Chinese Developer Kaisa Has Yet to Pay Interest Due Last Week

(Bloomberg) -- At least some of Chinese developer Kaisa Group Holdings Ltd.’s creditors haven’t received bond interest that was due last week, according to people with knowledge of the matter, starting the clock on a 30-day grace period before a default. 

As of 6 a.m. in New York on Nov. 15, investors in Kaisa’s dollar bonds had yet to receive their payments, said the people, who asked not to be named discussing a private matter. The developer had coupon payments totaling $88.4 million due on Nov. 11 and Nov. 12.  

A representative for Kaisa didn’t immediately respond to a request for comment after normal business hours. 

China’s property sector has been grappling with a clampdown on excessive leverage and liquidity woes at real estate giant China Evergrande Group and other companies. Property firms rebounded in the credit market in the past few days following articles in state media signaling support measures that could ease strains in the industry, but many still trade at distressed levels.

Evergrande, for its part, skipped several interest payments on dollar bonds and later paid them within its grace period, Bloomberg previously reported. 

Kaisa scrapped its interim dividend amid a historic funding squeeze for Chinese property developers. The company, which gained global notoriety after becoming the first Chinese real estate company to default on dollar bonds in 2015, has said it faces “unprecedented pressure on its liquidity.” 

Cash-strapped Kaisa’s notes plunged last month in the wake of ratings downgrades and canceled investor meetings. The company is trying to sell property assets with an estimated value of $12.8 billion. Its slow progress on divestitures has increased the likelihood it defaults on dollar-bond interest payments at some point, according to Fitch Ratings.

Kaisa next month has $184.5 million of dollar-bond coupons due, according to Bloomberg-compiled data, and a $400 million note that matures on Dec. 7. The company became one of China’s larger issuers of such debt despite its 2015 default and subsequent restructuring.

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