Chinese developers' shares, bonds stumble again as Kaisa, units suspended (updated)

Kaisa Prosperity Holdings

05/11/2021 01:29

(Adds market reaction, analyst comment)
    HONG KONG/SHANGHAI, Nov 5 (Reuters) - A rout in shares and
bonds of Chinese property developers deepened on Friday as Kaisa
Group Holdings Ltd  1638.HK  and three of its units had their
shares suspended, a day after Kaisa said an affiliate had missed
a payment on a wealth management product.  urn:newsml:reuters.com:*:nL1N2RV0B3
    Shenzhen-based homebuilder Kaisa, which has guaranteed the
wealth management product, said in a statement on Thursday it is
facing unprecedented liquidity pressure due to a challenging
property market and rating downgrades.
    A Hong Kong stock exchange filing showed Kaisa's shares were
suspended as of Friday. The exchange did not elaborate.
    Kaisa's troubles come amid concerns about a broadening 
liquidity crisis in the Chinese property sector, with a string
of offshore debt defaults, credit rating downgrades and
sell-offs in the developers' shares and bonds in recent weeks.
    The Hong Kong-listed shares of Kaisa, which has a market
value of about $1 billion, plunged more than 15% on Thursday to
an all-time low. 
    In early trade in Hong Kong, a sub-index tracking the
mainland property sector  .HSMPI  fell more than 2%, deepening
its losses in the past two weeks to nearly 20%. An index of real
estate A-shares  .CSI000952  fell more than 1.6% against a 0.25%
drop in the broader blue-chip index.  .CSI300 
    Shares of China Evergrande Group  3333.HK , once China's
largest property developer and whose debt woes have sparked off
a liquidity crisis across China's $5 trillion property sector,
fell 1.7%. The company's 11.5% October 2022 bond fell more than
10% to yield above 300%, according to Duration Finance, leading
sharp falls across developers' bonds.
    An ETF tracking Asian high-yield dollar bonds  AHYG.SI 
slumped nearly 1.5% in early trade, while spreads on Chinese
high-yield dollar debt  .MERACYC  hovered near record highs.
    "Kaisa could likely be another Evergrande," said Raymond
Cheng, head of China research at CGS-CIMB Securities, adding
that the companies woes had intensified market concerns over
developers' liquidity conditions. 
    "Even though the regulators have some easing measures ... it
seems that may not be able to help that much," he said. "Unless
the government has aggressive loosening measures ... we expect
to see more and more developers have problems (paying) off their
debts."
    Kaisa has the most offshore debt coming due over the next
year of any Chinese developer after embattled China Evergrande
Group  3333.HK , which is reeling under more than $300 billion
in liabilities.

 (Reporting By Donny Kwok and Anne Marie Roantree in Hong Kong
and Andrew Galbraith in Shanghai; Editing by Jacqueline Wong and
Shri Navaratnam)
 ((annemarie.roantree@thomsonreuters.com; +852 97387151; Reuters
Messaging: annemarie.roantree.thomsonreuters.com@reuters.net))