Investors in embattled Chinese property giant Country Garden are breathing a collective sigh of relief Monday, after it reportedly won approval from creditors to extend a major bond payment to avoid default, in a development that analysts say will give the firm some badly needed respite.
The deal was significant, as it was the first debt extension the firm has secured since its liquidity crisis became public last month. It not only buys time for the company to avoid default but also offers a temporary reprieve for the real estate industry, which has been gripped by fears that Country Garden’s debt woes would spill over to its peers and ripple through the economy. The company hasn’t replied to a request for comment from CNN.
More than 56% of the bondholders affected, including major state-owned banks and private equity funds, voted yes to the agreement, according to state-owned Southern Media Group. The deal “means nearly 70% of the bond’s principal payment will be delayed to three years later, which could greatly reduce pressure on Country Garden and improve its long-term debt servicing ability by trading ‘space for time,’” analysts from Huatai Securities wrote in a Sunday research note.
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