BOFIT Weekly Review 2015/17
Real estate developer Kaisa defaults on bond payments
Kaisa Group Holdings Ltd. this week failed to make interest payments on two separate dollar bonds. It was the first time a Chinese real estate developer defaulted on debt owed to foreign creditors.
As the underlying causes of Kaisa’s problems remain unclear, the episode has clearly eroded the credibility of companies operating in the real estate sector and other branches suffering from overcapacity. Given that access to new credit will become more difficult to these companies and China’s slowing economic growth, Kaisa is unlikely to be the last company in trouble.