Chinese real estate developer Kaisa announces debt restructuring plan

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The city square development project of Kaisa Group Holdings Co., Ltd. is under construction in Shanghai, China on Tuesday, November 16, 2021.

Seven Gods | Bloomberg | Getty Images

BEIJING – Chinese real estate developer Kaisa announced plans to repay investors on Thursday, temporarily easing concerns about defaults as the Chinese real estate industry continues to face pressure.

Kaisa’s Hong Kong-listed stocks soared by 20% at the opening, and then gave up some of the gains. This is the first day of trading after nearly three weeks of suspension. The developer suspended transactions after missing payments for wealth management products earlier this month.

Kaisa stated in a document submitted to the Hong Kong Stock Exchange that it has implemented “repayment measures” for approximately RMB 1.1 billion (US$171.9 million) of wealth management products. The developer said that it is negotiating to repay the remaining 396.6 million yuan of wealth management products.

In addition, Kaisa said it will restructure offshore debt payments due in December and provide investors with new bonds worth US$380 million, which will now mature in 2023. The original dollar-denominated bonds were valued at US$400 million.

According to data from French investment bank Natixis, Kaisa is the second largest issuer of US dollar-denominated offshore high-yield bonds among Chinese developers. Evergrande, the world’s most indebted real estate developer, ranked first.

According to Natixis, as of the first half of this year, Kaisa has crossed two of the three “red lines” set by the government for real estate developers.

Kaisa said in a document on Thursday: “The government’s continued tightening of policies, multiple credit incidents and deterioration in consumer confidence have caused the temporary closure of multiple refinancing venues in the industry and put tremendous pressure on our short-term liquidity.”

The company said: “Despite our efforts to reduce our interest-bearing debt in response to government regulations, the current sharp decline in the financing environment limits our sources of funds to cope with the upcoming maturity date.”

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