Few apartment buildings built in Kaisa Shenzhen City Plaza project.
Lanjie Xiang | SCMP | Getty Images
Hong Kong-listed shares of Chinese real estate developer Kaisa Group Holdings were halted on Friday, after news that it defaulted on a wealth management product earlier this week.
This comes as investors continue to monitor developments in China’s real estate sector following the fallout from the debt-laden city of Evergrande.
Kaisa said in a stock exchange statement on Friday that it will suspend trading. Its other units – Kaisa Capital, Kaisa Health and Kaisa Prosper – have also announced that they will stop trading.
On Thursday, Kaisa said its financial unit missed a payment on a wealth management product, amid growing concerns about strained liquidity.
Casey shares are down about 13% this week before trading was suspended. The stock is down 70% so far this year.
Investors have been keeping a close eye on the interest payments on Evergrande bonds — the company initially failed to make two payments, but was able to meet both within the 30-day grace period. All eyes are now on the other interest payments due in November and December.
A few other Chinese real estate companies were also highlighted for defaulting or defaulting on their debts.
Fitch Ratings and S&P Global Ratings downgraded Kaisa’s rating last week. Both agencies indicated the company’s diminishing cash flows.
Among Chinese developers, Kaisa is the second largest issuer of high-yield offshore bonds denominated in US dollars, according to Natixis. Evergrande, the world’s most indebted real estate developer, ranked first.
As of the first half of this year, Kaisa has crossed two of the three Chinese “red lines” for real estate developers set by the government, according to Natixis.
According to Fitch, Kaisa has a significant amount of debt maturing between now and the end of 2022, including $400 million due in December, and about $3 billion due in 2022.
Regulators in Shenzhen will hold a meeting on Friday to discuss liquidity issues at Kaisa and another Chinese real estate firm Fantasia, local media Cailianshe reported. Fantasia failed to repay a $206 million bond that matured early last month.
Kaisa and Fantasia did not immediately respond to a request for comment.