A unit of Country Garden Holdings Co. has borrowed from a Hong Kong-based private lender to refinance a bank loan, according to a person familiar with the matter, as debt-laden Chinese developers seek to diversify their funding sources.
(Bloomberg) — A unit of Country Garden Holdings Co. has borrowed from a Hong Kong-based private lender to refinance a bank loan, according to a person familiar with the matter, as debt-laden Chinese developers seek to diversify their funding sources.Â
The subsidiary of China’s third-largest builder by sales received HK$900 million ($115 million) of new financing from Flow Capital (HK) Ltd., an investment firm, said the person who requested anonymity discussing private matters. The two-year financing, which is backed by guarantees from the listed parent and a property in Hong Kong, is meant to refinance a HK$700 million bank loan, the person added.
A media representative for Country Garden didn’t immediately comment when reached by Bloomberg Thursday.Â
China’s cash-strapped developers are expanding their search for fresh funding into less mainstream but increasingly popular channels such as private credit. While the major builder has succeeded in selling additional shares and issuing domestic notes via a state guaranteed program, borrowing costs remain prohibitively expensive in the key dollar bond market.Â
Chinese junk-rated issuers, including Country Garden, are still effectively shut from the offshore bond market with average yields at about 18%, according to a Bloomberg index.Â
Guangdong-based Country Garden suffered its first full-year loss since its 2007 listing in Hong Kong. In a move to reassure creditors, the builder said last month it’s prepared funds to repay public bonds due through June. It also has recently secured a HK$950 million loan facility from Tai Fung Bank Ltd.
–With assistance from Emma Dong.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.