Chinese developer warns $400 million bond may not be paid


A Chinese property developer warned Friday that it may not pay off a $400 million bond due next week, adding to financial strain in a struggling industry. to avoid default on billions of dollars.

Kaisa Group Holdings Ltd., based in Hong Kong, said it tried to renegotiate the debt due on Tuesday but too few bondholders agreed to unspecified terms.

“There is no guarantee that the company will be able to meet its repayment obligations,” said a Kaisa statement published through the Hong Kong Stock Exchange.

It does not say if there is a grace period before it is declared insolvent, which could trigger other immediate repayment claims.

Some Chinese developers are struggling to reduce debt after regulators tightened limits on the use of their loans last year. That is raising concerns about possible defaults and turmoil in financial markets.

Investors fear the biggest, Evergrande Groupe, the global industry’s biggest debtor, could collapse with 2 trillion yuan ($310 billion) in debt.

China’s central bank officials have tried to reassure investors that the financial system can be protected from Evergrande’s problems.

Economists say Beijing could step in to ensure there is enough money in lending markets but wants to avoid sending the wrong signal by bailing out Evergrande or other developers.

Kaisa said it will consider options including selling the property.

The company says it has more than 17,000 employees, 310 billion yuan ($49 billion) in assets, and operations in more than 50 Chinese cities. It has assets in real estate development, tourism, hospitality, shipping and healthcare.

In October, a midsize developer, Fantasia Holdings Group, announced that it failed to make a $205.7 million payment due to bondholders.

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