Chinese developer Kaisa offers bond exchange to avoid potential default

chinese developer kaisa offers bond exchange to avoid potential default

Sumary of Chinese developer Kaisa offers bond exchange to avoid potential default:

  • HONG KONG (BLOOMBERG) – Chinese developer Kaisa Group Holdings began an exchange offer for at least US$380 million (S$520 million) of bonds to avert a default during the nation’s real estate cash crunch.
  • The builder has offered to exchange at least 95 per cent of its US$400 million 6.5 per cent note maturing Dec 7 for new notes with the same coupon maturing June 2023. If the offer to bond holders fails, the developer may not be able to repay bonds and could consider a debt restructuring, it said in a stock exchange filing on Thursday (Nov 25).
  • Kaisa’s bonds fell, while its shares jumped as the stock resumed trading following a three-week halt.
  • Kaisa is one of China’s largest issuers of high-yield United States dollar bonds, with more than US$11 billion of notes outstanding.
  • A failed extension and outright default could pose a significant risk for global investors who are diving back into offshore property bonds on bets that the worst of the recent market rout may be over.
  • Kaisa’s 2021 note dropped 3.2 cents on the dollar to 47.2 cents on Thursday morning, on track for the biggest decline since Nov 9, according to Bloomberg-compiled prices.
  • Still, it could be tough to get across the line with a minimum acceptance of 95 per cent, Bloomberg Intelligence analyst Daniel Fan wrote in a note.

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