New Chinese property fears another giant will miss payment on key bond

Another Chinese developer missed its payment deadline, causing its shares to be suspended and new concerns for the country’s already beleaguered real estate sector.

Trading in shares of Kaisa Group Holdings and three of its units was halted on the Hong Kong Stock Exchange on Friday after a financial unit of the company missed a payment on a wealth management product (WMP) the day before. WMPs are uninsured short-term banknotes sold in China.

The managing director of Shenzhen-based home builder Kwok Ying-Shing admitted that the company was facing “unprecedented pressure on its cash flow.”

The finance unit said it was taking a series of measures, including speeding up the sale of its assets, to make the payment due. Kaisa reportedly intends to sell 18 of its assets in the city of Shenzhen, primarily retail and commercial properties, worth a total of 81.8 billion yuan (£ 8.9 billion) to by the end of 2022.

In a document filed Friday, the company said its shares were on hold pending release of “inside information,” but did not elaborate.

However, the company’s shares had already taken a hard hit by that point, after news of the missed payment became public. Shares fell 15% on Thursday.

The crisis in Kaisa is part of a series of liquidity shortages and missed payments among Chinese real estate companies, which are under the weight of debt and tight standards. Evergrande, China’s second-largest developer, has already held investors spellbound with its £ 217 billion debt it is struggling to reduce.

Last week, Evergrande narrowly avoided a second default by repaying its payments on offshore bonds before the grace period expired. He has another deadline approaching November 10.

Another Chinese developer, Modern Land, defaulted on its bond coupon payments last month.

Kaisa also holds around £ 2.3bn of offshore senior bonds due over the next 12 months, with coupon payments totaling £ 43m due on November 11 and 12.

Additional reports by agencies


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Elaine R. Knight