Chinese developer Country Garden has won approval from creditors to extend a deadline for a key bond repayment, narrowly avoiding a potential default, Bloomberg reported Saturday.
One of China's biggest builders, Country Garden had racked up debts estimated at 1.43 trillion yuan ($196 billion) by the end of 2022, and this week reported a 48.9 billion yuan loss for the first six months of the year.
Its cash flow woes have ignited fears that it could collapse with consequences for China's economy, which is already suffering from record-high youth unemployment and flagging consumption.
The nation's economic rise has in part been fuelled by property and construction, which account for about a quarter of the gross domestic product.
Country Garden's bondholders voted this week to delay repayment on a bond worth 3.9 billion yuan ($535 million), to give it time to recover financially.
Had they voted against the extension, the company faced becoming the biggest Chinese real estate firm to default since rival Evergrande in 2021.
But late Friday, bondholders agreed to postpone Saturday's repayment deadline until 2026, Bloomberg reported.
Country Garden did not confirm the outcome of the vote.
The group -- China's largest private developer in terms of sales last year -- remains far from in the clear.
Another deadline looms next week for the repayment of $22.5 million in interest on two loans.
It was unable to deliver that payment in early August and was granted a 30-day grace period that ends Tuesday.
It risks default if it does not deliver the payment.
- 'Very near default' -
Moody's further downgraded Country Garden's credit ratings this week from Caa1 to Ca, indicating obligations that are "highly speculative and are likely in, or very near, default".
The move was an outcome of the firm's "tight liquidity and heightened default risk, as well as the likely weak recovery prospects for the company's bondholders," the ratings agency's Senior Vice-President Kaven Tsang said.
The company is estimated to "not have sufficient internal cash sources to address its upcoming offshore bond maturity", according to Moody's.
Deepening its woes, Country Garden reported a record 48.9 billion yuan loss for the first half of the year.
During the presentation of results Wednesday, the firm warned that it had "tried its best" to be able to repay its loans and was not ruling out a default on repayment.
"The shrinkage of the property sector, coupled with the not yet restored confidence of the capital market, exerted mounting pressure on the Company's business operation," it added.
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