Kaisa Creditors Offer Forbearance to Avoid Default
Posted on 12/06/2021
Chinese real estate developers are feeling financial pain as China Evergrande Group takes center stage trying to manage its massive pile of debt. Days ago, Kaisa Group Holdings Ltd. failed to win bondholder approval for a debt swap. This is putting the Chinese developer on course for a default. Luckily, Kaisa bondholders are said to have offered a forbearance to avoid a US$ 400 million default. This group of creditors holds Kaisa notes with a face value of roughly US$ 5 billion. China Evergrande Group said there was no guarantee it would have enough funds to meet debt repayments.
Chinese developer Sunshine 100 China Holdings Ltd defaulted on a US$ 170 million dollar bond due to liquidity issues. In an exchange filing, the developer said it was not able to repay the principal and interest of a 10.5% bond due December 5, 2021, “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry.”
Generally Speaking
In China, all land is either subject to government ownership or collective ownership. In principle, municipal land is subject to government ownership and land outside cities is subject to collective ownership. For investors, one can obtain the right to use the land. There is currently no property tax in China. In China, one can only have the right to use, not ownership.