Wednesday, January 19

Declaration of Default for Dollar Debt Together with Kaisa: Evergrande Update


China Evergrande Group and Kaisa Group Holdings, the two Chinese property developers whose liquidity crises have rocked the country’s credit markets, have defaulted on their dollar debt.

The two firms were downgraded to restricted default by Fitch Ratings, which cited late interest payments on dollar bonds in the Evergrande case and non-payment of a $ 400 million bond in Kaisa’s.

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Evergrande’s inability to meet its obligations is a market event and will be addressed in a market-oriented manner, People’s Bank of China Governor Yi Gang said on Thursday.

Yi’s comments offer the latest sign that Beijing will not bail out Evergrande, as it has less than $ 300 billion in liabilities. He also said that investors’ interests should be managed according to the age of their capital.

Key developments:

  • Evergrande restructuring leaves bondholders at the mercy of Beijing
  • Evergrande will be managed in a market-oriented manner, says PBOC’s Yi
  • Kaisa comes closer to discussing financing with bondholders
  • Recipients designated for Fantasia Holdings Group
  • Hopson to sell $ 250 million 8% convertible bonds due 2022
  • Evergrande’s way forward: roadmap, implications
  • The worst may be over for China’s Sunac after aggressive funding
  • R&F prepares to miss full-year sales target due to weakening sentiment
  • Hong Kong office rental weakness may persist as supply rises
  • China South City bond prices may reflect worst-case scenario
  • Evergrande electric vehicles are not on the approval list, raising questions about delivery

Evergrande Defaults For The First Time As China’s Debt Strains Spread (4:10 p.m. HK)

China Evergrande, the Chinese developer whose liquidity crisis has rocked the nation’s credit markets, has defaulted on dollar debt for the first time.

The real estate giant’s long-term foreign currency issuer default rating was downgraded to restricted default on Fitch Ratings, which cited overdue dollar bond interest payments whose grace period expired on Dec. 6.

Kaisa was in default after failing to pay $ 400 million of bonds (3:53 p.m. HK)

Kaisa Group Holdings has become the latest Chinese real estate developer to default as Fitch Ratings downgraded its rating following a missed dollar bond payment.

Fitch lowered its long-term foreign currency issuer default rating on Kaisa to restricted default, citing its default on a $ 400 million bond that matured Tuesday.

Failure to pay that amount also “triggered events of default for the company’s other US dollar notes, which will become due and payable immediately if the trustee of the bonds or holders of at least 25% of the total principal amount of offshore notes declare it, ”Fitch said.

PBOC’s Yi Says Evergrande Should Be Treated By The Market (2:34 PM HK)

The debt crisis in China Evergrande is a market event and investors’ interests should be managed based on the age of capital, said People’s Bank of China Governor Yi Gang.

“The rights and interests of creditors and shareholders will be fully respected in accordance with their legal seniority,” Yi said in a video message at a seminar in Hong Kong.

Hong Kong has established an effective system and well-defined legal provisions to address these problems, Yi said. Some companies in the short term will not undermine Hong Kong’s financial system in the long term, he said.

Hong Kong SFC CEO Says Financial System Not Facing Lehman Event (1:54 PM HK)

The head of Hong Kong’s Securities and Futures Commission said its stress tests in the wake of China’s real estate industry debt crisis had not shown elevated systemic risks in the city’s financial system.

“What we see now is really no different than what we saw a few months ago,” said Ashley Alder, CEO of SFC, in an interview with Bloomberg TV’s Stephen Engle.

“Is the financial system here, or elsewhere, as vulnerable as it turned out to be in the wake of Lehman? The answer to that is no. It is a significant event, it cannot be underestimated, but it is basically not that category of event for the financial system. ”

Receivers Designated for Fantasia Holdings Group (12:40 p.m. HK)

Kroll’s Cosimo Borrelli, Jocelyn Chi and Kent McParland have been designated as recipients of Fantasia Holdings Group, a Hong Kong Registry of Companies filing program. Cosimo Borrelli declined to comment when contacted by Bloomberg News.

Hopson to sell $ 250 million 8% convertible bonds due 2022 (7:58 am HK)

Hopson Development Holdings proposed to issue $ 250 million of 8% guaranteed convertible bonds due 2022. The initial conversion price is HK $ 20.16, representing a 4.56% premium over the latest closing. of 19.28 Hong Kong dollars.

Kaisa Gets Closer to Discussing Financing with Bondholders (4:21 a.m. HK)

A group of Kaisa bondholders is close to signing confidentiality agreements with the real estate developer in a move that would pave the way for discussions about a possible financing deal for the embattled company, people with knowledge of the matter said.

The group of creditors is being advised by Lazard Ltd. An announcement about the deals could come Thursday morning in Hong Kong, one of the people said. Lazard is looking for more bondholders to join the group.

A representative for Kaisa did not immediately respond to a request for comment made outside of normal business hours.

A look at Evergrande’s maturity schedule:

Dollar bonds Coupon expiration date Grace period ends Amount

(A million dollars)

TIANHL 13% due in 2022 November 6th 6th of December 41.93
TIANHL 13.75% due in 2023 November 6th 6th of December 40.56
EVERRE 7.5% due in 2023 December 28th January 27th 50.43
EVERRE 8.75% due in 2025 December 28th January 27th 204.77

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