Shares of developer Country Garden fell amid risks of default

Shares of Chinese property developer Country Garden fell 10.71% to a low of HK$0.75 ($0.096) during trading on October 10 on the Hong Kong Stock Exchange (HKEX). Quotes fell after a warning about a possible default on bonds.

As of 10:59 Moscow time, securities trading closed at 0.75 Hong Kong dollars (-10.714%).

Country Garden said on October 10 that it had not made payments on debts amounting to HK$470 million ($60.1 million). The Company also expects that it will not be able to satisfy all of its obligations under its dollar-denominated debt and other offshore debt obligations.

According to Country Garden’s financial statements, as of June 2023, its liabilities totaled $187 billion, including $15.3 billion in international bonds and loans, The Wall Street Journal writes. Country Garden’s announcement today effectively means the developer expects to default. The company has hired financial advisers and plans to negotiate with its offshore creditors.

Earlier, Finam analyst Natalia Pyryeva drew attention to the problems of the developer Country Garden Holdings in a commentary to Vedomosti. She noted that they could “hit the Chinese economy much harder” than the situation with another developer Evergrande, which marked the beginning of the crisis in the construction industry. According to Pyryeva, Evergrande’s problems were caused by excessive extravagance, while Country Garden’s problems arose due to the withdrawal of investors and buyers from the real estate market after construction volumes exceeded demand for several previous years. This, in turn, led to a huge excess of housing, the expert explained.

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