Country Garden stock falls after share-placement plan unveiled

Shares of Country Garden Holdings Co. 2007,
fell Wednesday, after the property developer said it is planning to launch a second share placement in as many months to refinance its offshore debt.

Country Garden said it is seeking to place 1.78 billion shares at HK$2.70 each to raise 4.81 billion Hong Kong dollars (US$618.5 million). The pricing is around a 15% discount to Tuesday’s closing price.

The Hong Kong-listed shares of China’s largest developer by contracted sales slid to as low as HK$2.76 on Wednesday morning, down 13% for the day and 60% in the year to date. Country Garden’s shares were trading around HK$1 at the end of October–as developers throughout China weathered a sharp downturn in the real-estate market due in large part to a government crackdown as well as a resurgence of Covid-19 and related restrictions–but nearly tripled in price by the end of November after Beijing announced a series of supportive measures for liquidity-stressed developers, including expanding a debt-financing program, summing mergers and acquisitions, and restructuring of listed companies.

Wednesday’s share placement is the second since November when the developer placed 1.46 billion shares at HK$2.68 a share and raised 3.87 billion Hong Kong dollars (US$493.9 million).

Policy makers are poised to continue rolling out more demand-side measures in the months ahead, said Larry Hu from Macquarie. “The government is determined to cut off the tail risks related to developers in order to boost the confidence among home buyers,” he said in a note to clients.

Shares of the Country Garden were last down 10% at HK$2.85 Other developers were also lower, with Longfor Group Holdings Ltd. 960,
down 4.2% and Guangzhou R&F Properties Co. 2777,
down 5.3%.

Hong Kong’s broader Hang Seng Index HSI,
is down 0.1%.

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