Chinese developer Kaisa Group suspended trading in its Hong Kong-listed shares on Friday as a report said it was offloading assets to help pay debts of more than $10 billion, in a crisis that comes as the country’s property sector is under intense pressure.
A liquidity crunch at one of the nation’s biggest property developers, China Evergrande, has thrown a spotlight on the real estate industry after a state crackdown that has rattled investors and fuelled fears of a wider economic fallout.
In a brief notice to the Hong Kong stock exchange, Kaisa Group said the suspension was “pending the release by the company of an announcement containing inside information”.
Kaisa has put 18 Shenzhen property projects covering 1.45 million square metres with a combined value estimated at €11 billion up for auction, according to a catalogue seen by South China Morning Post. The developer is also seeking buyers for its property management unit Kaisa Prosperity Holdings, which has a market value of about HK$2.42 billion (€289 million), according to media reports.
This follows missed payments on wealth management products guaranteed by Kaisa, as reports said the company admitted to “unprecedented pressure on its liquidity” while pledging to work out a repayment plan.
Last week, ratings agencies Fitch and S&P downgraded Kaisa, citing refinancing risks. Fitch said the downgrade was because of Kaisa’s “limited funding access and uncertainty over the refinancing of a significant amount of US-dollar bond maturities and coupon payment”.
The developer also triggered concern after calling off meetings with investors in October, Bloomberg News reported, sending its dollar bonds lower.
Kaisa is only the country’s 27th biggest property developer by sales but one of the largest dollar debt borrowers among developers, with more than $11 billion of bonds outstanding.
Troubles in China’s property sector are weighing on authorities’ resolve to forge ahead with reforms to rein in excessive debt.
Evergrande, which is bogged down in more than $300 billion worth of debt, plunged into crisis after Beijing began clamping down on the country’s colossal property sector last year. But there have been suggestions Beijing could be rolling back some of those rules, with state media recently hinting that local banks had begun easing some credit controls on homebuyers and developers on orders from the central bank.
Eyes are now on a Saturday deadline for Evergrande to pay $82.5 million (€71.3m) in coupons on bonds. It has stumped up two overdue interest payments in recent weeks.
Eyes are now on a Saturday deadline for Evergrande to pay $82.5 million (€71.3m) in coupons on bonds
As the Shenzhen-based group works to shed assets, e-mobility firm Bedeo said on Thursday that it had acquired Protean Electric from a subsidiary of Evergrande New Energy Vehicle Group.
Chinese authorities have urged Evergrande billionaire founder Xu Jiayin, also known as Hui Ka Yan, to use his personal fortune to alleviate the company’s debt crisis, according to reports. His luxury assets alone – including a 60-metre yacht, business jets and houses under his name – have an estimated value of $485 million (€419m), which could help cover the bond coupons that are yet to come due or have grace periods ending this year.