Chinese Developer Kaisa Unit Misses Payment, Debt Worries Mount

1 year ago 103

Kaisa’s troubles travel amid concerns astir a deepening liquidity situation successful the Chinese spot sector, with a drawstring of offshore indebtedness defaults, recognition standing downgrades, and merchantability offs successful the developers’ shares and bonds successful caller weeks.

The Shenzhen-based developer, which provides a warrant for the wealthiness absorption product, said successful a connection it is facing unprecedented liquidity unit owed to a challenging spot marketplace and standing downgrades.

It said it was raising funds to easiness the unit by measures including speeding up plus sales. It is ranked arsenic the 25th largest developer successful the state by location sales.

Kaisa has the astir offshore indebtedness coming owed implicit the adjacent twelvemonth of immoderate Chinese developer aft embattled China Evergrande Group, which is reeling nether much than $300 cardinal successful liabilities.

Kaisa’s adjacent Fantasia had defaulted connected an offshore enslaved tranche past month.

Fantasia and Kaisa declined to comment. The Shenzhen cardinal sub-branch of People’s Bank of China (PBOC) could not beryllium reached for comment.

Kaisa elder absorption including radical president Kwok Ying Ching spoke to WMP investors successful a gathering connected Thursday, the developer’s connection said, to sermon outgo solutions.

Two investors told Reuters that Kaisa said during the gathering it has a full outstanding 12.79 cardinal yuan ($2.00 billion) successful main and interest, and it plans to wage it backmost gradually. But investors person pushed backmost strongly, they added.

Kaisa did not instantly respond to Reuters questions astir its repayment plan.

Gradual Repayment

Kaisa, successful communal with different heavily-indebted Chinese spot developers and conglomerates, issues high-yielding WMPs to mostly mom-and-pop investors—a fashionable mode of borrowing that sidesteps stringent authorities lending restrictions.

Evergrande’s wealthiness arm, which raised much than 100 cardinal yuan successful the past 5 years, missed its payments earlier this year, starring to protests by investors successful respective cities successful September who feared they volition ne'er get their wealth back.

Hong Kong-listed shares of Kaisa, which has a marketplace worth of astir $1 billion, plunged much than 15 percent connected Thursday to an all-time low. Its December 2021 6.5 percent dollar enslaved slumped much than 17 percent to 51.5 cents, yielding implicit 1,000 percent, according to Marketaxxess.

Kaisa has astir $3.2 cardinal successful offshore elder notes owed successful the adjacent 12 months, with the adjacent maturity worthy $400 cardinal falling connected Dec. 7. It has coupon payments totalling implicit $59 cardinal owed connected Nov. 11 and Nov. 12.

Kaisa Finance’s office was astir bare connected Thursday morning, with respective constabulary vehicles stationed extracurricular the building.

Reuters reported past week that Kaisa is seeking buyers for its Hong Kong-listed spot absorption unit, Kaisa Prosperity Holdings Ltd and 2 residential sites successful the city.

Evergrande narrowly averted a default for the 2nd clip past week, but faces different hard deadline connected Nov. 10 for much than $148 cardinal successful coupon payments that had been owed connected Oct. 11.

Its portion Scenery Journey has coupon payments totaling much than $82 cardinal owed Nov. 6, though the bonds’ presumption assistance a 30-day grace play connected specified payments.

Liquidity Crunch

Separately, smaller subordinate Yango Group, which is seeking to speech its dollar bonds to assistance debar a default, said it has reached an statement with investors successful China to widen main payments connected asset-backed securities.

Shanghai Shimao Co. said it volition bounds capitalist information successful 7 Shanghai-traded bonds starting Friday. It added it sees nary large events that earnestly harm its repayment ability.

Investor concerns astir the broadening interaction of the liquidity crunch sparked dense selling of different Chinese developers’ bonds successful onshore markets connected Thursday.

Exchange-traded bonds of onshore units of developers Yuzhou Group and Shimao Group plunged much than 20 percent, triggering trading halts. Refinitiv information showed dollar bonds from Ronshine China Holdings, Zhenro Properties Group, and Guangzhou R&F falling much than 10 percent.

($1 = 6.3980 Chinese yuan renminbi)

By David Kirton, Clare Jim and Andrew Galbraith