2023-08-25 09:30:00
By Le Figaro with AFP
Posted 1 hour ago, Updated 10 minutes ago
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The situation of the Chinese real estate giant might have catastrophic consequences for the second world economy.
Country Garden, one of China’s biggest debt-ridden property developers, is negotiating with its creditors on Friday to reschedule its repayments to avoid a default, which would have catastrophic consequences for the world’s second-largest economy. The group, which has long been deemed financially sound, was unable at the beginning of the month to repay two interests on loans, at a time when the real estate sector is experiencing an unprecedented crisis in China.
Country Garden formally risks a payment default if it does not pay, following a grace period of 30 days which expires at the beginning of September. To add to the difficulties, he must also pay an obligation totaling 3.9 billion dollars (3.6 billion euros), which matures in ten days.
The developer, who hopes to postpone this deadline to 2026, has been talking to creditors since Wednesday. They have until 10:00 p.m. (2:00 p.m. GMT) to vote in an online vote, according to Bloomberg. A deal would see Country Garden avoid a default, which would be the biggest in China since that of rival Evergrande two years ago.
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A nervous situation
Country Garden’s situation is causing nervousness in the markets because the group had a considerable debt at the end of 2022, which it estimated at some 1.152 billion yuan (150 billion euros). Bloomberg figures it for its part at around 1.4 trillion yuan (176 billion euros). Country Garden was the biggest promoter in China last year. It has four times more projects than Evergrande, whose shutdown of construction sites led to protests and monthly payment strikes last year.
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Country Garden employs tens of thousands of people and is listed in the Forbes list of the 500 largest companies in the world. Her boss, Yang Huiyan, was until recently the richest woman in Asia. The setbacks of the two real estate giants further weaken a sector already scalded by the health crisis and the economic slowdown in China.
To revive this key sector of the economy, China on Friday announced further easing measures for mortgage lending.
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