Chinese real estate developer Country Garden has officially been declared in default after failing to meet obligations on a dollar bond, according to a notice from Citicorp International reported by Bloomberg. The trustee notice stated that Country Garden’s missed interest payments qualify as an event of default. The company initially missed a $15.4 million dollar bond payment in September and subsequently missed the 30-day grace period. In a filing to the Hong Kong Stock Exchange, Country Garden revealed that it did not anticipate being able to meet its offshore payment obligations on time.

This default will likely lead to one of China’s largest corporate restructurings, as Country Garden is one of the world’s most indebted property developers with nearly $200 billion in liabilities as of December 2022. The default comes at a time when China’s economy is struggling to recover from the effects of the pandemic. The country has experienced weak trade, signs of deflation, slumping consumer demand, and a struggling property market. In August, another Chinese property giant, Evergrande, filed for Chapter 15 bankruptcy protection, highlighting the liquidity issues faced by several Chinese real estate developers in the past year. Experts warn that these risks could spill over into other sectors of the economy.

The significance of the property sector in China cannot be understated, as it accounts for about 59% of household wealth and approximately three-quarters of household liabilities, according to a survey conducted by the People’s Bank of China in 2020. A volatile property market can significantly impact consumer confidence. Alfredo Montufar-Helu, the head of the China Center at the Conference Board, emphasized the need for reforms on the demand side while maintaining support for the supply side to generate more confidence in the market.

By smith steave

I have over 10 years of experience in the cryptocurrency industry and I have been on the list of the top authors on LinkedIn for the past 5 years.