12/5/2023 0 Comments China property developer default![]() While onshore creditors rushed to take legal action in the Kaisa case, foreign investors – who remain deeply subordinated in the creditor hierarchy, with little recourse to mainland China assets – had to sit on the sidelines.Ĭhina’s anti-corruption drive is weakening implicit corporate guarantees. The Kaisa saga should be seen as a poster-child for the systemic risks in the Asian high-yield sector, which is particularly biased towards China-centric credits with property developers from the mainland representing some 40% of the debt stock. Investor complacency might be sowing the seeds of trouble. ![]() The sector’s weighted average yield was at its tightest year-to-date level, in late May, at 8.3%, according to CreditSights, despite the sector’s elevated leverage, weak margins and excess capacity. The primary market hospitality for property developers after Kaisa’s default contrasts with the 2011 Sino-Forest saga that shut out Chinese industrial borrowers for at least six months.įor all the doom and gloom over Chinese private-sector debt sustainability, a clutch of brokers and cash-rich fund managers are overweight Chinese property developers. Meanwhile, lower down the credit curve at B2/B/B+, China Aoyuan priced a $250 million bond on May 18 offering a 11.25% yield. Agile Property, rated Ba3/BB-, raised $500 million from a $1.5 billion order book in early May. The following month’s monetary stimulus from the People’s Bank of China, together with Beijing’s efforts to boost property demand, unleashed further supply. Just three days later, Jingrui Holdings, rated B3/B, priced a $150 million 13.25% 2018 bond at par. When Kaisa became the first Chinese property developer to officially miss offshore obligations – failing to honour $51.6 million of coupons on two of its outstanding dollar bonds in April – the market responded not with a bang but with a whimper. ![]() A cyclist rides in front of a construction site by Chinese property developer Kaisa Group in Shanghai
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |