and 700,000 apartments in 2022.
Last month, the company made interest payments on two securities prior to the end of the 30-day grace period. As of June, Country Garden held liabilities exceeding $180 billion. Evergrande, on the other hand, possesses debts surpassing $300 billion.
Last month, a former Chinese official estimated that even China’s population of 1.4 billion individuals would not be enough to occupy all the vacant homes throughout the country. However, housing construction serves as a major catalyst for the economy, driving demand for materials, equipment, and various products. Moreover, the sale of land for development serves as an important source of funding for local governments.
Zane Su, The Associated Press
Source: ca.finance.yahoo.com
