Another Chinese real estate developer is in serious trouble


Shares of Kaisa Group, a Shenzhen-based developer, have been suspended from buying and selling on Friday in Hong Kong. The firm’s subsidiaries, which have been additionally halted from buying and selling, cited a “pending” announcement concerning the group in inventory trade filings.

While Kaisa didn’t disclose extra particulars for the rationale behind the suspension, it had mentioned the day past that it was going through “unprecedented pressure” on its funds.

Chinese state-run monetary newspaper Securities Times reported Thursday that the corporate instructed the outlet about its liquidity points, and admitted to lacking a fee associated to its wealth administration merchandise.

Kaisa didn’t instantly reply to a request for additional remark.

According to the report, Kaisa mentioned that it was experiencing a number of headwinds, similar to a difficult actual property market setting and the current downgrading of its credit score scores by worldwide businesses.

Those feedback led the corporate’s shares to crash about 15% on Thursday. Its inventory has already cratered by greater than 70% this 12 months.

Evergrande and these Chinese real estate developers are already in trouble
The information comes as buyers proceed to stress over the disaster at Evergrande, China’s most indebted developer. The conglomerate has generated worldwide headlines since September, after warning that it might default on its huge money owed of greater than $300 billion.
Other gamers have additionally warned of their very own issues, too. In current weeks, a slew of developers have disclosed their very own money move points, asking lenders for extra time to repay them or warning of potential defaults.

Kaisa confronted a setback final week as Fitch and S&P Global Ratings each downgraded the corporate, citing debt considerations.

In a report, S&P analysts wrote that they considered “Kaisa’s capital structure as unsustainable given the company’s sizable near-term debt maturities, weakening liquidity, and inadequate free cash flow through 2022.”

They estimated that about $3.2 billion of the corporate’s offshore notes would come due over the 12 months to October 2022, suggesting that it “will need to rely on asset disposals and successfully improving its capital structure to avoid defaulting.”

According to the Securities Times, Kaisa mentioned Thursday that it had been “actively raising funds … and doing its best to solve its current problems.”

But information of the corporate’s woes rattled the sector on Friday. The Hang Seng Mainland Properties Index, which tracks mainland Chinese firms within the sector, fell 2.8% in Hong Kong, following weeks of stress on these shares.

'Ghost towns': Evergrande crisis shines a light on China's millions of empty homes
Investors are nonetheless watching to see if Evergrande will slip into default as its numerous debt funds come due. So far, it has managed to keep away from that situation by making good on a variety of essential obligations, together with one reported last week.

But Evergrande faces yet one more check Saturday, as one other offshore bond fee comes due, famous Jeffrey Halley, senior market analyst for Asia Pacfic at Oanda.

CNN’s Beijing bureau contributed to this report.

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