Tuesday, November 9th, 2021
Please defer payment
Evergrande competitor also broadcasts SOS
Since the Chinese real estate group Evergrande admitted liquidity problems a few weeks ago, investors have been very nervous. Now the rival Kaisa is also reporting payment problems and asks for “more time and patience”. Meanwhile, the US Federal Reserve is also concerned.
In China, another real estate developer is sounding the alarm about impending liquidity bottlenecks. Evergrande rival Kaisa has asked investors and banks to defer payments. In addition, the Fitsch rating agency downgraded Kaisa’s credit rating to junk level and fueled the concerns of investors. In terms of sales, Kaisa is significantly smaller than its struggling competitor Evergrande, but after Evergrande it owes the most debt to foreign creditors. The US Federal Reserve is now also concerned.
“We sincerely ask investors to give the Kaisa Group more time and patience,” said the Shenzhen-based company. To raise money, Kaisa wants to sell assets and use the proceeds for repayments and promote the sale of existing properties. Talks have already taken place with mutual funds and banks such as China Vanke, Ping An Bank and China Citic Bank, a person familiar with the matter told Reuters. A few days ago, a subsidiary of the Kaisa Group Holding was unable to serve domestic creditors. Hundreds of millions of dollars in interest will be due on mutual funds held by overseas investors in the coming months.
Kaisa’s problems come at a time when investors are already very nervous. Since Evergrande admitted liquidity problems a few weeks ago, more and more real estate developers in China have been stumbling. The debt problems of the real estate companies there are now also causing concern for the US Federal Reserve. Problems in the sector and a tightening of global financial conditions could pose risks to the US financial system, the monetary authorities said in their latest financial stability report.
In September, US Federal Reserve Chairman Jerome Powell said the troubles of Evergrande, which is groaning under a mountain of debt of more than $ 300 billion, are likely to be limited to China. Evergrande had recently paid interest on several bonds within an extended payment period and thus reassured the angry investors somewhat. Another $ 148 million coupon payment deadline expires this week, with an additional $ 255 million due at the end of December. Evergrande’s shares gained just under one percent on Tuesday, while Kaisa shares were suspended from trading.