Another Chinese Developer Teeters, Raising Worries About the Economy
Country Garden, China’s last real estate giant to avoid default, has spooked investors after missing key debt payments, rekindling memories of China Evergrande.
Aug. 9, 2023Updated 2:14 p.m. ET
Remember China Evergrande, that Chinese real estate behemoth whose mountain of debt sent global markets spiraling in 2021? Its collapse signaled the start of a crisis for China’s housing market, where sales of apartments ground to a halt and developers big and small found themselves unable to pay their bills.
Now, financial troubles at Country Garden, another real estate giant, are raising fresh concerns. They are also a flashing warning sign about China’s economy.
Country Garden, the country’s biggest developer by sales, has been pummeled in the markets twice in the past week. Investors are panicked by two events: On Aug. 1, the company scrapped a plan to inject cash into the business, something it needs. This week, it missed two interest payments on bonds. The bond payments, which are owed in U.S. dollars, are relatively small in value, but by missing them, the company put itself at risk of default.
Country Garden’s market value has been more than halved since the start of the year. Traders were swapping some of its bonds for as little as 10 cents on the dollar this week, a sign of doubt that they expected to be paid back in full.
Investors are alarmed because Country Garden had largely benefited from.......
nytimes.com
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