Shares in Chinese developer Kaisa suspended

Trading in embattled developer Kaisa Group Holdings has been suspended, prompting fresh concerns about potential defaults across China’s debt-laden property sector.

In a brief statement to the Hong Kong Stock Exchange on Wednesday, the Chinese firm said trading had been suspended pending an announcement.

Like many of China’s property developers, Kaisa is heavily indebted and is struggling to make interest payments.

According to Reuters, which cited an unnamed source with direct knowledge, the firm is unlikely to meet a $400m offshore debt deadline. Non-payment would push it into technical default, which in turn would trigger cross defaults on offshore bonds totally nearly $12bn, Reuters added.

Kaisa is China’s largest holder of offshore debt among property developers after larger rival China Evergrande Group, which has been unsettling global markets throughout the autumn as it struggles to make coupon payments.

On Monday, shares in Evergrande tumbled to fresh lows on fears it was close to default, and by 0745 GMT the stock was down a further 6%, at HK$1.72, following the Kaisa announcement.

Neem Aslam, chief market analyst at AvaTrade, said: "Bondholders of Evergrande have still not received their coupons, even after the company being given a grace period of 30 days. Currently Evergrande is getting ready for a colossal debt restructuring while on the brink of default as its total liabilities are higher than $300bn."

The crisis in China’s once red-hot property sector has been largely fuelled by Beijing, as it looks to crack down on soaring levels of debt and speculation.

This is the second time this year that Kaisa’s shares have been suspended. It has seen its share price plummet by 74% this year, while Evergrande has lost 88%.