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By guest author Jacky Wong from the Wall Sreet Journal.
Wobbling gen 1 Country Garden’s contracted sales in July fell 60% year on year. Photo: Qilai Shen/Bloomberg News
Financial troubles at Chinese property developers are hardly news nowadays. But a sudden crisis of confidence in the country’s largest developer by contracted sales—roughly three years after the market started weakening—shows how deeply entrenched the sector’s problems have become, and how far off any real solution remains.
Shares and bonds of property giant Country Garden Holdings 2007 -7.69%decrease; red down pointing triangle fell sharply over the past week in the wake of media reports that it had scrapped a planned equity placement—which would have been a rare ray of light for the cash-strapped sector. Country Garden now says there is no definitive agreement about the proposed placement, and it is not considering the transaction at this stage. The company’s dollar-denominated bonds maturing in January 2024 are trading at 25 % of their notional value, compared with 81 % as recently as mid-June.