China’s real estate industry is still rocking. Concerns are growing around Country Garden, a major real estate developer in China whose huge debt has sparked fears of bankruptcy that could spark wider economic turbulence. Shares of the Chinese giant hit an all-time low after it suspended trading of some black bonds. The Chinese real estate giant fell 18.4% to $0.80 after it announced it would suspend trading in 11 onshore bonds with a face value of about 16 billion yuan ($2.2 billion) over the weekend.
The Guangdong province-based company defaulted on its bond payments on August 6. It has a 30-day grace period, but if it does not pay within that period, it risks default. Adding to the pressure, the firm’s 31 billion yuan ($4.27 billion) bond is due in 2024, according to rating agency Moody’s.
Country Garden announced over the weekend that it will suspend black bond trading from Monday (August 14th) in a decision that may cause concern in the markets as the company says its debt is estimated at around 1.15 trillion yuan (159 billion) by the end of 2022. More liabilities pushed other estimates of its total debt to 1.4 trillion yuan (193 billion), according to Bloomberg.
As a result, markets showed a new level of unease: Country Garden’s serious financial problems could have a contagious effect on home buyers and local banks, dealing a new blow to the industry’s and China’s recovery prospects.
The owner of the group, Yang Huiyan, said that the company “has been facing the biggest challenges since our founding”. Until recently, one of the richest women in China and Asia, Yang Huiyan became a billionaire when she inherited shares from her father in 2005, twenty years after founding the company. But his wealth has dwindled since 2021 as the housing crisis in China has greatly weakened the industry. According to the Bloomberg billionaires ranking, Yang lost about $29 billion in two years and has an estimated net worth of $5.3 billion. To support Country Garden, she and her family contributed $4.9 billion in personal funds she.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
