Country Garden, China’s largest property developer, has failed to repay a loan and expects to miss more international debt obligations as the country’s property crisis deepens.
A default by Country Garden, which looks increasingly likely, would ripple through the financial system of China, the world’s second-largest economy.
The property developer has failed to repay a loan worth about $60 million U.S. and said that it “expects that it will not be able to meet all of its offshore payment obligations.”
Country Garden added that it plans to hold discussions with its offshore creditors.
Shares in Country Garden, which trades on Hong Kong’s Hang Seng index, are down more than 70% this year as the company’s debt woes continue to spiral. News of the missed loan payment has sent the stock down a further 11%.
China’s real estate industry’s interconnection with the country’s financial system has raised concerns that indebted property developers represent a risk to the entire Chinese economy.
Country Garden currently has liabilities of more than $187 billion U.S. The company has said that its sales fell 44% year-over-year in the first nine months of this year.
The latest development with Country Garden is another sign of growing problems in China’s property market that could make things worse for the Chinese economy that is already in the grips of a slowdown.