Chinese Developer Country Garden Plans to Default on Bond Payment, Triggering $10B Cross-Default

Chinese builder Country Garden expects to default on a dollar bond interest payment due to China's housing market downturn. This would trigger cross-defaults on $10B of its debt.

Country Garden's potential default signals further troubles in China's real estate sector, which accounts for 20% of the economy.

Country Garden is one of China's largest developers. Its failure could have a bigger impact than Evergrande's 2021 default.

Country Garden hired advisors to restructure its debt after making last minute bond payments in September. It extended some onshore bonds but plans to default on the offshore bond.

Country Garden's founding family provided a $300M interest-free loan, but the firm still plans to default on the small $15M offshore bond coupon payment.