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Country Garden’s dollar bonds continued to tumble to deeply distressed levels of 20-30 cents on the dollar as fears of a property sector crisis have risen again. While the developer last week refinanced part of a 2019 loan facility, yet analysts and bondholders cite risks that they are not “completely out of the woods”. Raymond Cheng, head of China research at CGS-CIMB Securities notes that COGARD is among the largest developers in terms of sales and any signs of default would not just wreak havoc in the sector, but also send a signal that the government “does not care (about) more developers going down and has no plan to bail out”. With the property sector facing $12.8bn in dollar-denominated repayments by end-2023. COGARD’s immediate repayments include coupons on its 4.8% 2030s and 4.2% 2026s due on August 6. Its next principal repayment is its $1bn 8% dollar bond due January 2024. With erstwhile high-rated developers like Shimao going into default and Wanda on the brink, COGARD is now on the radar. JPMorgan estimates another $9bn of defaults this year, but that does not include COGARD. Its analysts however mention that fresh government support would become crucial to the sector.
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