Shares in Country Garden jumped more than 7 per cent in early trade on Monday (Sep 4), while Hong Kong’s Hang Seng mainland properties index rose more than 6 per cent.
In the deal reached after a vote on its proposal late on Friday, Country Garden is now allowed to repay the onshore debt in instalments over three years, instead of meeting its obligations by Sep 2.
It also has another immediate, albeit much smaller, debt payment challenge – the ending of a grace period on Tuesday for last month’s missed coupon payments worth a total of US$22.5 million on two offshore dollar bonds.
That Country Garden was able to avert an onshore default has raised hopes it will be able to make the interest payments on those bonds, said three of its offshore creditors, declining to be named as they were not authorised to speak to the media.
After that, the creditors said they expect Country Garden to enter into restructuring negotiations for its entire offshore debt to avoid a “hard default”, similar to what it did with the onshore creditors.
Country Garden did not immediately respond to a request for comment.
While China’s property industry may have gained some respite, some market participants said they plan to stay away from the sector until there is a rebound in home sales.
“We sold all our Chinese real estate stocks in April 2020 and haven’t bought back any since,” said Qi Wang, CEO of Hong Kong-based MegaTrust Investment. “Wouldn’t touch the private developers with a ten-foot pole right now.”
