**China’s Country Garden Rises 20% as Creditors Approve Bond Restructuring**
*Shares of Chinese real estate firm Country Garden surged nearly 20% on Monday after creditors agreed to restructure the repayment of a renminbi-denominated bond that was due over the weekend. The approval from bondholders gives the cash-strapped company some breathing room as it tries to meet its repayment obligations.*
## Significance of the Restructuring Approval
– The approval gives Country Garden more time to meet its repayment obligations, both domestically and internationally.
– The company has been under scrutiny from international investors who are evaluating the state of China’s real estate sector.
– Country Garden announced that it received a 56.08% approval from participating Chinese creditors in the vote, paving the way for an extension on a nearly Rmb 4 billion ($550 million) bond that was due on Saturday.
– The restructuring agreement allows the developer to pay off the debt in installments over a three-year period.
## Positive Market Response
– Following the news of the restructuring approval, shares of Country Garden rose by as much as 19.1% in Hong Kong.
– Despite the surge, the stock is still down over 60% year-to-date, reflecting the challenges the company has faced in meeting its repayment obligations.
– Country Garden, once considered unlikely to default, has recently struggled to fulfill its financial commitments.
– About a month ago, the company missed $22.5 million in interest payments on two $500 million international bonds, triggering a sell-off in real estate shares already strained by widespread defaults.
## Easing Mortgage Rules Boost Hong Kong-Listed Property Companies
– The announcement of eased nationwide down payment requirements for first- and second-time home buyers in China had a positive impact on Hong Kong-listed property companies.
– Shares of these companies rose as much as 10.5% on Monday, following the recent trend of mortgage rule easing in major cities like Beijing, Shanghai, Guangzhou, and Shenzhen.
– These measures aim to stimulate the real estate sector, which has been facing a protracted liquidity crunch.
– Despite the easing, some analysts believe that further measures may be needed to fully address the challenges faced by the sector.
## Challenges Ahead for Chinese Developers
– Data from Dealogic reveals that Chinese developers face a significant wall of maturing dollar and renminbi bond payments amounting to $38 billion over the next four months.
– Fitch Ratings has warned that annual new home sales in China could decrease by up to 15%.
– The rating agency also highlighted that Country Garden’s situation could further dampen Chinese homebuyer sentiment.
– Country Garden, with liabilities of approximately Rmb1.36 trillion at the end of the first half of 2023, is facing increased repayment pressure this week as the grace period for missed dollar bond payments, which occurred a month ago, is set to expire.
## The Outlook for Country Garden and the Real Estate Sector
– The recent restructuring approval provides Country Garden with some relief, but challenges remain for the company and the broader real estate sector in China.
– The market response to the announcement reflects investors’ hopes for a recovery in the sector, but it also highlights the volatility of the market and the uncertainties surrounding the Chinese economy.
– As the Chinese government continues to implement measures to stimulate the real estate sector, it will be crucial to monitor their effectiveness and the impact on market dynamics.
– Investors and analysts will be closely watching to see how Country Garden and other Chinese developers navigate the repayment challenges ahead and whether further government intervention will be required.
**Summary**
Chinese real estate firm Country Garden saw its shares surge nearly 20% after creditors approved the restructuring of a bond repayment. The approval gives the company more time to meet its financial obligations and provides a temporary respite from its cash-strapped situation. Despite the positive market response, Country Garden’s stock is still down significantly for the year. Eased mortgage rules in China have also boosted Hong Kong-listed property companies, but the real estate sector still faces challenges, including a significant wall of maturing bond payments. The situation at Country Garden could further impact Chinese homebuyer sentiment. The road ahead for the company and the real estate sector in China remains uncertain, and the effectiveness of government measures to stimulate the sector will be closely monitored.
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Shares of Chinese real estate firm Country Garden rose nearly 20% on Monday after creditors agreed over the weekend to restructure the repayment of a renminbi-denominated bond expected on Saturday.
The bondholder approval gives the cash-strapped company more time as it scrambles to meet domestic and international repayment obligations.
Country gardenwhich has become the focus of international investors seeking to assess the state of China’s vast real estate sector, said in a statement to bondholders that it won 56.08% approval from participating Chinese creditors in the vote.
The creditors granted an extension on a nearly Rmb 4 billion ($550 million) bond. destined to ripen on Saturday and allowed the developer to pay off the debt in a series of installments over the course of three years.
The news sent the developer’s Hong Kong-listed shares up as much as 19.1% on Monday. The stock is still down more than 60% year-to-date.
Country Garden, once considered one of the Chinese developers less likely to default, has struggled to meet recent repayment obligations. About a month ago, it missed $22.5 million in interest payments on two $500 million international bonds, triggering a large sell-off in shares of real estate groups already under pressure from widespread defaults.
Shares of Hong Kong-listed property companies rose as much as 10.5% on Monday as Chinese authorities eased nationwide down payment requirements for first- and second-time home buyers.
The pace of easing mortgage rules to encourage homebuyers has picked up sharply in recent weeks, following years of a severe crackdown on excess leverage in the sector. Major cities including Beijing, Shanghai, Guangzhou and Shenzhen lowered their minimum mortgage interest rates for first-time home buyers last week.
Nomura analyst Ting Lu said that while the recent easing marked a “significant step in stimulating the real estate sector,” these measures were “still not enough” to pull it out of a protracted liquidity crunch.
Dealogic data shows Chinese developers face a $38 billion wall of maturing dollar and renminbi bond payments over the next four months, while Fitch Ratings warned last week that annual new home sales in China could decrease up to 15%.
The rating agency also warned that the situation at Country Garden “could exacerbate the weakness [Chinese] homebuyer sentiment.
Country Garden, which had liabilities of around Rmb1.36 trillion at the end of the first half of 2023, is facing increased repayment pressure this week. The grace period for dollar bond payments missed a month ago will expire on Wednesday.
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