Chinese property developer Country Garden Holdings made coupon payments on two US dollar bonds ahead of the deadline of a 30-day grace period on Tuesday, avoiding a default that would have further pressured the nation’s ailing property sector.
The homebuilder paid a total of $22.5 million in interest on the two $500 million bonds, according to a report by Chinese news outlet The Paper and confirmed by a person familiar with the matter.
China’s largest private property developer failed to pay coupons on the bonds totalling $22.5 million due on Aug 6, exacerbating market concerns over the developer’s liquidity crunch.
The firm said at the time that its usable cash had continuously decreased, showing “periodic liquidity stress” due to deterioration in the sales and refinancing environment, and the impact from various fund regulations.
Though the amount was modest, failure to pay would have undermined fragile hope in financial markets that China’s policy stimulus was starting to stabilise the struggling property market and wider economy.
Tuesday’s development comes after Country Garden on Friday won approval from onshore creditors to extend a private bond worth 3.9 billion yuan ($536 million).
As well as the payments that were due on Tuesday, Country Garden has about US$162 million of offshore bond interest payments due during the rest of the year, according to data from researcher CreditSights.