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.