Chinese real estate developer Kaisa announces a debt restructuring plan

Kaisa Group Holdings Ltd.’s City Plaza development under construction in Shanghai, China, Tuesday, November 16, 2021.

Qilai Shen | Bloomberg | Getty pictures

BEIJING – Chinese real estate developer Kaisa on Thursday announced plans to pay back investors, which temporarily eases concerns about defaults as China̵[ads1]7;s real estate sector continues to face pressure.

Kaisa’s Hong Kong-listed shares rose 20% in the open market, before showing any gains. It was the first trading day after a stop of almost three weeks. The developer had suspended trading after missing a payment on an asset management product earlier this month.

“Repayment measures have been implemented” for about 1.1 billion yuan ($ 171.9 million) of asset management products, Kaisa said in an archive to the Hong Kong Stock Exchange. The developer said it is in negotiations to repay the remaining 396.6 million yuan in asset management products.

Kaisa said separately that they would restructure offshore debt payments maturing in December by offering investors new bonds worth $ 380 million that are now maturing in 2023. The original bonds denominated in US dollars were worth $ 400 million.

Among Chinese developers, Kaisa is the second largest issuer of offshore high-yield bonds denominated in US dollars, according to the French investment bank Natixis. Evergrande, the world’s most indebted real estate developer, ranks first.

From the first half of this year, Kaisa had crossed two of China’s three “red lines” for real estate developers outlined by the government, according to Natixis.

“Continued tightening of government policies, more credit events and weakened consumer sentiment have resulted in the temporary closure of various refinancing sites for the sector and put enormous pressure on our short-term liquidity,” Kaisa said in an archive on Thursday.

“Despite our efforts to reduce our interest-bearing debt in response to government regulations, the current sharp decline in the financing environment has limited our sources of financing to deal with the coming maturities,” the company said.

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