China’s Kaisa says bondholders not asking for faster repayments

The property developer has yet to repay a $400m offshore bond amid liquidity troubles in real estate market.

Evergrande and Kaisa, two of China's biggest property developers, have defaulted on their debts [File: Qilai Shen/Bloomberg]

Kaisa Group said it has not received any notice from bondholders to accelerate repayments yet as the embattled Chinese property developer has not repaid a $400m offshore bond.

The firm said on Monday that it also did not pay the coupon totalling $105m for notes due in 2023, 2025, and 2026, with the grace period for the first two already expired.

The non-payment on the $400m maturity on December 7 triggered cross-default provision on all its $12bn offshore bonds and prompted a downgrade to “restricted default” by Fitch Ratings.

Kaisa is the second-largest dollar bond issuer among China’s property developers after China Evergrande Group, which has more than $300bn in liabilities.

The fate of Kaisa, Evergrande and other indebted Chinese property companies has gripped financial markets in recent months amid fears of knock-on effects, with Beijing repeatedly seeking to reassure investors.

Shares of Kaisa tumbled 8.7 percent to HK$0.84 in the early session on resumed trading, a record low, after a suspension since December 8.

Restructuring deal

Kaisa said it was still in talks with bondholders over a debt restructuring deal and it had hired Houlihan Lokey as its financial adviser and Sidley Austin as a legal adviser.

Kaisa was in talks with Lazard, the adviser of a group of offshore bondholders, to sign a non-disclosure agreement (NDA), the Reuters news agency has reported, laying the groundwork for further discussions on forbearance and financing solutions.

The group planned to use up to $1bn in order to buy bad loans from the Chinese developer’s onshore creditors, sources said last week.

In the Monday filing, the developer added that after a significant decline in sales in October and November, it expects the confidence of potential property purchasers to remain subdued in December.

Source: Reuters