Country Garden admits debt woes

A Country Garden (2007) coupon payment deadline passed without word of China's biggest private developer settling the US$15 million (HK$116.7 million) debt, fueling worries it had defaulted on its offshore debt as the nation's real estate woes deepen.

The firm did state yesterday that it expects to be unable to meet all of its offshore debt obligations and hopes to seek a "holistic" solution to its difficulties. Non-payment will trigger cross defaults in other Country Garden bonds as is standard in such contracts.

The company has almost US$11 billion of offshore bonds, and a default would set the stage for one of China's biggest corporate debt restructurings. One bondholder of the tranche in question said he had not received payment on the coupon when a 30-day grace period ended.

Also yesterday, private real estate giant China Vanke (2202) and state-owned developer Poly Property (0119) saw their ratings cut to BBB by Fitch Ratings. Still, Vanke said its financing was normal and work was proceeding well in replying to an investor inquiry.