Kaisa edges closer to default after failing to extend maturity

Chinese developer’s growing risk of mặc định comes as property sector is gripped by an unprecedented liquidity squeeze.

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Chinese property developer Kaisa Group has halted trading of its shares amid heightened scrutiny of China"s property market
Chinese property developer Kaisa Group Holdings Ltd has said it failed to secure the minimum 95 percent approval it needed from offshore bondholders khổng lồ extkết thúc the maturity of a $400m note due next week, raising the risk of mặc định.

With the Chinese property sector gripped by an unprecedented liquidity squeeze, Kaisa now faces the possibility of defaulting on its 6.5 percent offshore bonds due on December 7 & drawing renewed focus on other developers also staring at a wall of offshore debt maturing over the next few months.

“To ease the current liquidity issue and reach an optimal solution for all stakeholders, the company is assessing và is closely monitoring the financial condition and cash position of the group,” it said on Friday.

Kaisa had hoped khổng lồ exchange the $400m 6.5 percent offshore bonds for new notes due June 6, 2023 at the same interest rate if at least 95 percent of holders accepted. It did not discthảm bại how many bondholders had consented to the offer.

Shares of the embattled property firm dropped 9.8 percent to a record low of $0.92 Hong Kong dollars ($0.12), taking the stock’s plunge so far this year to approximately 75 percent.

The firm, which became the first Chinese property developer to default on its dollar bonds in năm ngoái, said it had been in talks with representatives of certain bondholders, but no “legally binding agreement” had been entered inkhổng lồ yet.

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It added that it still exploring selling assets and extending or renewing debt obligations, but cautioned there was no guarantee it would be able to meet the December 7 maturity.

A failure lớn repay or reach an agreement with creditors would have “a material adverse effect” on Kaisa’s financial condition, it said.

Kaisa is the second-largest dollar bond issuer aý muốn China’s property developers after Trung Quốc Evergrande Group, which has more than $300bn in liabilities, and like the others has been scrambling lớn raise capital to stave off a mặc định.

The Reuters news agency reported last month that the firm was looking to lớn sell its Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd.

Last week, in its notes exchange offer, Kaisa said it could consider a debt restructuring exercise if bondholders did not approve the extension of maturity.

Kaisa’s failure in getting a much-needed lifeline from its creditors will also weigh on other smaller developers that are looking khổng lồ avoid long & messy litigation & restructuring processes, analysts have said.

Also on the horizon is the kết thúc of a 30-day grace period for Evergrande, which has been narrowly avoiding defaults, after it failed to pay coupons totalling $82.5m due on November 6.