2023-08-17 10:42:13
Until a few months ago, Country Garden was considered the strong link in Chinese real estate, when Evergrande and dozens of other developers were no longer able to repay their debts. But the company is now facing “its most serious difficulties since its foundation”, admitted the current boss of the group, Yang Huiyan. A week following having missed two repayment deadlines on debts contracted in dollars, the company suspended, on August 14, the listing of ten of its bonds on the debt market, now considered to be rotten by the rating agencies. ratings. The sanction was immediate: the price of Country Garden on the Hong Kong Stock Exchange fell by 18%. The fall in the number one housing sales in China in 2022 risks further undermining household confidence in this sector, which accounts for around 25% of the country’s gross domestic product.
The risk is that these shortcomings reinforce the negative spiral in which the construction economy is engaged. In July, sales of China’s top 100 developers fell 33% year on year, while real estate investment fell 8.5%, according to the National Bureau of Statistics. For lack of buyers, private promoters are short of cash and can no longer repay their debts.
Evergrande, the most indebted player, in default since 2021, faces the equivalent of 310 billion euros in debts and unpaid bills. Country Garden, with 180 billion euros in debt, had resisted so far, even if the boss of the company had to put her hand in her pocket, at the end of 2022, to lend funds to the group. But the sector’s difficulties have only worsened: despite the end of the zero Covid policy in December 2022, the hoped-for recovery has not taken place. On the contrary, following a brief upturn in the first quarter, real estate sales have finally fallen by 4.7% since the start of the year.
Thirty-day period to repay missed installments
Founded in Foshan, near Canton, in 1992, Country Garden, or Bi Guiyuan in Mandarin, took advantage of the liberalization of the real estate market, then the rapid urbanization of the country. Its founder, Yang Guoqiang, a farmer then a construction worker, became one of the many Chinese real estate billionaires. Today, her daughter, Yang Huiyan, runs the company, which had 70,000 employees at the end of 2022. Long considered Asia’s richest woman following inheriting it from her father in 2007, she now has to reassure investors regarding the solvency of his group, which has a period of thirty days to repay missed maturities.
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