Chinese real estate developer Kaisa has officially defaulted on its debt.
It’s also a reminder that China’s economy is slowing, real estate activity is contracting, and developers are financially-stretched.
In a statement from the Hong Kong stock exchange on Monday, Kaisa announced that it did not make an interest payment on either of its bonds due in 2017 or 2018.
The company didn’t pay $US16.1 million in interest on its 2017 notes, or $US35.5 million in interest on its 2018 notes. This $US51.6 million missed payment is the first time a Chinese developer has defaulted on US dollar-denominated debts, according to Bloomberg.
Back in January, Kaisa appeared to be on the road to defaulting on its debt, after reports indicated that the company hadn’t paid its debt, though company representatives said that they “weren’t sure” if the payment was made or not.
Kaisa said in its statement that it, “will continue its efforts to reach a consensus al restructuring of its outstanding debts,” and that the company, “hopes to enter into standstill agreements with certain of its offshore debt holders as soon as practicable.”
The news from Kaisa comes amid concerns over the health of the Chinese economy and fears over a bubble in the country’s stock market.
On Monday, stocks in China were lower despite news over the weekend that the People’s Bank of China cut its reserve requirement for banks, potentially improving liquidity in China’s financial system.
On Friday, Chinese stock futures tumbled following news that regulators were seeking to crack down on some margin trading while also making it easier for investors to bet against stocks.