The embattled property developer Country Garden said it was unable to repay a loan and that it expects to miss upcoming overseas debt payments as a result of plunging sales from China’s spiraling property crisis.
The announcement, made Tuesday on the Hong Kong Stock Exchange, is effectively a statement from Country Garden, once China’s largest homebuilder, that it will likely default with roughly $187 billion in liabilities. Country Garden is one of the biggest causalities of China’s collapsing real estate market that has sent Evergrande, another giant property developer, into bankruptcy.
Country Garden had been scrambling over the last few months to stave off a collapse, selling off assets to raise cash and negotiating with creditors to restructure liabilities or delay payments. But the company’s unabated struggle in selling new apartments has throttled the cash flow necessary to stay on top of debt payments.
Last month, when Country Garden announced that it had managed to make a closely watched interest payment to avoid default, the company said it still needed to repay nearly $15 billion in debt within the next 12 months in the form of bonds, notes, and bank and other borrowings.
Country Garden said presales of unfinished apartments, an important indicator of future revenue, fell for a sixth straight month in September, to 6.17 billion yuan, or $862 million. That was down 81 percent from the same month a year ago.
“Prevailing market conditions have made it difficult for the group to procure sufficient cash to enhance its liquidity position within a short period of time. Consequently, the group’s cash position remains under significant pressure,” the company said in the statement.
Country Garden said it had not made a payment due on a $60 million loan and that it expects that it will not be able to pay all of its overseas debt obligations when they come due, or even within a grace period.