Country Garden reports major slump in China home sales, triggering fresh alarm for creditors amid debt restructuring
- Contracted sales plunged 85 per cent in February from a year earlier, suggesting no relief to credit crunch at one of China’s biggest developers
- Distress shows why some creditors are running out of patience with its debt situation
Country Garden Holdings said home sales plunged last month to a multi-year low, raising fresh alarm about its financial distress even as the mainland Chinese developer fends off hostile creditors in Hong Kong and seeks forbearance on more than US$10 billion in offshore debt.
The firm, once China’s biggest home builder by sales, reported 3.72 billion yuan (US$516.8 million) in contracted sales for February, an 85 per cent slump from a year earlier, it said in a Hong Kong stock exchange filing late on Monday. Sales fell 32 per cent from 5.49 billion yuan in January.
The February slump is the steepest in at least five years, and amounted to about a tenth of Country Garden’s average monthly sales of 35 billion yuan over the past four years, according to its filing records.
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China Evergrande Group, the emblem of China’s housing market crisis, lost a case in Hong Kong in January when the High Court ordered the firm to liquidate after accumulating more than US$300 billion in total liabilities. Investors are likely to get next to nothing on the firm’s US$20 billion of defaulted offshore bonds.
Home sales in mainland China remained anaemic despite recent measures by Chinese authorities to extend financial lifelines to a “whitelist” of worthy developers, indicating a lack of confidence among consumers. Sales by the country’s top 100 developers fell at an annual rate of 60 per cent in February, according to China Real Estate Information Corp.
