China’s Country Garden defaults on yuan bond coupon payment for first time

Country Garden Holdings Co, a major Chinese property developer, has failed to make a coupon payment on a yuan bond for the first time, signalling escalating financial troubles for the company, Bloomberg reported.

According to sources familiar with the matter, Country Garden’s primary onshore unit missed a 96 million yuan ($13 million) coupon payment due on Tuesday for a 4.8 per cent yuan bond maturing in 2026.

Despite a 30-day grace period for payment, concerns about potential default loom large for the embattled developer.

The missed payment comes amidst Country Garden’s ongoing financial crisis, compounded by a lawsuit filed seeking the company’s liquidation offshore.

The company’s woes intensified when a Hong Kong court received a petition from a creditor to wind up the Guangdong-based firm.

Country Garden’s financial woes are reflected in its dwindling sales figures.

Corporate filings reveal an 85 per cent plunge in contract sales for February compared to the previous year, following a 75 per cent decline in January.

The developer’s inability to meet its financial obligations is exacerbating concerns among homebuyers in China, who are now apprehensive about investing in projects by defaulted developers.

Amidst the turmoil, attention is shifting to China Vanke Co., another major builder backed by the state, which is engaged in talks with creditors to avert a potential default.