Debt-ridden developer Kaisa’s bonds edge up after firm says it has signed joint venture agreement with state-owned builder, bad asset manager
- Shenzhen-based firm has entered a strategic partnership with China Merchants Shekou Industrial Zone Holdings and China Great Wall Asset Management
- Other cash-strapped developers could also strike deals with state-owned actors and local governments following Kaisa’s example, analyst says
Bonds of embattled Chinese property developer Kaisa Group Holdings edged up on Wednesday after the company said it had entered into a strategic partnership with a state-owned developer and a major bad asset manager.
“This is the first major restructuring announced by a developer so far. And we think the market should consider it as a positive, because this should pave the way for a smooth resolution of its problems,” said Raymond Cheng, a property analyst at CGS-CIMB Securities.
China’s “three red lines” measures, in place since August 2020 to control systemic risk posed by weak property developers, have sent the industry into a slump not seen since the 2015 stock market crash. Major developers such as China Evergrande Group and Kaisa failed to repay their debts last year as a result.
And the cracks in the sector have widened this year, with the likes of Sunac China Holdings, the country’s fourth-largest developer, and Shimao Holdings Group, joining the list of distressed Chinese property firms.
Cheng said he expected other cash-strapped developers to also strike deals with state-owned actors and local governments following Kaisa’s agreement with the state-owned developer and bad asset manager.