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Chinese real estate developer Kaisa halts trading in Hong Kong, as debt concerns escalate

Kaisa Group Holdings Ltd. logo displayed on a smartphone screen.

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Hong Kong listed shares of Chinese real estate developer Kaisa Group Holdings were halted on Friday, following news that it had missed a payment on a wealth management product earlier this week.

It comes as investors continue to watch for developments in China’s property sector following the fallout from heavily indebted Evergrande.

Kaisa said in an exchange filing on Friday that it will be suspending trading. Its other units — Kaisa Capital, Kaisa Health, Kaisa Prosper — also announced they will halt trading.

On Thursday, Kaisa said its finance unit missed a payment on a wealth management product, amid increased worries about its strained liquidity.

Kaisa shares fell nearly 13% this week before the trading suspension. The stock is down about 70% so far this year.

Investors have been closely monitoring interest payments on the Evergrande’s bonds — the company initially missed making two payments, but managed to meet them within the 30-day grace period. All eyes are now on other interest payments due in November and December.

A few other Chinese real estate firms had also been under the spotlight for going into default, or missing payments on their debt.

Fitch Ratings and S&P Global Ratings downgraded Kaisa last week. Both agencies cited the firm’s diminishing cash flow.

Among Chinese developers, Kaisa is the second-largest issuer of U.S. dollar-denominated offshore high-yield bonds, according to Natixis. Evergrande, the world’s most indebted real estate developer, ranks first.

As of the first half of this year, Kaisa had crossed two of China’s three “red lines” for real estate developers that the government outlined, according to Natixis.

According to Fitch, Kaisa has a large amount of debt due between now and end-2022, including $400 million due in December, and around $3 billion due in 2022.

Regulators in Shenzhen will hold a meeting on Friday to discuss liquidity issues at Kaisa and another Chinese real estate firm Fantasia, local media Cailianshe reported. Fantasia failed to repay a $206 million bond that matured early last month.

Kaisa and Fantasia didn’t immediately respond to a request for comment.

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