The distressed builder’s onshore unit, Country Garden Real Estate Group Co, repaid in full an 800 million yuan (US$111 million) bond with a put option that expired Wednesday, it said in a filing to the Shenzhen Stock Exchange. It also sold an investment in Zhuhai Wanda Commercial Management Group Co for 3.07 billion yuan to raise cash for debt restructuring.
The latest moves by China’s former top developer, among the world’s most indebted builders, injected a sense of relief among investors and triggered a rally in the country’s property stocks.
They also came hot on the heels of a top housing official’s pledge to avoid a cascade of debt defaults by developers, a remark that was among the strongest commitments yet to ease the industry’s unprecedented cash crunch.
“The Group is actively resolving the periodic liquidity pressure,” Country Garden said in its statement explaining its stake sale in Zhuhai Wanda. It is “actively seeking a comprehensive solution to fully address the current offshore debt risks,” the company said.
Country Garden’s shares rose as much as 9% in Hong Kong on Thursday morning, before paring the gains to 5.2%. A Bloomberg Intelligence gauge of Chinese developer shares jumped close to 3% earlier.
Guangdong-based Country Garden overtook rival China Evergrande Group as the epicenter of the property crisis after its October default. Its potential debt workout, which promises to be one of the biggest restructuring exercises in the world’s No 2 economy, also is attracting close scrutiny.
After the latest yuan note repayment, Country Garden has around US$13 billion of bonds outstanding, according to data compiled by Bloomberg.
At least several holders of the yuan note received payment Thursday morning, said people familiar with the matter who requested anonymity discussing private matters.
Chinese policymakers have stepped up efforts in recent months to arrest a housing slump and ease developers’ funding woes, seeking to prevent the crisis from sparking broader contagion and further weakening an already patchy economic recovery.
Authorities widened the industry rescue campaign by mulling a potential list of 50 developers eligible for financing and an unprecedented proposal to allow banks to offer unsecured loans to qualified builders, among other measures.
Home sales have plunged in 18 of the past 22 months. Buyers remain on the sidelines, spooked by construction delays, falling prices and company defaults.
Country Garden is selling its 1.79% stake in Zhuhai Wanda, the mall operator of Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co, to parties related to Wanda Group. The developer said it will use the proceeds for offshore restructuring.
Helmed by one of China’s richest women, Yang Huiyan, Country Garden’s sheer size has made it important to the economy, where the property market along with related industries accounts for about 20% of gross domestic product.
Along with Evergrande, whose default in 2021 opened the door to record non payments from other builders, it has come to symbolise the nation’s broader real estate crisis.