A construction site of residential buildings by Chinese developer Country Garden, in Tianjin, China, on Aug. 18.TINGSHU WANG/Reuters
Chinese developer Country Garden Holdings has delayed from Friday until Aug. 31 the deadline for holders of a private yuan bond to vote on its new plan to extend its repayment schedule, a filing seen by Reuters showed.
The deadline has been postponed to give bondholders more time to consider the plan, according to the filing.
China’s largest private developer earlier this month missed two dollar coupon payments totalling US$22.5-million, raising fears that the country’s deepening property debt crisis will hamper the financial sector and a broader economic recovery.
According to the new repayment plan, Country Garden will repay the onshore private bond due Sept. 2 in seven instalments ending in September, 2026. Three initial instalments will be made this year, with 2 per cent of the principal each. The coupon will be kept at the same rate at 5.65 per cent and paid annually.
Country Garden declined to comment.
A person in the company said that because most of its funds are locked up in the escrow account of project companies to ensure the delivery of homes over the next two years, there is little cash left for repaying debt at the group level.
The person, who declined to be named because he was not authorized to speak to media, added that 60 per cent of the company’s total onshore bond maturities are concentrated over the rest of this year, so repayment extensions could give it time to improve its operations and cash flow.
The developer has suspended trading in 11 of its onshore bonds worth more than 16-billion yuan since Aug. 14, in a move that traders said usually signals plans to seek repayment extensions.
In September alone, Country Garden has a 5.8-billion yuan onshore bond maturing and a 48-million yuan coupon due, as well as put options on a further 3.4-billion yuan of paper.