Breath of fresh air for Chinese real estate: approval to defer payments for Country Garden
The Chinese real estate company is trying to get its head out of the water, but he still remains in apnea. Of course, in times of crisis even a small sign of trust can work miracles. This is what comes from Country Garden, China’s largest private real estate developer, which after days of frenetic negotiations managed to obtain approval from its creditors for extend the repayments of six onshore bonds by three years.
The positive news came as a relative surprise, given the 200 billion boulder of liabilities that the Chinese giant has accumulated. But after managing to pay off some small bonds last week, Country Garden’s onshore creditors have decided to take a crack at and vote in favor of the troubled builder’s proposals to extend repayments on eight onshore bonds worth of 10.8 billion yuan (1.48 billion dollars).
In the vote, which ended on Monday, creditors approved the extension of six of the eight bonds. The decision-making phase is still being concluded on the other two, but the outcome should be the same. It is no coincidence that the title of Country Garden it immediately shot up 10% on the stock market. Little consolation, if you consider that since the beginning of the year the company’s shares lost about 60%, but these days it’s much better than nothing.
The bondholders’ reprieve came as investors are carefully considering whether the Chinese government’s latest stimulus measures, including reducing existing mortgage rates and the offer of subsidized loans for the purchase of a first home in large cities, may be sufficient to restore consumer confidence and sow the seeds for an eventual recovery in the real estate market. Beijing’s action is unlikely to be enough, but creditors are certain that Country Garden is a different story from that of Evergrande, also affected by the policies decided by Xi Jinping to reduce the sector’s debt exposure.
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