Chinese property developer Kaisa Group Holdings Ltd. raised eyebrows when it announced Friday (3) that it had failed to seek a rollover (forbearance) on a $400 million aggregate principal amount of its notes. Kaisa’s dollar-denominated debt is second in size only to China Evergrande Group.
According to the announcement, on Dec. 8 and 23, 2020, Gloria issued a total of US$400 million principal amount of senior notes with an interest rate of 6.5% per annum, payable on June 8, 2021 and Dec. 7, 2021.
China Business News reported that as of November 25 this year, the above notes had not been repaid. At that time, Gloria announced that it was seeking an exchange offer for the bonds, which required an acceptance rate of at least 95% to be reached; if the final acceptance rate fell below 95% during the solicitation period from Nov. 25 to Dec. 2, the exchange offer and consent solicitation would automatically fail.
According to the news released by Interface News on November 30, some creditors of Goodwill’s US$400 million bonds expressed their unwillingness to support the exchange offer made by Goodwill on November 25.
In its previous announcement, Goodwill said that it may not be able to repay the notes if the rollover fails and may consider an alternative debt restructuring.
According to another announcement on Nov. 25, Gloria then failed to pay the interest on the USD notes due in 2023 and 2025 of US$58.513 million and US$29.875 million, respectively, and is in the 30-day grace period, which will be on Dec. 11 and Dec. 12, respectively.
Goodwill has previously mentioned the impact of frequent downgrades by foreign rating agencies on its current situation.
Starting from mid to late October this year, internationally renowned rating agencies Fitch (Fitch) and Standard & Poor’s (S&P) downgraded Jia Zhaoye Group’s rating, citing the financial crisis.
Jia Zhaoye is another well-known Chinese real estate company in financial crisis, following two other real estate companies, China Evergrande and Fancy Year.
At the end of October, a financial product issued by “Jinheng Wealth” of Jia Zhaoye Group and guaranteed by Jia Zhaoye Group was not paid as scheduled. On November 4, buyers of the product flocked to the company’s Shenzhen headquarters to seek a payment plan, involving nearly 1,000 investors, and on November 5, before the opening of the Hong Kong stock exchange, the company announced the suspension of trading in the morning, and the suspension of trading of its subsidiaries, namely, Goodwill Capital, Goodwill Wonderful and Goodwill Health, but the announcement did not explain the reasons for the suspension.
Jia Zhaoye is the second-largest issuer of U.S. dollar bonds among Chinese real estate developers, with debt behind only China Evergrande Group.
Evergrande’s first U.S. dollar-denominated bond defaults on Chinese Communist Party official “stability maintenance”
On the same day that Jia Zhaoye announced the failure of its overseas bond rollover, Evergrande Group issued an announcement on the Hong Kong Stock Exchange on the evening of the 3rd, saying that it had received a demand for a US$260 million guarantee obligation, but “given the current liquidity situation, the Group is uncertain whether it has sufficient funds to continue to meet its financial obligations”.
The Guangdong provincial government interviewed Hui Kayan, founder of Evergrande, and sent a working group that night; the Communist Party’s central bank, the Banking and Insurance Regulatory Commission and the Securities Regulatory Commission made statements overnight to reassure the market.
However, insiders of Evergrande said, “Evergrande owes too much debt in many projects in the early stage, and even if the local government provides partial financial assistance, it can only support for a period of time.”
Currently, Evergrande Group has more than US$300 billion in debt, including US$19.236 billion in outstanding U.S. dollar debt. This means Evergrande’s $19.236 billion of outstanding dollar debt cross-default was initiated, Caixin said.
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