Country Garden: China property behemoth loses record due to debt crisis

Country Garden, one of China’s largest property developers, is the latest to warn of debt default.

The announcement raises concerns about the world’s second-largest economy’s post-pandemic recovery.

The company threatened to default “if the financial performance of the group continues to deteriorate in the future”.

“The group might not be able to fulfil the financial covenants of these borrowings, which may result in default and cross-default in certain other borrowings,” Country Garden stated in a Hong Kong regulatory filing.

The corporation estimated a 45bn to 55bn yuan loss from which the record loss was the lowest.

Hong Kong Country Garden shares rose 1% on Thursday morning.

China’s economy: ‘ticking time bomb’?
Crisis-hit China Evergrande shares fall 80%.
China’s property market, which comprises building homes and creating its goods, accounts for a third of the economy and is suffering.

In 2020, new borrowing rules for huge real estate enterprises shook China’s real estate market.

Evergrande, China’s top-selling developer, accumulated around $300bn in debt as it expanded to become one of the country’s largest enterprises.

Its financial woes have caused other developers to default on their loans and leave unfinished building projects around the country.

Evergrande reported a 33bn yuan first-half loss at the weekend.

Its shares plunged about 80% on Monday, their first day of Hong Kong trade in a year and a half.

Evergrande shares have lost over 99% of their value in three years as Beijing cracks down on property firms.

Weak economic growth, rising local government debt, and record young unemployment plague China.

Official data indicated Thursday that China’s factory activity fell for a sixth month.

The August PMI was 49.7..


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