Kaisa Group Holdings Ltd.  can’t say whether it would make critical bond interest payments that are due Thursday, according to a Bloomberg article.

BondIn an emailed statement to Bloomberg, Kaisa spokesperson Lin Yikang wrote  that the company couldn’t answer the question of whether it would pay roughly $26 million in interest on its  dollar-denominated 10.25% 2020 debentures due today.

The Chinese residential and commercial builder defaulted on a HK$400 million ($51.6 million) loan from HSBC Holdings Plc., after Kwok Ying Shing resigned as chairman on Dec. 3, according to Bloomberg. He was followed out the door by now ex-CFO Cheung Hung Kwong,  former vice chairman Tam Lai Ling and Joanne Mo, an investor relations executive.

This is the first time a Chinese developer has defaulted on dollar-denominated bonds, Dennis Lee, a Hong Kong-based analyst at Standard & Poor’s, told the news service.

In a “clarification announcement” posted Wednesday on its website, Kaisa said that, contrary to reporting in “certain news articles” on Tuesday, no company board meeting was held on Tuesday and the company “had not passed any resolution in relation to the winding up and restructuring of the group.”

“The company is currently assessing the overall impact on the financial position as a result of the recent developments of the group as disclosed in the announcements and will publish an announcement to provide an update as soon as possible,” Kaisa stated.

The troubles at Kaisa are reflective of the overall strains in the Chinese economy, according to the Bloomberg article. Growth in the country’s gross domestic product will slow to 7% this year from an estimated 7.4% in 2014, the slowest in more than two decades, according to analysts surveyed by Bloomberg.

“It’s a normalization of the Chinese market where you’re finally starting to see defaults,” David Gaud, a Hong Kong-based fund manager at Edmond de Rothschild Group, said in the Bloomberg article. “Over the medium to long term it’s a positive. Companies which aren’t sustainable economically are no longer supported.”

Source: Bloomberg

Image by Alistair

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