Chinese property developer Kaisa defaults on dollar bonds

A struggling Chinese property developer says it has defaulted on dollar-denominated debt, exposing international creditors to potential losses as it grapples with a slumping property market amid a slowdown in the world's second biggest economy.
Kaisa Group Holdings Ltd. Said in a filing late today that it failed to pay USD 51.6 million in interest payments on its bonds due in 2017 and 2018.
The company said in its statement to the Hong Kong stock exchange that it failed to make the payments within a 30-day grace period.
It's the latest sign of turmoil for the troubled company, whose fortunes have tracked the rise and fall of China's housing market.

The company was popular with foreign investors, who gave it piles of cash at a time when China's property market was blazing hot. Beijing's track record of bailing out troubled borrowers to preserve confidence in its fledgling credit markets also gave investors reassurance.
But the situation has changed. Chinese real estate has cooled more rapidly than expected. Meanwhile, China's ruling Communist Party has reversed its position on defaults, pledging to make the economy more productive by allowing market forces a bigger role.

The default comes as Kaisa has been negotiating to restructure its debt with creditors. Its woes stem from a decision by authorities in the company's home base of Shenzhen, a southern economic boomtown next door to Hong Kong, to clamp down on its operations. The company said in February that 11 of its projects faced restrictions or were blocked from sale by the Shenzhen government.

The company, which has delayed filing its financial results for 2014, also said that chairman and founder Kwok Ying Shing resigned at the end of December, followed by other key executives and more than 170 staff. However, Kwok returned to his job earlier this month.
In its statement to the Hong Kong stock exchange, Kaisa said it is working to release its 2014 results and after that, it "will continue its efforts to reach a consensual restructuring of its outstanding debts."
The statement added that "the company hopes to enter into standstill agreements with certain of its offshore debt holders as soon as practicable.