China Developer Kaisa’s Plea For Help Over Mounting Debt

Kaisa Group Holdings desperately needs help to pay its investors, workers and suppliers, the ailing developer reportedly told a meeting of a Chinese government think-tank, banks and property firms.

China’s real estate sector has been hit hard by a liquidity squeeze, made worse by the troubles of China Evergrande Group, the world’s most indebted developer. That has resulted in offshore defaults, credit rating downgrades and sell-offs in some developers’ shares and bonds in recent weeks.

Underscoring the crunch, Fitch downgraded Kaisa on Tuesday, citing a deteriorating liquidity situation. The developer said separately it was trying to solve its liquidity problems, was consulting investors in wealth management products about better payment solutions and pleaded for more breathing space.

“We sincerely ask investors to give Kaisa Group more time and patience,” it said in a statement on its official WeChat account late on Monday.

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Earlier on Monday, Kaisa attended a meeting with the Development Research Center of the State Council, other developers and lenders in the southern Chinese city of Shenzhen, the source said.

The think-tank makes policy proposals on China’s national development and its economy, but is not a decision-making body.

At the meeting, Shenzhen-based Kaisa urged state companies to help private firms improve liquidity through project acquisitions and strategic purchases, the source added.

Participants at the meeting included China Vanke, Ping An Bank, China Citic Bank, China Construction Bank, CR Trust, Southern Asset Management and developer Excellence Group, according to the source.

Risks To US

Underlining global concern on the situation, the US Federal Reserve said on Monday in its latest report on financial stability that stresses in China’s real estate sector, caused in part by regulatory focus on leveraged institutions, as well as a sharp tightening of global financial conditions could pose some risks to the US financial system.

Trading in shares of Kaisa, which has been looking to sell some of its assets to raise cash, and three of its units was suspended last week, a day after an affiliate missed a payment to onshore investors.

Kaisa has the most offshore debt of any Chinese developer after Evergrande, which is itself grappling with liabilities of more than $300 billion.