.png)
Country Garden, one of China's greatest real estate developers, is the most recent real estate behemoth to warn it may default on its loans.
Country Garden is among the greatest real estate developers in China. According to various sources, the financially troubled corporation recorded a record deficit for the first half of the year totaling $6.7 billion (or £5.2 billion).
In their statement, Country Garden expressed that it was "extremely sorry for the poor performance." Following the statement, concerns surrounding the post-pandemic recovery of the world's second largest economy have increased.
Country Garden also admitted that it had fallen behind on interest payments that were due on bonds that were maturing this month. On the other hand, it said that there was still a grace period for payments of thirty days.
According to reports, it is also attempting to prolong the time for the repayment of yet another bond.
The company warned that it could also default on its debts "if the group's future financial performance continues to deteriorate." "The group may not be able to meet the financial covenants of these borrowings, which could result in default on these borrowings and cross-default on other borrowings," Country Garden stated in a Hong Kong regulatory filing.
The company warned earlier this month that it could incur a loss of up to $7.6 billion for the first half of the year.
The record loss was at the lower end of the company's estimated range of 45 billion to 55 billion yuan ($6.2 billion to £4.9 billion). On Thursday morning in Hong Kong, Country Garden shares were trading slightly higher than what they have been.
Problems in China's property market, which encompasses everything from the construction of homes to the manufacture of products for them, are having a significant effect on the economy, as It constitutes roughly one-third of the total.
In 2020, new regulations limiting the amount of money that large real estate firms could borrow shook China's real estate industry.
Evergrande, once China's top-selling developer, amassed more than $300 billion in obligations as it aggressively expanded to become the country's largest company.
Its financial problems have reverberated throughout the country's real estate industry, with a number of developers defaulting on their obligations and abandoning unfinished construction projects.
Evergrande reported a 33 billion yuan loss for the first half of the year over the weekend.
On their first day of trading in Hong Kong after a year and a half, its shares dropped by nearly 80% on Monday, reported sources.
As a result of Beijing's crackdown on property companies over the past three years, the value of Evergrande shares decreased.
In addition to these issues, China is dealing with a number of other challenges, including sluggish economic growth, soaring levels of local government debt, and unemployment rates that are at historic highs among young people.
On Thursday, official data indicated that the amount of activity that took place in China's factories had decreased for the fifth month in a row.
