Country Garden Offshore Bond Default

[shri]

The looming default, which would be the latest in scores of Chinese developers who have defaulted, would deepen the crisis roiling the property sector, which makes up about a quarter of the world's second largest economy.


Country Garden will be deemed in default on its overseas debt if it does not make a $15 million payment for a September 2025 bond by midnight in New York (0400 GMT).

The repayments had not been made by early Wednesday, Reuters reported. The company last week warned of its inability to meet offshore debt obligations.

https://finance.yahoo.com/news/china...003023751.html

[er2]

Trading at 5c on the dollar. Nearly tempted to gamble a bit

[shri]

Best of luck.. might go cheaper in a few more mins or not. Isnt it a case of you v/s the govt here?

An eventual default wouldn’t come as a surprise given the builder’s dollar bonds are trading at deeply distressed levels of around 5 cents, indicating low expectations for debt recovery. Country Garden also said last week that it hadn’t made a due payment totaling HK$470 million ($60 million) “under certain of its indebtedness,” without specifying.

https://archive.is/7hSgk

[Morrison]

Trading at 5c on the dollar. Nearly tempted to gamble a bit

Does your handle have any meaning?

[er2]

Best of luck.. might go cheaper in a few more mins or not. Isnt it a case of you v/s the govt here?

I don't think this matters for the bond price. For the CDS issuers and for those who need to book impairments if a default happens, sure. But the price should primarily be a reflection of how much money you can expect to get back, and when. That they'll default in some form I think is a given, how they'll eventually restructure their debt and whether everyone has to take a haircut or chinese bond holders get paid first and overseas bond holders get nothing should be the key question.

[shri]

overseas bond holders get nothing should be the key question

Thats what I meant .. its you v/s govt policy ... may be I'm being cynical here as I always consider that anything related to China has to be approved by the govt.

[jimbo_jones]

Thats what I meant .. its you v/s govt policy ... may be I'm being cynical here as I always consider that anything related to China has to be approved by the govt.

Country Garden relabeled themselves Risland in Australia.

They did build a bunch of stuff and have a bunch of land and other assets. Not sure how they would clawback money from foreign holdings. It really depends on the jurisdiction and how the company was structured.

https://www.theurbandeveloper.com/ar...west-of-sydney
Given some of the shenanigans that have happened with Chinese companies (eg, Arm China).

https://www.reuters.com/business/rea...ct-2023-10-18/
Reuters indicates that a bunch of assets were just land and just subdividing the land and the building risk is on the individuals. The Winton land is very far away from services/infrastructure. May eventually get a boost the new airport opening.

Some of the apartments that they built in North Ryde were okay -> close to university, shops and rail. Lots of asians in the area (but not quite as Asia-fied as Chatswood).

It's not like some of the other properties in mainland China, where individuals are paying full mortgages for apartments that have not event started to build. Those folks will get clobbered. And supposedly those people that were shuffled into Country Garden 'investment products' will get a haircut. The folks with half built apartments, or tofu dreg apartments also get haircuts.

[moctapxe]

The worse is yet to come. We are talking trillions not billions anymore or even millions back in the good old days.
Excess units, unfinished building and of poor quality; high unemployment; world decoupling; inflation/interest rates; and super-power conflict, situation seems like WWII and WWIII could actually be coming and join the party.