Chinese real estate developer Kaisa announces debt restructuring plan
The City Plaza project under construction by Kaisa Group Holdings Ltd. in Shanghai, China on Tuesday November 16, 2021.
Qilai Shen | Bloomberg | Getty Images
BEIJING – Chinese real estate developer Kaisa announced plans to repay investors on Thursday, temporarily alleviating default concerns as China’s real estate sector remains under pressure.
Hong Kong-listed shares of Kaisa rose 20% as the market opened, before detracting from some gains. It was the first day of trading after an almost three week hiatus. The developer had trading on hold after missing a payment for an asset management product earlier this month.
About 1.1 billion yuan ($ 171.9 million) of wealth management products have been “repaid,” Kaisa said in a filing with the Hong Kong Stock Exchange. The developer said it was in negotiations to repay the remaining 396.6 million yuan in wealth management products.
Separately, Kaisa said it will restructure its December offshore debt payments by offering investors $ 380 million in new bonds due now in 2023. The original US dollar bonds were valued at $ 400 million.
Among the Chinese developers, Kaisa is the second largest issuer of US dollar-denominated offshore high-yield bonds, according to French investment bank Natixis. Evergrande, the world’s most heavily indebted real estate developer, comes first.
According to Natixis, in the first half of this year, Kaisa crossed two of China’s three “red lines” for real estate developers outlined by the government.
“The continued tightening of government policies, multiple credit events and deteriorating consumer sentiment have temporarily closed various refinancing locations for the sector and put tremendous pressure on our short-term liquidity,” Kaisa said in a filing on Thursday.
“Despite our efforts to reduce our interest-bearing debt in response to government regulations, the current sharp decline in the funding environment has limited our funding sources to meet the upcoming maturities,” the company said.