China’s real estate sector is once again at the center of concerns as Country Garden, one of the country’s largest non-state-owned developers by sales, has reportedly missed two coupon payments on dollar bonds. The missed payments were due on Sunday, and the affected bonds are notes set to mature in February 2026 and August 2030. However, Country Garden has not yet responded to requests for comment on the matter.
The news comes just two years after Evergrande’s debt crisis, reigniting worries about the stability of China’s real estate market. The sector plays a crucial role in the country’s economy, with any potential defaults or financial issues having far-reaching consequences.
In a separate development, Dalian Wanda’s senior vice president, Liu Haibo, has been taken away by police as part of the company’s internal anti-corruption probe. Dalian Wanda has not provided any comments or clarifications regarding this incident.
Following this news, Hong Kong-listed shares of Country Garden experienced a decline of more than 1.7% on Wednesday, after already suffering sharp declines earlier in the week. The negative sentiment has also spilled over to other non-state-owned developers such as Longfor, whose shares closed about 0.8% higher after trading lower earlier in the day.
The current economic situation in China, including falling home prices and slower economic growth, has further fueled concerns about the real estate market. With total home sales in the first half of 2023 declining year-on-year, another major developer default would present significant challenges for the Chinese authorities.
According to Sandra Chow, co-head of Asia Pacific Research for CreditSights, the timing of this potential default is particularly unfavorable, as cities are lifting local property restrictions. This move could potentially reduce demand in lower tier cities, which account for 70% of national new home sales volume. Overall, the sentiment among homebuyers is likely to suffer as a result.
While an investor relations representative for Country Garden has not denied the reports regarding the missed payments, they have also not provided any details regarding the company’s payment plans.
