Fresh China property fears as another giant misses key bond payment

Crisis in Kaisa is latest in series of cash crunches and missed payments among China’s real estate companies

Stuti Mishra
Friday 05 November 2021 10:08 EDT
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Troubles in the Chinese real estate market intensify as another developer misses a payment
Troubles in the Chinese real estate market intensify as another developer misses a payment (Guang Niu/Getty Images)

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Another Chinese developer has missed its payment deadline, leading to a suspension of its shares from trading and fresh worries for the already-embattled real estate sector of the country.

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

The Shenzhen-based homebuilder’s chief executive, Kwok Ying-Shing, has admitted that the company was facing an “unprecedented pressure on its liquidity”.

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

In a filing on Friday, the company said its shares were being suspended pending the release of “inside information” but did not elaborate.

However, the company’s stock had already taken a major hit by then, after news of the missed payment became public. Shares fell by 15 per cent on Thursday.

The crisis in Kaisa is one in a series of cash crunches and missed payments among China’s real estate companies, which are reeling under debt and tightened norms. Evergrande, the second-biggest Chinese developer, has already kept investors on their toes with its £217bn debt that it is struggling to reduce.

Last week, Evergrande narrowly averted default for a second time by paying off its payments on offshore bonds before the expiry of the grace period. It has another deadline approaching on 10 November.

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

Kaisa also has about £2.3bn in offshore senior notes due in the next 12 months, with coupon payments totalling £43m due on 11 and 12 November.

Additional reporting by agencies

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