Bondholders In China Developer Kaisa Seek Debt Recovery Help

Some offshore bondholders of embattled Chinese developer Kaisa Group who did not receive coupon payments this month have tapped investment bank Moelis & Co to advise them on the matter, a source with direct knowledge said on Tuesday.

Kaisa, which has the most offshore debt of any Chinese developer after China Evergrande Group, has not paid coupons totalling over $59 million due on November 11 and 12, with 30-day grace periods for both.

The Shenzhen-based developer also has a $400 million maturity on another dollar bond due on December 7.

There were also reports on Tuesday that a group of offshore bondholders is also seeking legal advice on what to do.

Kaisa declined to comment. There was no immediate comment from Moelis and a law firm to a query sent outside US working hours.

Credit Rating Downgrades

Chinese developers are facing an unprecedented liquidity squeeze due to regulatory curbs on borrowings, causing a string of offshore debt defaults, credit rating downgrades and sell-offs in some developers’ shares and bonds in recent weeks, with Evergrande at the centre of the crisis.

Evergrande, the world’s most indebted developer, has been stumbling from debt-repayment deadline to deadline as it grapples with more than $300 billion in liabilities. Moelis and Kirkland & Ellis are advising a group of offshore bond holders of Evergrande.

Fitch last week downgraded Kaisa’s Long-Term Foreign-Currency Issuer Default Rating to “C” from “CCC-” on the missed coupon payments.

The developer, which has also missed some payments on its wealth management products onshore, had pleaded for help from creditors this month and said it will not pay interim dividends.

Kaisa is scrambling for money to repay its debts by asset disposals. Last month it was seeking buyers for its Hong Kong-listed property management unit Kaisa Prosperity Holdings and two residential sites in the city. One of the sites has been sold recently, one source with direct knowledge said.

• Reuters with additional editing by Jim Pollard