Country Garden (Time Bomb bigger than Evergrande)

Day in and day out we are preoccupied with Evergrande Debt saga. Some people claim that the size is biggest in China. But today we will emphasise on Country garden which seems to be far far bigger in size than Evergrande. Just in terms of number of projects Evergrande has 817 projects but Country Garden has 3157 projects as on 30.06.2021. So we are enclosing the following details:

Summary of Loan Liabilities

As on 30.06.2021
   In Billion $
ParticularsWithin 1 yearGreater than 1 YearTotal
Contract Liabilities                  112.46                   112.46
Senior Notes                       0.61                       11.03                    11.64
Corporate Bonds                       2.80                         3.09                      5.89
Bank and Other Borrowings                    10.07                       21.92                    31.99
Convertible Bonds                          0.83                      0.83
                    162.81
Add: Contingent Liabilities through Gurantees   
Guarantees in respect of mortgage facilities                      61.16
Guarantees to joint ventures associates and other related parties                        9.36
Total                    233.33

Number of projects

As of 30 June 2021, the Group operated 3,157 projects under different development stages, 3,127 of these projects were located in Mainland China and 30 were outside Mainland China.

Guarantees

Guarantees in respect of mortgage facilities for certain property buyers (a):393847

Guarantees to joint ventures associates and other related parties in respect of liabilities(b):60296

(a)These represented the guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain property buyers of the Group’s properties. Pursuant to the terms of the guarantees, upon default in mortgage payments by these buyers, the Group is responsible to repay the outstanding mortgage principals together with accrued interest and penalty owed by the defaulted buyers to the banks and the Group is entitled to retain the legal title and take over the possession of the related properties. The above guarantees are to be discharged upon earlier of (i) issuance of the real estate ownership certificates which are generally available within three months after the buyers take possession of the relevant properties; and (ii) the satisfaction of mortgaged loans by the property buyers. The Group considers that in case of default in payments by property buyers, the net realisable value of the related properties can cover the repayment of the outstanding mortgage principals together with the accrued interest and penalty and therefore no provision has been made in this interim financial information for the guarantees.

(b) These mainly represented the maximum exposure of the guarantees provided for the borrowings of certain joint ventures and associates.

Senior Notes

Senior notes As at 30 June 2021, senior notes with principal amount of USD585 million (equivalent to approximately RMB3,779 million) (31 December 2020: USD591 million, equivalent to approximately RMB3,856 million) and USD30 million (equivalent to approximately RMB194 million) (31 December 2020: USD25 million, equivalent to approximately RMB163 million) and USD18 million (equivalent to approximately RMB116 million) (31 December 2020: USD18 million, equivalent to approximately RMB117 million) were held by Mr. YEUNG Kwok Keung, Mr. MO Bin and Ms. YANG Ziying respectively.

Details of Maturities within one year

As on 30.06.2021 in Billion Dollar 
ParticularsAmount
Senior Notes                       0.79
Corporate Bonds                       4.18
Convertible Bonds                       0.04
Bank and Other Borrowings                    12.30
Trade and other Payable                    93.35
Total 110.66

Conclusion on Debt

The hidden portion of debt in Country Garden is 70.52 Billion dollar out of which 61 Billion dollar liability represents Mortgage Debt. So overall Debt (Loans plus Guarantee plus Trade payables to contractors, Service providers, Goods providers etc is 343.98 Billion Dollar.

 So with Evergrande holding more than $300 billion liability and if we add Country Garden, the combined liability is more than $644 Billion.

Source:Interim Report of Country Garden (30.06.2021)

From Nishant Maheshwari and Vishal Vora

In case you are interested in making a contribution to our writing, please do so in the following account:

Account Number: 00000037522669317

Name: Rashi Maheshwari<br>IFSC Code: SBIN0030115

Name of Bank: SBI India,YN Road Branch Indore-India

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