Country Garden wins creditors' support to extend repayment of 7 yuan bonds

Country Garden Holdings Co. won creditor support to extend repayment on seven yuan-denominated bonds, giving the distressed Chinese developer breathing room just days after it dodged a default on dollar securities at the last minute.

Holders of the securities voted in favor of the company’s plan to stretch principal repayments by three years, people familiar with the matter said, asking not to be identified discussing a private matter. 

The seven notes are among a group of eight bonds the company was seeking approval to extend in voting that had started Sept. 7. The voting on the eighth note, issued by unit Guangdong Giant Leap Construction, was again extended until Thursday night 10 p.m. Beijing-time, according to a bondholder who said he was given the information by a company representative.

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The outstanding principal of all eight securities totals 10.8 billion yuan ($1.5 billion). The firm has left much smaller payments go right up until final deadlines recently, including a combined $22.5 million in interest it paid in the final hours of grace periods ending Sept. 5-6.

Country Garden’s tumble into crisis has shocked China’s financial markets because it’s a household name, known for building homes in smaller cities. Helmed by one of the country’s richest women Yang Huiyan, the builder has become a symbol of a broader property debt crisis that’s led to record nonpayments and prompted authorities to adjust policy to try to avoid more contagion.

The firm has so far avoided defaulting but recently warned it still could, after posting a record first-half loss of almost $7 billion.

Country Garden has had some more positive news in recent days, even as it’s far from out of the woods. Along with other developers whose shares have traded at or near penny-stock levels, it has extented gains in the stock market this week after authorities introduced bolder measures recently including lowering down payments and loosening some mortgage rules.

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And it’s navigated other recent deadlines beyond the interest on the dollar bonds. It gained approval in a separate creditor vote that ended earlier this month to extend payments into 2026 on a local bond with 3.9 billion yuan of outstanding principal. The builder also wired a 2.85 million ringgit ($609,430) coupon coming due on a bond in the Malaysian currency.   

Any payment failures could impact China’s housing market even more than a landmark default in late 2021 by China Evergrande Group, as the builder has four times as many projects.