Kaisa Group is the second-largest issuer of U.S. dollar bonds among Chinese property developers, as reported on Friday, December 3rd.
Kaisa’s closing price fell 8.82%. This is far below the 0.09% drop in Hong Kong’s Hang Seng Index, cumulative this year it is down 75%.
The group previously stated that it had failed to obtain at least 95% of foreign bondholders’ agreements for the bonds to expire on December 7th.
According to Epoch Times, the company had hoped to exchange 400 million USD worth of bonds at a yield of 6.5%. Bondholders will receive new bonds with the same interest rates maturing on June 6th, 2023.
Kaisa’s proposal failed, and it did not disclose how many bondholders had agreed to the proposal.
A group of overseas bondholders said they hold 50% of the related bonds. Their financial advisor wrote to Kaisa earlier this week to provide more time to negotiate the bond’s return and avoid default issues.
The other two sources said that bondholders offered to provide Kaisa with new funds worth U.S.$2 billion. However, this proposal hasn’t made significant progress. The source declined to be named because they were talking about confidential information.
Kaisa became the first Chinese property developer to default on a U.S. dollar bond in 2015. The company said it has been in talks with representatives of certain bondholders but has yet to reach “a deal legally binding agreement.”
The company is still exploring the issue of selling assets or renewing debt contracts, but they warned that it could not guarantee that it would be enough to pay for the bonds that mature on December 7th.
Kaisa is only ranked after China Evergrande Group and has more than $300 billion in debt and. like other developers, it has worked to raise capital to avoid default.