Liquidity crisis (2020-2024)
There have been rumors about the financial health of Country Garden since the start of 2020–2023 Chinese property sector crisis.[44] The valuation of its equities had witnessed a steep decline. In January 2023 the stock price had been HK$3.24 (equivalent to 41 U.S. cents). As the end of July 2023 approached, the company's share value had ebbed significantly, bottoming out at HK$1.58.[44]
On August 7, 2023, Country Garden had two bond coupons denominated in U.S. dollars (approximately $22.5 million) that had expired and had not yet been paid.[22][45][46][47] As of August 8, 2023, according to statements from investors based in Hong Kong, the company defaulted on the cumulative amount of US$45 million with regarding interest disbursements linked to two offshore U.S. dollar bonds. The company enjoyed a leeway of 30 days to effect the payments. Should it not meet these financial obligations within the aforementioned time limit, it would default on the stipulations contained in the bond agreements.[44]
On 10 August 2023, Country Garden warned of a large net loss for the first six months of 2023 due to impairment on property projects and declining profit margins; the loss was expected to be in the range of CN¥ 45 billion(US$6.25 billion) to CN¥ 55 billion, after a net profit of around CN¥ 1.91 billion in the same period in 2022.[48] The company's shares fell up to 14.4 percent to a record low on the day following the profit warning,[48] closing below HK$ 1 for the first time.[49] The same day, Country Garden appointed China International Capital Corporation (CICC), as its financial advisor to handle the restructuring of its public market debt, with preliminary decisions expected to be made in the near term.[50] On August 12, 2023, Country Garden Real Estate Group announced the suspension of trading for eleven onshore bonds on the Shenzhen Stock Exchange and Shanghai Stock Exchange starting August 14,[51] following its controlling shareholders' disclosure of a significant first-half loss. This decision affects multiple yuan-denominated corporate bonds issued in 2021 and 2022, with discussions about restructuring due to liquidity challenges.
In October 2023, the company's Australian branch, Risland Australia, sold the 366 hectare (904 acre) Windermere project in Victoria state to Frasers Property and also announced plans to sell its $2 billion Wilton Greens estate in Wollondilly Shire south-west of Sydney, after it began defaulting on offshore debts for the first time.[41][54] In October 2023, the company failed to pay US$15 million in U.S. dollar-denominated bond, triggering cross defaults in up to $11 billion of offshore bonds.[26][9][55]
Despite initially missing an interest payment worth approximately 66 million yuan on onshore bonds in May 2024, Country Garden was able to pay within the grace period.[56]
