China’s Kaisa Real Estate Group announced on Dec. 20 that it failed to pay interests for its U.S. dollar debts on time and will discuss a restructuring plan after the default.
According to Secret China, Kaisa said it could not repay both principal and interest of $400 million foreign-currency-denominated bonds, which were due on Dec. 7 even as they had previously raised $11.8 billion for bonds issued overseas.
The group will also have to pay interest on $105 million on overdue debt of three other types of bonds. However, Kaisa has not been forced to pay its debt immediately, so there is still time to negotiate a comprehensive debt restructuring plan.
Kaisa is one of the leading real estate companies in Shenzhen. Currently, at least eight real estate projects of the company are facing problems such as wage arrears and work stoppages.
According to media, some who have invested in Kaisa’s Guangzhou No. 1 project said their properties had been withheld since their purchase five years ago. There has not been any compensation.
Investors have recently flocked to Kaisa to collect debts. Some people even wore shirts with the words “corrupt Kaisa” or “I want to get my house.” But, unfortunately, Kaisa had not responded to any of them.
Bloomberg describes Kaisa as the third-largest issuer of foreign currency-denominated bonds among Chinese real estate groups.
Kaisa’s scale of offshore bond issuance is second only to Evergrande Group. According to Chinese state media, Evergrande’s offshore bonds are about $19 billion.