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Construction site of the Kaisa Group in the center of Shanghai
Photo: Carlos Barria / Reuters
The financially troubled Chinese real estate developer Kaisa is deep in the crisis: The financial division Kaisa Finance was unable to make the due payment for a financial product on Thursday, the company confirmed. The Shenzhen-based parent company stated in a press release that it was confronted with a significant liquidity bottleneck due to the difficult situation on the real estate market and the downgrading of its own creditworthiness by rating agencies. To raise money, Kaisa wants to accelerate sales of company shares.
The company's problems are fueling concerns about a deepening crisis in the Chinese real estate sector.
This is an important engine of China's economic growth.
Many highly indebted real estate developers have sold so-called wealth management products to small investors and lured them with high interest rates.
This enabled the corporations to bypass the Beijing government's borrowing restrictions.
Dispute with the donors
Kaisa is number 25 among Chinese property developers in terms of the number of apartments sold. The company will have to service around $ 3.2 billion in senior offshore bonds over the next twelve months. As early as November 11th and 12th, $ 59 million in interest payments are due. Among the real estate developers, only rival Evergrande, who has been in trouble for some time, will have to service more foreign debts in the coming year.
Kaisa board member Kwok Ying Ching and other senior executives met with investors on Thursday to discuss a payment plan, Kaisa said.
Two investors told Reuters news agency that Kaisa owed investors 12.8 billion yuan, including interest, and intends to repay the money gradually.
The two investors said the investors strongly objected to the plan.
Initially, no comment was received from Kaisa.
Kaisa's credit rating was downgraded by rating agencies last week.
The Kaisa Finance headquarters was almost empty on Thursday morning, with several police vehicles stationed in front of the building.
Evergrande, once China's top-selling developer, suffers from more than $ 300 billion in debt.
Last week, Evergrande was only just able to avert a default for the second time.
The next test will follow on November 10, when payments of more than $ 148 million will be due.
beb / Reuters
