China

Creditors of Country Garden Holdings are doubtful the Chinese developer will be in a position to service debt that will come due later this year without liquidity support, after it averted a catastrophic default this week at the last minute, Reuters reported. With its financial situation precarious and prospects of China's property sector remaining grim, the offshore creditors expect the country's largest private developer to get liquidity support soon or for it to undergo a debt revamp.

China’s exports to the rest of the world dropped for a fourth straight month in August, bringing little relief to the country from a deepening economic malaise and weighing on the global trade outlook, the Wall Street Journal reported. China has struggled to sustain a wave of overseas demand for Chinese-made goods that carried it through much of the three years of the pandemic, particularly as Western consumers tilted their spending back toward services and away from smartphones, furniture and other goods. Higher borrowing rates in the U.S.

Speculative bets that Chinese authorities will widen support for the property sector sent some of the country’s ailing developers surging by the most on record, Bloomberg News reported. A Bloomberg Intelligence gauge tracking Chinese builders gained nearly 10% Wednesday, the most in more than a month. Heavily indebted developers with depressed valuations were among those to rally the most, with Sunac China Holdings Ltd. soaring 68% alongside a spike in trading volume. China Evergrande Group closed up 83% — capping the biggest gain since its 2009 listing.

China's Country Garden made interest payments on U.S. dollar bonds hours ahead of a grace period deadline, a person close to the firm said, pulling back from the brink of default for the second time in four days and bringing some relief to the country's crisis-hit property sector, Reuters reported. China's largest private property developer failed to pay coupons on the bonds totalling $22.5 million due on Aug. 6, exacerbating fears over how much cash it has left and keeping markets on tenterhooks throughout the bonds' 30-day grace periods.

Italy is preparing to cancel its controversial membership in China’s Belt and Road infrastructure initiative, engaging in an elaborate diplomatic dance to avoid angering Beijing and triggering retaliation against Italian businesses, the Wall Street Journal reported. Italian Foreign Minister Antonio Tajani held talks in Beijing on Sunday and Monday to facilitate as smooth an exit as possible from the initiative while laying the groundwork for alternative economic deals with China.

China's largest private property developer, Country Garden, faces a deadline for making interest payments on two U.S. dollar bonds on Tuesday, just days after dodging an onshore debt default with a last-minute payment extension deal, Reuters reported. Country Garden last month said it had not paid coupons on the bonds due on Aug. 6 totalling $22.5 million, exacerbating market fear that the developer was slipping into a worsening liquidity squeeze. Both payments had 30-day grace periods, ending on Tuesday.

China’s housing crisis has engulfed the country’s private developers, producing record waves of defaults and leaving a shrinking group of survivors, Bloomberg News reported. Out of the nation’s top 50 private-sector developers by dollar bond issuance, 34 have already suffered delinquencies on offshore debt, according to Bloomberg-compiled data as of Sept. 1. The remaining 16, including Country Garden Holdings Co., face a combined $1.48 billion of onshore and offshore public bond payments for either interest or principal in September. The monthly amount is the highest until January.

China allowed large cities to cut down payments for homebuyers and encouraged lenders to lower rates on existing mortgages in its latest attempts to halt a slide in the country’s residential property market, Bloomberg News reported. The nationwide minimum down payment will be 20% for first-time buyers and 30% for second-time purchasers, according to a joint statement from the People’s Bank of China and National Administration of Financial Regulation on Thursday. The mortgage-rate cuts will be negotiated between banks and customers. Both policies go into effect Sept. 25.

In the beginning, Hui Ka Yan followed a simple formula. Borrow to buy land. Sell homes on the site before they are built. Use the cash to pay lenders and finance the next real estate project. For two decades, starting in the mid-1990s, this approach was enormously lucrative as Chinese home prices soared. It transformed Hui, a former steel industry employee from a rural village, into China’s richest man. And it turned his company, China Evergrande Group, into a vast real-estate empire.

China’s economy limped through August. A prolonged slump in the real-estate market deepened. Factories were hit by sinking exports, and consumers kept a tight leash on spending, the Wall Street Journal reported. A new batch of data on Thursday heaped further pressure on China’s policy makers to do more to revive crumbling growth, with a dizzying mix of targeted measures so far showing little effect. On Thursday evening, the country’s central bank lowered the minimum down payment for some borrowers, an attempt to spur home buying.