China's troubled property giant Country Garden has reportedly defaulted on a bond payment
- Chinese developer Country Garden was officially deemed in defaulted Wednesday, Bloomberg reported.
- It failed to meet its obligations on a dollar bond within the grace period that ended last week.
Chinese real estate developer Country Garden has been officially declared in default after failing to meet obligations on a dollar bond, according to a notice from Citicorp International reported by Bloomberg.
The trustee notice said Country Garden's missed interest payments "constitutes an event of default."
Country Garden missed an initial $15.4 million dollar bond payment in September, and then missed the subsequent 30-day grace period. Earlier this month, the company warned in a filing to the Hong Kong Stock Exchange that it did not pay a 470 million Hong Kong dollar principal payment, and that it did not expect to meet its offshore payment obligations on time.
Now, in all likelihood, Country Garden — one of the world's most indebted property developers — will face one of China's largest corporate restructurings. At the end of 2022, the developer had nearly $200 billion in liabilities.
The default comes as China's economy continues a prolonged stumble out the pandemic. The economy has yet to see a rebound from its stringent "zero-COVID" lockdowns. Instead, recent months in China have been colored by weak trade, signs of deflation and slumping consumer demand, and an ailing property market.
In August, another Chinese property giant, Evergrande, had filed for Chapter 15 bankruptcy protection. Other Chinese real-estate developers have run into similar liquidity issues over the last year, too, and strategists have cautioned that the risks could spillover into other parts of the economy.
Real estate in China accounts for about 59% of household wealth, and roughly three-quarters of household liabilities, a survey from the People's Bank of China said in 2020.
A wobbling property sector, in turn, translates to shaky consumer confidence.
"The boom that characterized the property sector of the last decade is over," Alfredo Montufar-Helu, the head of the China Center at the Conference Board, told Insider in a recent interview. "China is at a crucial moment where they cannot stop supporting the supply side, because economic growth would decelerate, but at the same time they need reforms on the demand side. Hopefully the intentions alone can generate more confidence in the market."