Kaisa Shares Soar After Bond Restructuring Bid

Shares in Chinese property developer Kaisa Group soared as much as 20% on Thursday on news that it wanted to extend the maturity of a $400 million bond by 18 months.

The extension is part of the company’s efforts to avoid a messy default and resolve a liquidity crisis.

Kaisa shares stood at HK$1.20 in late-morning trading in Hong Kong, up 19 Hong Kong cents or 18.8%. The stock, which has lost more than two-thirds of its value in the year to date, was at HK$1.16, about 14% up at the close of trading.

Meanwhile, there was positive news also for China Evergrande‘s New Energy Vehicle Group, which saw its shares shoot up over 12% on Thursday to HK$5.00 just after the close of trading in Hong Kong.

The stock jumped after Evergrande NEV’s onshore unit raised its registered capital by 39% to $3.5 billion.

Coupon Payments

In a filing, Kaisa said it would exchange its 6.5% offshore bonds due December 7 for new notes due June 6, 2023, at the same interest rate if at least 95% of holders accept.

Kaisa, which has the most offshore debt among Chinese developers after China Evergrande Group, missed coupon payments totalling $88.4 million due on November 11 and 12. The payments have a 30-day grace period.

Kaisa said a sharp downturn in the financing environment has limited its funding sources to meet upcoming maturities.

“If the exchange offer and consent solicitation are not successfully consummated, we may not be able to repay the existing notes upon maturity on December 7, and we may consider alternative debt restructuring exercise,” the company said in the filing.

Last week, Fitch Ratings downgraded Kaisa’s Long-Term Foreign-Currency Issuer Default Rating to ‘C’, from ‘CCC-‘, and its senior unsecured rating to ‘C’ from ‘CCC-‘, with the Recovery Rating maintained at ‘RR4’.

“The downgrade reflects the likelihood that Kaisa missed the interest payments on its senior unsecured notes and entered the consequent 30-day grace period before non-payment constitutes an event of default,” the agency said.

Reuters with additional editing by George Russell

This report was updated with additional information on November 25.

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.