Real Estate News

Kaisa Group, another Chinese real estate developer, is in serious trouble

November 6, 2021
Jerry Schmidt
Shares of Kaisa Team, a Shenzhen-dependent developer, have been suspended from trading on Friday in Hong Kong. The company’s subsidiaries, which were also halted from investing, cited a “pending” announcement about the group in stock trade filings.

Whilst Kaisa did not disclose additional aspects for the motive behind the suspension, it experienced explained the past working day that it was struggling with “unprecedented pressure” on its funds.

Chinese condition-run economical newspaper Securities Instances reported Thursday that the organization advised the outlet about its liquidity problems, and admitted to lacking a payment linked to its prosperity management merchandise.

Kaisa did not promptly answer to a request for further more comment.

According to the report, Kaisa reported that it was suffering from several headwinds, this kind of as a tough genuine estate sector natural environment and the new downgrading of its credit rating ratings by worldwide companies.

Individuals comments led the company’s shares to crash about 15{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} on Thursday. Its stock has currently cratered by additional than 70{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} this yr.

Evergrande and these Chinese real estate developers are already in trouble
The information arrives as traders proceed to fret in excess of the disaster at Evergrande, China’s most indebted developer. The conglomerate has produced international headlines considering the fact that September, right after warning that it could default on its enormous debts of a lot more than $300 billion.
Other gamers have also warned of their own troubles, too. In latest months, a slew of builders have disclosed their own dollars move concerns, asking creditors for much more time to repay them or warning of potential defaults.

Kaisa faced a setback final week as Fitch and S&P World wide Scores equally downgraded the corporation, citing debt considerations.

In a report, S&P analysts wrote that they considered “Kaisa’s funds composition as unsustainable given the firm’s sizable around-phrase credit card debt maturities, weakening liquidity, and insufficient absolutely free dollars move by means of 2022.”

They estimated that about $3.2 billion of the firm’s offshore notes would arrive owing over the calendar year to October 2022, suggesting that it “will need to have to rely on asset disposals and productively increasing its cash composition to stay away from defaulting.”

According to the Securities Times, Kaisa mentioned Thursday that it had been “actively raising funds … and performing its most effective to remedy its current problems.”

But news of the firm’s woes rattled the sector on Friday. The Hang Seng Mainland Properties Index, which tracks mainland Chinese organizations in the sector, fell 2.8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in Hong Kong, subsequent months of force on people shares.

'Ghost towns': Evergrande crisis shines a light on China's millions of empty homes
Investors are however observing to see if Evergrande will slip into default as its numerous debt payments appear owing. So far, it has managed to steer clear of that state of affairs by earning excellent on a range of important obligations, together with one particular claimed very last week.

But Evergrande faces yet a further test Saturday, as a further offshore bond payment will come due, mentioned Jeffrey Halley, senior current market analyst for Asia Pacfic at Oanda.

— CNN’s Beijing bureau contributed to this report.