Chinese property firm Kaisa Group Holdings Ltd (佳兆業集團) yesterday suspended share trading in Hong Kong as questions swirl over its ability to make repayments and contagion spreads within the nation’s debt-ridden real-estate sector.
Kaisa, China’s 27th-largest real-estate firm in terms of sales, but one of its most indebted, became the latest company to spook investors when it announced on Friday that it had failed in a bid for a debt swap that would buy it crucial time.
Yesterday morning the firm announced that it was suspending trading in Hong Kong, where it is listed, “pending the release by the company of an announcement containing inside information.”
Photo: AFP
It is the second time the company has suspended trading in the past month.
Kaisa last month announced a plan to delay the repayment timeline for some of its bonds, offering an exchange for at least US$380 million of notes, which would have given it some room to find money further down the line.
However, the offer failed to win the 95 percent approval from bondholders needed for the plan to go ahead.
The company currently has about US$11.6 billion of US dollar notes outstanding.
It had defaulted on a US dollar debt in 2015, becoming the first Chinese developer to do so.
The most indebted Chinese property firm is China Evergrande Group (恆大集團), which set off the current confidence crisis earlier in the summer.
The Shenzhen-based behemoth racked up an eye-watering US$300 billion in loans before Beijing began to rein in the sector.
On Tuesday, Evergrande missed a deadline to repay some of its overseas creditors, raising the prospect of it defaulting as it prepares for a government-backed mega-restructure.
Bloomberg News reported some of the US$82.5 million in overdue coupon payments it owed by the end of Tuesday — when a 30-day grace period ran out — remained unpaid.
Ratings group S&P has predicted that a default by Evergrande is now “inevitable.”
Kaisa and Evergrande have become the most visible faces of the debt crunch within China’s property sector, but defaults have rippled throughout the sector.
Bloomberg News reported that at least 10 lower-rated real-estate firms have now defaulted on onshore or offshore bonds since the summer.
Chinese borrowers have so far this year defaulted on a record US$10.2 billion of offshore bonds, with real-estate companies accounting for 36 percent of those non-repayments, Bloomberg reported.
Wealthy owners of at least seven Chinese real-estate companies have also sold off some of their own luxury assets in the past few weeks to help prop up their firms, Bloomberg added.
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