And 2015 Starts Off With A Bang - First Chinese Default Of The Year Hits

Well that didn't take long... With the smell of fireworks still lingering in the air, Bloomberg reports that Chinese developer Kaisa Group defaulted on a HK$400 million ($51.6 million) loan triggered by forced repayment terms after the firm's chairman resigned. With shares already down over 50% in December alone, trading is suspended as the company faces what S&P calls "more challenges" ahead and the 2018 bonds have collapsed to just 43c on the dollar (yields over 42%).

The company’s $800 million of 8.875 percent notes due 2018 and sold to investors at par in March 2013 tumbled to 43.846 cents on the dollar as of 10:05 a.m. in Hong Kong, from 66.263 cents on the dollar on Dec. 31, sending yields to 42.485 percent

Its $500 million of 10.25 percent debentures due 2020 slid to 38.025 cents on the dollar to yield 39.601 percent. The securities were sold to investors at 100 cents on the dollar in January 2013.



Kaisa’s stock fell over 50 percent in December -- its steepest monthly decline on record -- as authorities in the southern Chinese city of Shenzhen blocked its projects and key personnel departed. Standard & Poor’s Ratings Services said after two executives resigned that Kaisa may face “more challenges” in the days ahead while Moody’s Investors Service cut the company’s credit rating to B3 from B1.


As Bloomberg reports,

Kaisa Group failed to pay a HK$400 million ($51.6 million) loan, raising questions about the Chinese developer’s ability to pay other debts.


Automatic repayment of the August 2013 term loan facility from HSBC was triggered by the Dec. 31 resignation of Kaisa’s chairman, Kwok Ying Shing, the company said today in a Hong Kong stock exchange filing. The company is assessing whether its failure to pay the outstanding debt plus interest may trigger cross-defaults and have a material adverse impact on the company, it said.




Routine applications for licenses, permits and project approvals haven’t been accepted, while an application for a certificate allowing land acquisitions has been suspended, Kaisa said in a statement on Dec. 21. Approvals for two projects in the city’s Longgang district have been withheld.


Kaisa announced Dec. 10 that Kwok, a co-founder, would resign for health reasons at the end of the month. The company’s shares were halted from trading Dec. 29, the day after Chief Financial Officer Cheung Hung Kwong and Vice Chairman Tam Lai Ling also resigned. The stock will remain suspended pending further announcements, Kaisa said today.

*  *  *
The first of many we suspect...