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China's Country Garden seeks to delay onshore bond repayment, fanning market fears [real estate market] (www.reuters.com)

submitted 1 year ago by [email protected] to c/[email protected]

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Country Garden, China's largest private developer, is seeking to delay payment on a private onshore bond for the first time, a source said, after suspending trading in 11 onshore bonds, sending its shares plunging to a record low on Monday.

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[–] [email protected] 3 points 1 year ago

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Anxiety about contagion risks is spreading through global markets, putting China's government under mounting pressure to deliver support for the ailing real estate sector, which accounts for roughly a quarter of the economy.

In a move that dealt a fresh blow to investors' sentiment, two Chinese listed companies said over the weekend that they had not received payment on maturing investment products from Zhongrong International Trust Co.

Concerns about the outsized exposure of China's shadow banks - a $3 trillion industry, roughly the size of Britain's economy - to property developers have grown over the past year as the sector lurched from one crisis to another.

JPMorgan in a research note on Monday said that rising trust defaults would drag down China's economic growth by 0.3-0.4 percentage points directly, and that it expects a "vicious cycle" of real estate financing challenges.

A source with direct knowledge said on Monday that Country Garden has proposed to creditors to extend repayment for an onshore private bond due Sept. 2 , with an outstanding of 3.9 billion yuan, by three years in seven instalments.

China's economy grew at a frail pace in the second quarter as demand weakened at home and abroad, prompting top leaders to promise further policy support and analysts to downgrade their growth forecasts for the year.