The logo of Country Garden is seen on a building in Dalian, Liaoning province, China on May 7, 2017. Picture taken May 7, 2017. SHANGHAI LONDON, Jan 17 Reuters -- China's biggest homebuilder by sales, Country Garden, scooped up $10 million of its own bonds on Monday as the country's ongoing property crisis escalated again.
Last week was the worst on record for Country Garden's bonds and fresh falls of up to 17 points on Monday left most of its international market debt 25 -- 35% below its face value. Reports that it had dropped plans to raise $300 million last week after debt market investors showed insufficient appetite, according to analysts.
A spokesman for Country Garden said the company had no plans to sell a convertible bond at present.
It just seems to be the fear factor playing out, according to Seaport Global analyst Himanshu Porwal. The firm said it had bought $5 million of its July 2022 notes and $5 million of its April 2026 notes from the open market after Asian markets closed. It said it would make further repurchases as and when appropriate. Country Garden's share price had fallen 8% in Hong Kong, but it wasn't the only one to see sharp falls.
1628 HK Yuzhou Group Holdings. HK KWG Group Holdings was founded in 1813 by HK KWG Group Holdings. HK dropped from 2% to 5% even as China's central bank cut one of its key interest rates unexpectedly. Chinese developers are facing an unprecedented liquidity squeeze due to years of regulatory curbs on borrowing, leading to a string of debt defaults, credit-rating downgrades and sell-offs in developers' shares and bonds.
The World Bank warned last week that a severe and prolonged downturn in China's real estate sector would have significant economic repercussions, as developers' total liabilities amount to almost 30% of the country's GDP.
Colm D'Rosario, a high-yield debt manager at Europe's biggest asset manager Amundi, said that it has turned into a cash crunch in the sector.
Many of China's big developers still have large debt payments to make this year, at a time when traditional borrowing markets are largely closed to them.
The government will take steps because they don't want a downward spiral, but they are walking a tightrope, D'Rosario said.