Evergrande announced on Dec. 3, 2021, that its first U.S. dollar bond would default after Kaisa’s announcement that it would not be able to renew its overseas obligations.
Kaisa Group, a Chinese property developer, stated on Dec. 3 that its request to extend its foreign bond obligation for $400 million had been denied. Kaisa is second only to China’s Evergrande Group in total debt.
Several creditors of Kaisa’s $400 million bond did not agree to an exchange offer on Nov. 25, according to Jiemian News on Nov. 30. Thus Kaisa could not secure the consent of at least 95% of the creditors to negotiate a bond exchange to extend the debt.
If the renewal is unsuccessful, Kaisa has stated that it may not pay the amount and instead pursue debt restructuring.
According to a statement on Nov. 25, Kaisa has defaulted on interest payments of $58,501 million and $29,875 million on USD bonds expiring in 2023 and 2025. The maturity dates are Dec. 11 and 12, respectively, and they are in a 30-day principal grace period.
Fitch and Standard & Poor’s lowered Kaisa’s credit rating beginning in mid-to-late October this year, citing the financial crisis.
After Evergrande and Fantasia, Kaisa is the latest well-known Chinese property giant to face financial difficulties.
At the end of October, Kaisa Group issued and guaranteed an asset management product named “Jin Heng Wealth,” which was not paid on schedule. On Nov. 4, around a thousand investors enclosed the company’s Shenzhen offices to request payment.
Before the Hong Kong Stock Exchange opened on Nov. 5, Kaisa Group announced that its trading would be suspended. Its subsidiaries, namely Kaisa Capital, Kaisa Wonderful, and Kaisa Health, were likewise suspended simultaneously, with no explanation given.
In terms of debt, Kaisa is the second-largest issuer of U.S. dollar bonds among Chinese property developers, trailing only the Evergrande Group.
Kaisa declared that the company would not renew its international bonds on the same day. On the evening of the 3rd, Evergrande Group issued a notice on the Hong Kong Stock Exchange, stating that it lacked sufficient capital to meet its financial commitments under a $260 million bond debt.
The Guangdong provincial authority dispatched a working group, including the Chinese Communist Party Central Bank, the Banking Regulatory Commission of China, and the China Securities Regulatory Commission to collaborate with Evergrande to find a way to ease the market.
However, one Evergrande insider claims that even with some financial backing from the local authorities, it can not hold out for too long.