BEIJING (Reuters) – Chinese developer Kaisa Group suspended trading in its Hong Kong-listed shares on Friday, raising concerns that the company’s cash flow crisis worsened as the crucial real estate sector in the China is under intense pressure.
The announcement came as a liquidity crunch at one of the country’s largest real estate developers, China Evergrande, shines a light on the real estate sector after a state crackdown that rocked investors and fueled fears of more economic fallout. wide.
It also follows Chinese media reports that monies owed on Kaisa-related management products were not paid by their due date and that the company admitted it was facing “pressure. unprecedented level of liquidity “.
In a brief notice to the Hong Kong Stock Exchange, the group said the suspension was “pending the publication by the company of an announcement containing inside information.”
Last week, the rating agencies Fitch and S&P downgraded Kaisa, citing refinancing risks.
Fitch said the downgrade was due to “Kaisa’s limited access to financing and uncertainty over the refinancing of a significant amount of US dollar bond maturities and coupon payments.”
According to Bloomberg News, Kaisa is only the 27th largest real estate developer in the country in terms of sales, but one of the largest borrowers of dollar debt among developers, with more than $ 11 billion in bonds outstanding.
The difficulties of the Chinese real estate sector weigh on the authorities’ willingness to move forward with reforms to curb over-indebtedness.
Evergrande, which is mired in debt of more than $ 300 billion, plunged into crisis after Beijing began cracking down on the country’s colossal real estate sector last year.
It has been suggested, however, that Beijing may rescind some of those rules, with state media recently hinting that local banks have started relaxing some credit checks on homebuyers and developers on orders from the central bank.
For now, all eyes are on a key deadline Saturday for Evergrande to pay off an $ 82.5 million coupon on a bond. The company missed the upfront payment last month, but was granted a 30-day grace period. He has lost two more in recent weeks.
As the Shenzhen-based group scrambles to dispose of its assets, electric mobility company Bedeo said Thursday it had acquired Protean Electric from a subsidiary of Evergrande New Energy Vehicle Group.
Chinese authorities have urged Evergrande founder and billionaire Xu Jiayin, also known as Hui Ka Yan, to use his personal fortune to ease the company’s debt crisis, according to reports.
Bloomberg said his luxury assets alone – including a 60-meter yacht, business jets and homes under his name – are estimated to be worth $ 485 million, which could help cover coupons. bonds that are not yet due or have grace periods. ends this year.