Moody’s Investors Service downgraded Country Garden Holdings Co. Ltd.’s rating to Caa1 from B1 early Thursday, after the Chinese developer failed to make interest payments on dollar bonds earlier this week. “The downgrade reflects Country Garden’s heightened liquidity and refinancing risks in view of its deteriorated liquidity and financial flexibility, sizable refinancing needs and still-constrained access to funding,” said Kaven Tsang, a Moody’s senior vice president, in a statement. The developer missed $22.5 million of interest payments that were due Monday on debt with a face value of $1 billion, as the Wall Street Journal reported. Prices of the two bonds, that mature in 2026 and 2030, promptly fell below 8 cents on the dollar and remained at distressed levels on Wednesday. The news raised fears about China’s struggling property sector after other defaults including from China Evergrande Group in the last two years. Country Garden has a 30-day grace period to make the payments. If it fails to do so, it would dampen market confidence and impair its access to funding, said Moody’s.
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