China

Chinese property developer Kaisa Group has appointed financial adviser Houlihan Lokey to formulate a plan that will be agreeable to all its creditors as the indebted company struggles with the risk of defaulting on its credit. The company failed earlier this month to make a $26 million interest payment on its bonds due to mature in 2020, and now has until Feb. 9 to pay that coupon or else become the first Chinese real estate firm to default on its offshore debt. Kaisa is grappling with a series of departures after some senior executives left unexpectedly.

Troubled Chinese property developer Kaisa Group failed to remove a local government block on sales at its Shenzhen projects during talks with public officials on Monday, a company source familiar with the discussions said. Kaisa's top executives held a high-level meeting with senior Shenzhen government officials on Monday afternoon in the Longgang district in northern Shenzhen, where two of Kaisa's new projects are blocked, according to the source. "There was no progress at all in the meeting," the Kaisa executive said.

Offshore bond sales by mainland property developers have stalled in January as rising investor fears of a flurry of debt defaults have junked one of the usually busiest months of the year for real estate issuance, South China Morning Post reported. With an estimated US$10 billion in offshore debt falling due for repayment this year and next, a bad January bodes ill for the ability of developers to refinance huge foreign borrowings.

Troubled Chinese property firm Kaisa Group is talking to banks and rival developers about selling its assets as the company scrambles to raise cash, according to people with knowledge of the matter. A number of developers have approached the company about possibly buying some of its holdings, said one person. "Banks, developers, Shenzhen government want this to happen," said another. The Wall Street Journal reported on Friday that developers speaking to Kaisa include China Vanke and Shenzhen Overseas Chinese Town. Shenzhen Overseas and China Vanke could not be reached for comment.

China’s economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, keeping pressure on Beijing to take aggressive steps to avoid a sharper downturn, the Irish Times reported. For investors worried about growth in China and the world this year, the data poses two questions: Will the soft numbers and expectations of further weakness force the central bank to pump hundreds of billions of dollars into banks system-wide to prop up growth?

Shares in some mid-size Chinese real estate developers fell sharply on Thursday, as fears grew that the troubles hitting Kaisa Group could spread to other firms in the sector, Reuters reported. Local government officials blocking real estate sales and anti-corruption probes are adding to worries about the prospects of companies in China's already highly leveraged property industry. Shanghai developer Glorious Property Holdings fell as much as 35 pct on Thursday, while China South City Holdings was down 10 pct.

China’s 40m public sector employees are to lose their exemption from paying into the state pension system, as the government looks to curb public outrage over excess benefits for civil servants, the Financial Times reported. China’s dual-track urban pension system — in which corporate employees must contribute 8 per cent of their salary to the pension system but government employees contribute nothing — has been a source of populist outrage for years. The State Council, China’s cabinet, on Wednesday announced a long-awaited plan that will move to equalise the two systems.

Rising failures in China’s peer-to-peer lending industry may pressure authorities to regulate a segment of Internet finance that almost quadrupled in size last year, Bloomberg News reported. The number of platforms that went bankrupt or had difficulty repaying money climbed to 275 in 2014 from 76 a year earlier, according to Yingcan Group, which tracks China’s more than 1,500 online lending sites. Last month, police started investigating the originator of two Sina Corp. wealth products for illegal fundraising.

For China’s property market bears, the default by a Hong Kong-listed developer on its US dollar bonds looks like the canary in the coal mine. More are likely to follow, they argue, as the great unravelling of the heavily indebted and chronically oversupplied sector finally gets under way. Even some of the more sanguine observers see the recent bond and loan repayment failures by Shenzhen-based Kaisa as potentially part of a broader trend in China’s property sector, the Financial Times reported.

Bonds issued by Kaisa Group rose sharply on Tuesday after the embattled Chinese property developer said it had received a waiver from HSBC Holdings on a loan it failed to repay late last month. Kaisa, which has been struggling with the departure of senior executives, government officials blocking sales at some of its projects in the southern city of Shenzhen and a missed coupon payment on an offshore bond, made the announcement late on Monday. Market participants are watching Kaisa closely as it could become the first Chinese company to make an outright default on its offshore U.S.