Top Chinese think tank meets mainland developers, banks as property sector’s liquidity crisis deepens
- The Development Research Center of the State Council met representatives from developers and lenders including Kaisa Group and Ping An Bank
- Fitch Ratings has further downgraded Kaisa to CCC- from CCC+
A Chinese think tank under the control of the cabinet held a meeting with mainland property developers and financial institutions in Shenzhen amid fears of a deepening liquidity crunch in the nation’s real estate industry, media reports said.
The meeting on Monday included representatives from China Vanke, Kaisa Group, Ping An Bank, China Citic Bank, China Construction Bank and CR Trust, Reuters reported citing an unnamed source.
At the meeting with the Development Research Center of the State Council, Shenzhen-based Kaisa urged state companies to help private firms improve their liquidity through project acquisitions and strategic buyouts, the report added. Other issues about the state of the real estate sector, the risks and views on the upcoming property tax were also discussed, The Paper reported.
Fitch Ratings cut Kaisa’s rating further to CCC- from CCC+ on Tuesday, two weeks after it was downgraded by two notches from B+.
“It reflects our view that Kaisa’s liquidity has further deteriorated. We believe Kaisa’s credit risk is high due to tight liquidity, undisclosed debt from wealth-management products, potential pressure to address non-capital market debt, declining contracted sales and limited progress on asset disposals,” Fitch said in a statement.
The developer has put 18 property projects with 1.45 million square metres (15.6 million square feet) in Shenzhen on the auction block, with a combined value estimated at 81.82 billion yuan (US$12.8 billion), according to a catalogue seen by the Post.
In a statement on its website late on Monday, Kaisa said it was taking measures to resolve its issues, and was seeking advice from investors in its wealth management products about feasible payment solutions.
“At present, the overall asset value of Kaisa Group is greater than its liabilities, and there are enough high-quality assets that can be processed to provide investors with the follow-up payment of wealth products,” the group said in the statement.
“Kaisa Group will resolutely fulfil its social responsibilities, properly solve the payment problem, improve the payment plan as soon as possible, and announce it to investors in a timely manner.”
Kaisa also cancelled an investor representative meeting originally scheduled for Wednesday because of public safety concerns surrounding the coronavirus outbreak situation.
Additional reporting by Pearl Liu
