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       Country Garden Makes $22.5 Million Payment, With $15 Billion To Go

       The embattled Chinese property giant is said to have avoided default by meeting a deadline to pay interest on small loans. But it must repay billions within the next year.

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       A Country Garden project under construction in Nantong, China, last month. Credit...Qilai Shen for The New York Times

       By Daisuke Wakabayashi and Claire Fu

       Sept. 5, 2023Updated 2:03 a.m. ET

       Country Garden, China’s biggest property developer, told creditors that it had made a late interest payment, averting an immediate default on its debts and keeping the company financially viable for the time being.

       Last month, the company missed two interest payments totaling $22.5 million on bonds that had been sold in U.S. dollars. It had a 30-day grace period to make the payment or risk default. The grace period ended this week.

       Country Garden told the bondholders that it had made the payment within the grace period, a person close to the company said on Tuesday.

       The delayed payments underscored the financial pressure facing Country Garden, which has been China’s top-selling homebuilder for the last six years. The company has been scrambling to raise cash to get a handle on liabilities that totaled about $187 billion at the end of June. Last week, after reporting a $7.1 billion loss for the first half of 2023, it warned that there were “material uncertainties which may cast significant doubt” on its ability to avoid bankruptcy.

       It struck a deal to sell a minority stake in a property development, and it agreed to issue new shares at a discount to a creditor who is owed hundreds of millions of dollars from Country Garden. The company also reached an agreement with holders of its $537 million bonds denominated in yuan, the Chinese currency, that were due last week, to delay repayment of the debt for three years.

       The company said it must repay nearly $15 billion in debt within the next 12 months in the form of bonds, notes, and bank and other borrowings. Country Garden’s debt due within the next year is more than its current $13.9 billion in cash and cash equivalents.

       Once considered a model company in China’s property industry, Country Garden’s cash crunch is the latest signal of the country’s worsening real estate crisis, which has already left dozens of home builders in default, unable to pay off their debts.

       Country Garden had managed to avoid a spiraling liquidity crisis until recently, when a slowdown in the Chinese economy prompted a sharp and sudden downturn in the company’s property sales. Presales of unfinished apartments, a crucial indicator of future revenue, plunged more than 50 percent in June and July, twice the rate of decline in the preceding five months.

       There may not be a quick resolution to Country Garden’s financial predicament. China Evergrande, once considered a rival to Country Garden for the title of top Chinese home builder, defaulted on its debt in late 2021, and it continued to restructure its debt and negotiate with creditors for almost two years before it declared bankruptcy last month.

       Country Garden said last week that it still owed around $200 million to a subsidiary of the Hong Kong-based Kingboard Holdings Limited, a materials and chemicals manufacturer with a property division. It said the amount would be paid in installments, with the final payment due in December.

       Daisuke Wakabayashi is an Asia business correspondent for The Times, based in Seoul. More about Daisuke Wakabayashi

       Claire Fu covers news in mainland China for The New York Times in Seoul. More about Claire Fu

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