Kaisa, models buying and selling suspended as China property debt disaster routs builders’ shares

  • Kaisa says it faces unprecedented liquidity strain
  • Doc exhibits Shenzhen asset disposal plans to repay WMPs
  • Property shares fall, China high-yield spreads close to report excessive
  • Yango Group secures onshore bond extension, sources say

HONG KONG/SHANGHAI, Nov 5 (Reuters) – Kaisa Group Holdings Ltd (1638.HK) and three of its models had their shares suspended from buying and selling on Friday, a day after an affiliate missed a cost to onshore buyers as China’s snowballing property debt disaster jolts different builders.

Shenzhen-based homebuilder Kaisa, which has assured the wealth administration product, stated in a press release on Thursday it was going through unprecedented liquidity strain on account of a difficult property market and score downgrades.

Kaisa and its unit Kaisa Prosperity (2168.HK) stated in separate trade filings on Friday that buying and selling of their shares was being suspended pending the discharge of “inside info”. The businesses didn’t elaborate.

Reuters reported final month, citing sources, that Kaisa was in search of consumers for its property administration unit Kaisa Prosperity and two residential websites in Hong Kong, because it scrambles to satisfy a wall of debt repayments. learn extra

Kaisa’s troubles come amid issues a few broadening liquidity disaster within the Chinese language property sector, with a string of offshore debt defaults, credit standing downgrades and sell-offs within the builders’ shares and bonds in current weeks.

Kaisa has essentially the most offshore debt coming due over the subsequent 12 months of any Chinese language developer after embattled China Evergrande Group (3333.HK), which is reeling beneath greater than $300 billion in liabilities.

A finance unit of Kaisa had missed a cost on a wealth administration product (WMP), the developer stated on Thursday, including it was elevating funds to ease the strain by taking measures together with rushing up asset gross sales. learn extra

Kaisa is planning to promote 18 of its property in Shenzhen metropolis, principally retail and industrial properties, value a complete of 81.8 billion yuan ($12.78 billion) by the top of 2022, in keeping with a doc seen by Reuters on Friday.

The proceeds shall be used to repay the wealth administration merchandise. The developer additionally has 95 city renewal initiatives in Shenzhen, valued at 614 billion yuan, which will help replenish its capital after gross sales upon completion or early disposal.

Media outlet Cailianshe, citing unidentified sources conversant in the matter, reported that state-owned enterprises together with China Sources Land (1109.HK) had been in talks to purchase a few of Kaisa’s city renewal initiatives within the southern metropolis.

China Sources didn’t instantly reply to Reuters request for remark. Kaisa additionally didn’t remark.


A building web site by Chinese language property developer Kaisa Group is seen at an space of downtown Shanghai, February 17, 2015. REUTERS/Carlos Barria

Kaisa has about $3.2 billion in offshore senior notes due within the subsequent 12 months, with the subsequent maturity value $400 million falling on Dec. 7. It has coupon funds totalling over $59 million due on Nov. 11 and Nov. 12.

On Friday, a sub-index monitoring the mainland property sector (.HSMPI) fell 2.8%, deepening its losses prior to now two weeks to 17.8%. An index of actual property A-shares (.CSI000952) additionally fell 2.1%.

Shares of Evergrande, as soon as China’s largest property developer and whose debt woes have sparked a liquidity disaster throughout China’s $5 trillion property sector, fell 2.5% to their lowest shut since Sept. 21.

The corporate’s 11.5% October 2022 bond issued by its unit Surroundings Journey fell greater than 10% on Friday morning to yield above 300%, in keeping with Period Finance, main sharp falls throughout builders’ bonds.

Evergrande narrowly averted a default for the second time final week, however faces one other arduous deadline on Nov. 10 for greater than $148 million in coupon funds that had been due on Oct. 11.

Surroundings Journey has coupon funds totalling greater than $82 million due Nov. 6, although the bonds’ phrases grant a 30-day grace interval on such funds.

An ETF monitoring Asian high-yield greenback bonds (AHYG.SI) fell as a lot as 1.6%, whereas spreads on Chinese language high-yield greenback debt (.MERACYC) hovered close to report highs.

Builders have scrambled to ease short-term liquidity squeezes as they face looming debt repayments and tighter financing situations.

Yango Group , which earlier this week reached a cope with buyers to delay principal funds on asset-backed securities, agreed with buyers to increase the cost of its 636.5 million yuan onshore bond due Nov. 19 by one 12 months, two sources conversant in the matter instructed Reuters on Friday. learn extra

“Kaisa might doubtless be one other Evergrande,” stated Raymond Cheng, head of China analysis at CGS-CIMB Securities, including that the businesses’ woes had intensified market issues over builders’ liquidity situations.

“Though the regulators have some easing measures … it appears that will not be capable of assist that a lot,” he stated. “Except the federal government has aggressive loosening measures … we count on to see increasingly more builders have issues (paying) off their money owed.”

Native authorities in Shenzhen stated in a press release on Friday they’d strictly implement insurance policies on property market regulation and guard towards hypothesis.

($1 = 6.4005 Chinese language yuan)

Reporting by Clare Jim, Donny Kwok and Anne Marie Roantree in Hong Kong, Andrew Galbraith and Steven Bian in Shanghai, and Cheng Leng and Shuyan Wang in Beijing; Writing by Sumeet Chatterjee; Modifying by Jacqueline Wong, Shri Navaratnam and Mark Potter

Our Requirements: The Thomson Reuters Belief Rules.

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