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Chinese property developer Kaisa jumps on bond exchange offer

By Mensholong Lepcha

06:51, 25 November 2021

Aerial view of residential apartments in Pudong, Shanghai
Aerial view of residential apartments in Pudong, Shanghai – Photo: Shutterstock

Chinese property developer Kaisa Group jumped as much as 23.7% on Thursday after it resumed trading following a near three-week trading halt.

Debt-ridden Kaisa Group said it will exchange its 6.5% senior notes due on 7 December for new notes payable on 6 June 2023 at the same interest rate, in order to improve its overall financial condition.

The company added it will commence with the exchange offer for a minimum of 95% of the outstanding principal amount of the existing notes.

Missed coupon payments on two notes

“If the Exchange Offer and Consent Solicitation are not successfully consummated, we may not be able to repay the Existing Notes upon maturity on December 7, 2021, and we may consider alternative debt restructuring exercise,” the company said in a stock exchange filing.

Kaisa Group added that interest due on two notes, which was supposed to be paid on 11 November and 12 November, remain unpaid, as of Thursday. Non-payment of coupons after 30 days will result in an official default.

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The company further added that certain wealth management products guaranteed by its onshore unit became due and payable in October and November.

Insufficient resources

“We estimate that our existing internal resources may be insufficient to repay the Existing Notes at maturity,” said Kaisa Group.

“Despite our efforts to reduce our interest-bearing debt in response to government regulations, the current sharp downturn in the financing environment has limited our funding sources to address the upcoming maturities,” Kaisa Group added.

The deadline for existing bondholders to exchange said notes is set for 2 December.

Read more: Technology stocks rebound in Asia-Pacific stock markets

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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