Kaisa Suspends Trading Amid Uncertainty Over Debt Repayment
(Bloomberg) -- Kaisa Group Holdings Ltd. has suspended stock trading in Hong Kong amid growing concern over the Chinese developer’s ability to service its debts as distress in the nation’s property sector spreads.
The company faced repayment on a $400 million dollar bond that came due Tuesday after it failed last week to win approval for a debt swap that would have extended its repayment deadline. A group of Kaisa noteholders sent the company a formal forbearance proposal on Monday, people familiar with the matter said, but the outcome was uncertain.
Kaisa requested the trading halt, effective 9 a.m. local time Wednesday, pending “an announcement containing inside information,” it said in a filing, without elaborating. It’s the second halt in just over a month. The stock has tumbled 75% this year.
Kaisa, which became first Chinese developer to default on dollar debt in 2015, now risks reneging on its debt obligations again. Its the nation’s third-largest issuer of dollar notes among property firms, and its stumble adds to contagion risk just as investors grapple with an escalating crisis at China Evergrande Group.
Like Evergrande, Kaisa has been a frequent borrower in the offshore market with some $11.6 billion of dollar notes outstanding, even as it ranks just 27th among China’s property developer by sales. It had attracted strong demand from global investors after it returned in 2016 following a hiatus amid its restructuring.
Shares of related companies fell in Hong Kong trading on Wednesday, with Kaisa Capital Investment Holdings Ltd. sliding as much as 17%. Kaisa Health Group Holdings Ltd. dropped 5.2% before recouping the losses. Kaisa Prosperity Holdings Ltd. slipped as much as 2.8%.
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