Country Garden: Debt-laden China property giant in record loss

Country Garden is one of the biggest homebuilders in China

Country Garden, one of China's biggest property developers, has become the latest real estate giant to warn that it could default on its debts.

This came as the crisis-hit company reported a record $6.7bn (£5.2bn) loss for the first six months of the year.

Country Garden said in the statement that it was "deeply remorseful for the unsatisfactory performance."

The announcement adds to concerns about the post-pandemic recovery of the world's second largest economy.

Country Garden also announced it had missed interest payments on bonds that were due this month. However, it added it was still within a 30-day grace period to make the payments.

It is also reportedly seeking to extend a deadline for the repayment of another bond.

The firm warned that it could default on its debts "if the financial performance of the group continues to deteriorate in the future".

"The group might not be able to fulfil the financial covenants of these borrowings, which may result in default in these borrowings and cross-default in certain other borrowings," Country Garden said in a regulatory filing in Hong Kong.

Earlier this month, the company warned that it could see a loss of up to $7.6bn for the first six months of the year. The record loss was at the bottom end of a 45bn yuan ($6.2bn; £4.9bn) to 55bn yuan estimate issued by the company.

Country Garden shares were trading around 1% higher in Hong Kong on Thursday morning.

• Is China's economy a 'ticking time bomb'?

• Crisis-hit China Evergrande shares plunge by 80%

Problems in China's property market - which includes everything from building homes to industries making the goods that go in them - is having a major impact as it accounts for around a third of the economy.

China's real estate industry was rocked when new rules to control the amount of money big real estate firms could borrow were introduced in 2020.

Evergrande, which was once China's top-selling developer, racked up debts of more than $300bn as it expanded aggressively to become one of the country's biggest companies.

Its financial problems have rippled through the country's property industry, with a series of other developers defaulting on their debts and leaving unfinished building projects across the country.

At the weekend, Evergrande posted a 33bn yuan loss for the first six months of the year.

Its shares fell by almost 80% on Monday, in their first day of trading in Hong Kong for a year and a half.

Evergrande shares have lost more than 99% of their value in the past three years as Beijing cracked down on property firms.

China is also facing other problems - including weak economic growth, ballooning local government debt and record-high youth unemployment.

On Thursday, official data showed that activity in China's factories shrank for a fifth month in a row.

The Purchasing Managers' Index came in at 49.7 in August. It was an improvement from the previous month, but still below 50, indicating contraction.