November 5 marked a pivotal moment in the history of Chinese property developers' debt restructuring.
Country Garden announced that its offshore debt restructuring plan was overwhelmingly approved by creditors on November 5. This concluded a grueling 300-day battle involving approximately $17.7 billion (RMB 127 billion), representing the most critical and challenging milestone in the process.
The restructuring will reduce Country Garden’s debt by around $11.7 billion (RMB 84 billion) and is expected to generate up to RMB 70 billion in restructuring gains, significantly bolstering its net assets.
The same day brought another breakthrough: Sunac China’s second offshore debt restructuring also received court approval. This was no coincidence—it signaled a synchronized resurgence among leading private developers after enduring a painful self-rescue phase.
The message to the market is clear: Negotiated survival is not only viable for private developers but is gaining momentum, proving they still have a future.
While China’s property sector has moved past its golden era, companies like Country Garden and Sunac have demonstrated resilience amid deep industry adjustments. Their successful debt restructurings represent a crucial step toward securing a place in the sector’s next phase.
**A Record-Setting Restructuring** Completing a $17.7 billion offshore debt restructuring in 300 days set a new benchmark for Country Garden. Speed is critical—protracted negotiations risk destabilizing operations and morale, undermining the purpose of restructuring.
However, the task was daunting. The $17.7 billion involved 34 separate debt obligations across jurisdictions including New York, UK, and Hong Kong law, each with distinct legal frameworks and creditor interests.
Negotiations were equally complex, spanning months of cross-border discussions with creditors ranging from Chinese and foreign banks to hedge funds, insurance firms, and private wealth managers. Striking a balance among divergent demands was a high-wire act.
The final outcome was exceptional: Approval rates reached 96.03% for bondholders and 83.71% for syndicated lenders—a rare show of creditor confidence.
**The Yang Family’s Commitment** The controlling Yang family demonstrated resolve by converting $1.148 billion in shareholder loans into equity and providing RMB 10.6 billion in interest-free support since 2021. Their steadfastness earned public recognition from local officials, reinforcing creditor trust.
**A New Chapter** The restructuring buys Country Garden vital breathing room. Alongside Sunac’s progress, it offers a blueprint for peers still grappling with debt crises, proving even the most complex restructurings can be resolved through negotiation.
The deal systematically reshapes Country Garden’s debt profile: - **Reduction**: Up to $11.7 billion cut. - **Cost Savings**: Interest rates slashed to 1.0%-2.5%, with payment-in-kind options. - **Extended Maturities**: Some terms stretch to 11.5 years, providing long-term stability.
With domestic bond restructurings also advancing, the company is poised for deleveraging.
**Beyond Debt: Operational Revival** Financial restructuring is just the first step. Country Garden must now stabilize operations and cash flows.
A shift is underway: As large-scale deliveries of 1.8 million homes near completion, capital pressures are easing, allowing resources to pivot from legacy obligations to future planning. Some regions have already begun new project evaluations, signaling a transition from crisis management to normalized operations.
The old growth model is obsolete. China’s property sector now prioritizes quality and sustainability—a transition reflected in Country Garden’s strategy focusing on core development, supported by tech-driven construction and project management services.
Having cleared its most formidable hurdle, Country Garden’s journey toward a leaner, more sustainable future is just beginning.