Kaisa stock takes a hit after note on bonds

Kaisa Group’s bond and share prices took a hit on Thursday after the troubled mainland developer hinted at renegotiating its debts.

The company said in a stock exchange filing on Wednesday night that it had begun assessing various options with regards to its onshore and offshore debt obligations, with a plan to start a dialogue with lenders and bondholders as soon as possible in order to reach a preliminary understanding by the end of March and completion by the end of April.

However, it warned that “lenders and bondholders should not expect payments of principal and interest according to existing terms”.

“The company expects material modification to the group’s offshore debt obligations to be necessary so as not to frustrate the transaction under the share-purchase agreement,” it said, referring to the HK$4.55 billion sale of the 49.3 per cent stake in the company owned by founding former chairman Kwok Ying-shing’s family trust to luxury home builder Sunac China.

The harsh tone of the note surprised the market. The company’s US$500 million 2020 paper was down 8 percentage points in the morning before recovering later but was still down from a high of 75.5 last week, when Sunac chairman Sun Hongbin said he did not want creditors to lose money and Kaisa remedied a delayed interest payment of US$23 million.

Its Hong Kong-listed shares were down 6 per cent during intraday trading at HK$1.57, the lowest since December 24, before closing down 3.6 per cent at HK$1.61.