2023-08-24 20:10:12
The rating agency Fitch lowered the soundness rating of a subsidiary of Country Garden, due to “increased pressure on liquidity” of this Chinese real estate giant whose financial health worries the markets.
The group, which has long been deemed financially sound, was unable at the beginning of the month to repay two interest on loans.
He formally risks a payment default if he does not pay, following a grace period of 30 days which expires at the beginning of September.
His situation is a source of nervousness on the markets because Country Garden had an astronomical debt at the end of 2022 which he estimated at some 1.152 billion yuan (150 billion euros). The Bloomberg agency figures it for its part at around 1.4 trillion yuan (176 billion euros).
“Increased cash pressures” at Country Garden are likely to impact “the growth, brand reputation, profitability and access to finance” of its property management subsidiary Country Garden Services (CGS), it said. Fitch Wednesday.
As a result, the strength rating of this subsidiary has been lowered from “BBB-” (lower average credit quality) to “BB+”, synonymous with speculative.
This decision comes before the expected publication in the coming days of the half-yearly results of its parent company.
Country Garden says it expects a net loss of around 45 to 55 billion yuan (between 5.6 and 7 billion euros).
To add to the pressure, 31 billion yuan (3.9 billion euros) of bonds will mature in 2024, according to rating agency Moody’s, which last week downgraded the group’s strength rating due to a “very high credit risk”.
Its setbacks raise fears of a bankruptcy with immeasurable consequences for the financial system in China, two years following the descent into hell of its competitor Evergrande which had made the headlines.
Country Garden, which employs tens of thousands of people, is on the Forbes list of the 500 largest companies in the world and has four times as many sites as its rival.
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