Kaisa Default Risks Rise After Swap Rejected: Evergrande Update

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Kaisa Default Risks Rise After Swap Rejected: Evergrande Update

(Bloomberg) -- Kaisa Group Holdings Ltd. failed to win bondholder approval for a $400 million debt swap designed to avert default, in a development that could spur contagion risk just as global investors return to offshore property bonds.

The firm had sought to exchange the dollar notes maturing Dec. 7 for new ones due 18 months later. The offer to exchange the notes failed to meet the required 95% approval rate. Kaisa became the first Chinese developer to default on such bonds in 2015.

Key Developments:

  • Kaisa Abandons Hong Kong Developments in Race to Avoid Default
  • Worst May Be Over for China Junk Bonds, But Not Out of Woods Yet
  • China’s Li Urges Crackdown on Late Payments to Small Businesses
  • China Private Builders’ Yuan Bond Sales Hit Lowest in Five Years
  • China Home Sales Slump Deepens as Easing Shows Little Effect
  • Arkkan Raises $245 Million for China Real Estate Recovery Fund
  • China’s Developers Face $12 Billion in Trust Payments This Month

Kaisa Bondholders Reject Chinese Developer’s Debt Swap Proposal (7:37 a.m. HK)

Kaisa failed to win approval from bondholders for the debt swap, it said in a statement. The firm will explore solutions including renewal and extension of borrowings and disposing of assets. 

The developer had sought to exchange the dollar notes maturing Dec. 7 for new ones due 18 months later. 

Kaisa, which became China’s first developer to default on dollar debt in 2015, now risks once again reneging on its obligations.

Evergrande 2023 Bond Rises (7:31 a.m. HK)

Evergrande’s dollar bond due January 2023 is poised for its biggest increase in about a month, Bloomberg-compiled prices show. The 11.5% note rose 1.1 cents on the dollar to 23.4 cents as of 8:06 a.m. in Hong Kong.

Tycoon’s New Banker Is the ‘Queen of Shell (LON: RDSa ) Companies’ (2:45 p.m. NY)

She’s best known as the “queen of shell companies,” a financier who briefly became Hong Kong’s richest woman by striking deals in some of the wildest corners of the city’s stock market.

Now Pollyanna Chu has a new role: investment banker for embattled China Evergrande Group billionaire Hui Ka Yan. Chu’s Kingston Securities was the sole manager of two share sales last month by Evergrande’s electric-vehicle unit, helping the company raise more than $400 million despite a liquidity crisis that drove down its stock 90% this year. 

Shimao Group Says Pledged Shanghai Headquarters (7:22 p.m. HK)

Major Chinese developer Shimao pledged the headquarters for financing, according to a Shanghai-based media representative for the company.

Moody’s Cuts China Property Sales View (5:16 p.m. HK) 

Moody’s now forecasts contracted property sales will fall 5%-10% next year in China, versus a prior view of flat to down 5%, as “restrictions on developers’ funding access are limiting” marketing and construction abilities.

“Funding access will remain tight during the next 6-12 months due to tightened regulations and increased risk aversion” amid Evergrande’s woes and defaults in the sector, analysts including Kelly Chen wrote in a report dated Wednesday.

A look at Evergrande’s maturity schedule:

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