Evergrande joins Kaisa in ‘restricted default’ after missing bond payments, Fitch says

Fitch says Kaisa had reportedly failed to make payments on its US dollar bonds due on December 7 and had not responded to requests for comment

A restricted default means that a company is in payment default but has not entered into formal winding-up procedures

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The ratings agency said Evergrande had missed bond repayments after the grace period lapsed on December 6. Photo: AFP

Published: 6:30pm, 9 Dec 2021Updated: 8:34pm, 9 Dec 2021

Embattled Chinese property developer China Evergrande Group and Kaisa Group Holdings have been downgraded to “restricted default” by international rating agency Fitch Ratings.

The downgrade on Thursday comes after several attempts by China Evergrande, the world’s most indebted developer, to stave off such an event through last-minute bond payments a couple of times over the past two months.

Fitch said that Kaisa had reportedly failed to make payments on its US dollar bonds due on December 7 and had not responded to requests for comment.

A restricted default is a grade higher than a default in Fitch’s definition, and means that a company has an uncured payment default but has not entered into bankruptcy filings, liquidation, or other formal winding-up procedures.

Fitch placed downgraded Modern Land to restricted default after it missed the payment on the US dollar bonds in October, and Fantasia Group Holdings after the developer failed to repay its US$206 million senior notes the same month.

The ratings agency said Evergrande had not made the payment of interest due on November 6 for its US$645 million 13 per cent bonds and US$590 million 13.75 per cent bonds, after the grace period lapsed on December 6.

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