Offshore bondholders have rejected an offer by cash-strapped Chinese property developer Kaisa to extend maturities on their bonds to avoid a default next week, as per a letter to the company’s chair seen by the FT. This comes less than a week after the company launched the exchange offer of its $400mn 6.5% bonds due December 2021 for new notes maturing in June 2023 on a par-to-par basis, plus $25 in cash per $1,000 in principal and capitalised interest. In the letter to Kaisa, a group of bondholders claiming to represent over 50% of the $400mn bond said that the exchange offer was “unacceptable”. As per people familiar with the matter, the bondholder group includes large investors such as Pimco and Ashmore. The group has proposed a forbearance period (Term of the Day, explained below) to offer Kaisa some “breathing room” and made an offer to provide new financing to the company. Financial advisory firm Lazard is advising the bondholder group on this.
Kaisa’s $400mn 6.5% bond due next Tuesday (December 7) is currently trading at 44.72 cents on the dollar while its other dollar bonds are trading at about ~32 cents on the dollar.
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