11/21/2023 0 Comments 2016 mortgage defaultsThe issue is seen as one of the biggest tests for the leadership in Beijing this year as officials work to stem a broader economic slowdown that has also battered consumer confidence, exports and retail spending. Such an event could send shockwaves across the world’s second biggest economy, as real estate accounts for an estimated 25% to 30% of China’s GDP. Investors have since been bracing for a potential default by Country Garden, which has openly admitted this could happen soon. That was when reports emerged that the company had missed interest payments on two US dollar bonds, casting attention on its overall debt problems. While confidence in China’s real estate sector has been shaky since the collapse of Evergrande, Country Garden reignited fears last month when its liquidity crisis burst into public view. Evergrande filed for bankruptcy in the United States last month, after posting losses of $81 billion in the last two years. Its troubles are reminiscent of those of Evergrande, a once mighty Chinese developer that defaulted in 2021. In recent weeks, Country Garden has become emblematic of China’s spiraling property crisis, which is hampering efforts by the government to reignite economic growth. That was down significantly from revenue of about 523 billion yuan ($71.6 billion) and net profit of approximately 41 billion yuan ($5.6 billion) in 2021. It booked nearly 430.4 billion yuan (about $59 billion) in sales last year, though just a tiny fraction of that - 2.6 billion yuan ($357 million) - was taken home in net profit. The developer is also part of the Global 500, meaning it’s one of the world’s biggest businesses by revenue. It is also responsible for masses of jobs in China, employing some 300,000 people, according to its most recent annual report.Ī Country Garden development in Zhenjiang, located in China's eastern Jiangsu province in 2021 STR/AFP/Getty Images The group also develops commercial spaces, such as hotels, parking lots and retail stores, though it has branched out dramatically in other areas, such as robotics and agricultural services. Listed in Hong Kong and based in Foshan, Guangdong the company has developed 3,000 projects across the country, provided housing for more than 5 million people and converted more than 1,400 rural towns into cities. Here’s what to know about Country Garden, and the future it faces.Ĭountry Garden has long been one of China’s biggest real estate developers, specializing in residential property. That will be tough, as slowing home demand in China has hammered its cash flow and wiped out its profit. While a deadline to repay one bond has just been extended, it continues to stare into an abyss of nearly $200 billion in liabilities - and faces mounting pressure to pay up. The company has about 27 billion yuan ($3.7 billion) in bonds either due to bondholders or subject to demands for early payment through the end of 2024 alone, according to a Wednesday estimate from Moody’s. The developer, China’s largest in terms of home sales, continues to keep investors around the world on edge as it faces more upcoming payment deadlines on billions of dollars it has borrowed. Chinese property giant Country Garden has twice narrowly avoided defaulting on its debt in a matter of days.
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