China's Kaisa struggles for relief from bond holders as default risk looms



By Scott Murdoch and Samuel Shen

HONG KONG, Dec 2 (Reuters) - Chinese developer Kaisa Group Holdings Ltd 1638.HK is unlikely to win bondholders' approval to extend the maturity of a $400 million bond due next week, analysts say, heaping more pressure on other indebted peers.

Kaisa's proposal to delay the maturity of the bond by 18 months comes against the backdrop of growing creditor concerns about Chinese property developers' ability to meet their near-term offshore repayment obligations.

Some developers in late October called on the regulators to extend their offshore bond maturities Link or undertake a debt restructuring, as a growing number of defaults hit the sector.

Kaisa's struggle in getting a much-needed lifeline from its creditors will also weigh on other smaller developers that are looking to avoid long and messy litigation and restructuring processes, analysts said.

James Wong, portfolio manager of GaoTeng Global Asset Management Ltd, said that for Kaisa, a debt restructuring is "quite certain", as the threshold of passing the bond maturity extension proposal was too high.

"Investors are waiting for that day (of restructuring) to come" he said, adding smaller Chinese developers will continue to struggle.

Kaisa needs at least 95% of its bond holders to approve a proposal to exchange $400 million, 6.5% offshore bonds due Dec. 7 KY226867333= for new notes due June 6, 2023 at the same interest rate.

The firm, which became the first Chinese property developer to default on its dollar bonds in 2015, has said its notes exchange offer will expire 4 pm London time on Thursday unless it extends or terminates the proposal.

Kaisa is the second largest U.S.-dollar bond issuer among China's property developers after China Evergrande Group 3333.HK , once China's top-selling developer and now at the centre of the country's property sector liquidity crisis.

Signs have emerged in recent days of Kaisa's exchange offer getting knocked back.

At least one group of Kaisa bond holders had rejected the offer, according to a letter sent this week by their financial advisor to the Kaisa board and a copy of which was reviewed by Reuters.

"The group believes that the terms of the exchange offer are unacceptable and illustrate an unwillingness on the part of the company to consider more appropriate and holistic ways to address Kaisa's current short term liquidity challenges," the letter said.

The group of bond holders mentioned in the letter sent to Kaisa offered a 'forbearance period' to the company to delay the repayment to continue negotiations.

The bond holders, who say they own 50% of the debt Kaisa is trying to exchange, have offered $2 billion in fresh debt funding to the Chinese firm to help it avert a default, two sources with knowledge of the offer told Reuters.

The exact details of the funding size or terms for the offer were not disclosed. The sources could not be named due to confidentiality constraints.

There had been little interaction between Kaisa and the group since the offer was presented to the Chinese developer, said the sources.

Kaisa did not immediately respond to Reuters request for comment.
Reporting by Scott Murdoch in Hong Kong and Samuel Shen in Shanghai; Writing by Sumeet Chatterjee

Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Ang iyong kapital ay maaaring malugi. Ang mga produktong naka-leverage ay maaaring hindi para sa lahat. Tingnan ang aming Risk Disclosure.