By Jiahui Huang


Chinese property developer Country Garden made payments on two onshore bonds within a grace period, avoiding default days after the company had said it might turn to a state guarantor for help.

The heavily indebted property developer said Saturday that it made interest payments totaling about 65.95 billion yuan ($9.13 billion) on two onshore bonds that had been due last week.

Country Garden said that through the efforts of "all parties, the issuer actively raised funds and revitalized the mortgage assets." It didn't elaborate.

The move came after Country Garden last week said that it would try to make the payments by Monday, and that if it couldn't, it would seek the help of state-owned entity China Bond Insurance, the guarantor of the bonds. The bonds were issued in 2022 when the government provided a few private-sector "model developers," including Country Garden, Longfor, CIFI, Seazen and others, with state-backed bonds to help them endure tightened liquidity conditions in China's property market.

Analysts said the payment was atypical given Country Garden's stretched finances and previous defaults on other offshore and inshore bonds in recent months.

"It is unusual for distressed developers trying to avoid another default," Daiwa analyst William Wu said.

The payments likely won't help restore Country Garden's credit, and may instead weigh on already tight cash flows that could be spent on delivering projects, Wu said.

Where Country Garden got the money for the payments was also up for debate.

Morningstar analyst Jeff Zhang said the funds likely came from "additional loans or sales of pledged assets."

Zhang added that Country Garden may have sought to avoid further default on onshore debt while focusing on restructuring offshore debt. The company is facing a liquidation petition in a Hong Kong court.

Country Garden, once one of China's largest property developers, had more than $15 billion of international bonds and loans outstanding at the end of June 2023, according to its public disclosures. It defaulted on a dollar bond last October, and missed a local bond payment in March.

Trading in shares of Country Garden has been halted since late March in Hong Kong.

China Real Estate Information Corp., a property consulting firm, recently said that developers including Evergrande, China Resources Land, China Overseas Land & Investment, and Gemdale have around CNY30 billion principal of bonds due in May.


Write to Jiahui Huang at jiahui.huang@wsj.com


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