Chinese property giant Country Garden warned overnight it might default on some of its huge debts as it reported a loss of US$7bn for the first six months of the year.
Echoing comments from its similarly financially hamstrung rival Evergrand, residential housing specialist Country Garden said it had been caught out by the “depth and persistence” of the Chinese property slump, especially in the regions.
“The company felt deeply remorseful for the unsatisfactory performance,” it said in a filing to the Hong Kong Stock Exchange.
Interest payments had been missed to some suppliers and bondholders, it conceded, adding that “if the financial performance of the company continues to deteriorate in the future”, the group may default and struggle to keep trading.
Country Garden posted an interim loss of 48.9 billion yuan (US$6.72 billion) and closed the half year with total interest-bearing debts of 257.9 billion yuan (US$35bn) half of which fall due within a year.
Creditors outside of China are considering legal action if the group tries to refinance its debts, according to Reuters,
Chinese authorities have taken action recently to alleviate the property crisis to try to stimulate an economy already weakened by rising unemployment and falling demand.
Market watchers said that this was the reason for the relatively calm response by overseas markets to the crisis with the view being that the worse it gets the more support the Chinese government will have to provide.