Country Garden faces fresh test for onshore bond extensions. After avoiding default at the last minute twice this month to provide some relief to the crisis-hit Chinese real estate market, embattled developer Country Garden will face a fresh round of voting by creditors on Monday to extend multiple loan deadlines.

Onshore creditors must vote by Monday at 10 p.m. Hong Kong time (1400 GMT) to approve Country Garden’s (2007. HK) request to postpone repayment of eight onshore bonds for three years.
The most recent vote comes after the biggest private developer in the nation on September 1 received clearance from creditors to postpone payments for a 3.9 billion yuan ($533 million) onshore private bond for three years.

After a two-time delay, 56.08% of the voting creditors approved Country Garden’s proposal. With a last-minute coupon payment for the bond last week, it also avoided default in the offshore market.

The requests to postpone the maturity dates of eight onshore notes issued by the developer and a subsidiary and scheduled to mature and be puttable in 2023 and 2024 will be put to the separate votes of Country Garden’s bondholders on Monday.

Requests for comment from Country Garden did not immediately get a response.

As revenues fell, Country Garden—one of the few significant Chinese developers that have not defaulted on loan obligations—faced liquidity strain and had less money available, according to its interim financial filings.

According to the company’s interim financial statement, it has obligations of 108.7 billion yuan ($14.9 billion) due within a year. In comparison, its cash position was around 101.1 billion yuan as of the end of June.

Country Garden has at least five coupon payments this month in the offshore market, including two quite substantial dollar bond coupons of $15 million due on September 17 and $40 million due on September 27. These coupons have a 30-day grace period on each.

Any failure by Country Garden would worsen the nation’s escalating real estate problem, put further stress on its already troubled banks, and postpone the recovery of the real estate market and the wider Chinese economy.

According to Nicholas Chen, a Singapore-based analyst at the research company CreditSights, Country Garden has shown a “higher willingness to stave off a default” compared to many of its rivals.

Given its weak cash position, Chen anticipates Country Garden to continue attempting to postpone due bond payments on both domestic and international markets.

He said that Chinese authorities were probably engaged with the developer because of the “potential contagion risk to other upstream and downstream sectors, as well as the various local governments,” but precise participation is yet unclear.