Explainer-Country Garden: What happens next?

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Explainer-Country Garden: What happens next?
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Bruce Cockburn: 50 years of music, spirituality and social justice | SaltWireHONG KONG - Country Garden's entire offshore debt will be deemed to be in default if China's largest private property developer fails to make a $15 million coupon payment on Tuesday, the end of a 30-day grace period.A non-payment is expected after Country Garden last week warned about its inability to meet offshore debt obligations. Its dollar bonds are being bid at below 6 cents on the dollar.

Bondholders are also in talks with other financial institutions and law firms to form a group to consider their options. Country Garden had total liabilities of 1.4 trillion yuan at the end of June, including nearly $11 billion of offshore bonds and $6 billion of offshore loans. Since the sector's debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted, most of them private developers. Chinese developers have defaulted on more than $114.6 billion of $175 billion in dollar bonds outstanding since 2021.

With property sentiment already very weak, home-buyers could become even more wary of private developer brands, and home prices in many areas could come under greater pressure if Country Garden resorted to fire sales to raise cash.

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