Country Garden’s Losses Fan Worst Fears on China Property Market

Country Garden’s financial struggles are confirming investors’ worst fears about the nation’s vast property market, which has resumed a downturn after a brief first-quarter rebound. 

Home sales tumbled the most in a year in July, making it harder for real estate firms to get cash needed to alleviate the credit crisis. 

Failure by Country Garden to pay its debts would pummel fragile investor sentiment just as Beijing seeks to revive the troubled property market.

Bloomberg 11 August 2023

https://www.bloomberg.com/news/articles/2023-08-11/country-garden-s-losses-fan-worst-fears-on-china-property-market

Country Garden crisis brings new pain to China’s property sector | Financial Times (ft.com)

Bonds of China’s Largest Property Developer Crash to 25 Percent of Notional Value

Speculative demand for housing—in the form of second and third, often unrented homes—supported the market for years, helping paper over China’s weak demographics. 

But the protracted downturn and the government’s hands-off approach appear to have seriously undermined the assumption that housing prices will keep going up endlessly, over the long run.

Mish 10 August 2023

Bonds of China’s Largest Property Developer Crash to 25 Percent of Notional Value – MishTalk

Country Garden faces default after missing coupon payments

Bloomberg 9 August 2023

https://englundmacro.blogspot.com/2023/08/once-asias-richest-woman-loses-286.html

Country Garden: the Good, the Bad and the Very Ugly

First, the good. Country Garden is not China Evergrande Group. That’s a much better-run company. 

Now, the bad. In a restructuring scenario, investors are unlikely to see any money upfront.  

Country Garden’s Achilles’ heel is a heavy exposure to smaller cities, which are plagued by housing oversupply and population outflows 

Now here comes the outright ugly. It’s possible that Country Garden’s dollar bonds will be in default for a long time and there’s no restructuring whatsoever.

Bloomberg 14 August 2023 

https://www.bloomberg.com/opinion/articles/2023-08-14/country-garden-what-the-china-developer-s-restructuring-would-look-like

Country Garden is not a repeat of Evergrande, but

Even if Country Garden makes the late payment, it would only be delaying what appears to be inevitable

Financial Times 14 August 2023

https://www.ft.com/content/f295df85-d954-42b9-bc4b-3adf678032e5