Chinese property developer Country Garden plans deal with creditors, as industry languishes

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HONG KONG (AP) — Embattled Chinese property developer Country Garden expects to reach a deal with its creditors in February to restructure billions of dollars in debt, the company’s lawyer told a Hong Kong court Monday.

One of the largest Chinese real estate companies, Country Garden defaulted on $11 billion in offshore bonds in 2023 and said earlier this month that its debt restructuring proposal would reduce its $16.4 billion offshore debt by 70%.

The Hong Kong court adjourned Country Garden’s case until May 26 after the company asked for more time to strike a deal with creditors.

Country Garden is one of dozens of property companies caught up in a crackdown on excess borrowing that led many to default on its debts. It said last week that it posted a net loss of 12.84 billion yuan ($1.76 billion) in the first six months of 2024. In 2023, it reported a net loss of 178.4 billion yuan ($24.4 billion).

The firm had delayed posting the results its 2023 and 2024 interim results.

The debt-ridden property sector, once one of the strongest engines of growth for the world's second-largest economy, is struggling to pull out of a prolonged downturn.

Home prices across China have fallen, even as policymakers have introduced measures such as reducing mortgage costs, lending to property developers and making it easier to buy homes.