July 7, 2022

China’s Shenzhen-based property developer, Kaisa Group Holdings Ltd.’s three units were reported to have their shares suspended from trading on Friday, over an affiliate’s default in a payment to onshore investors.

With China’s property debt crisis jolting other developers, Kaisa which has guaranteed the wealth management product is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades.

According to the property developer and its unit Kaisa Prosperity in separate exchange filings mentioned that their shares were being suspended pending the release of inside information per se.

The developer’s problems have come amid concerns about an increasing liquidity crisis in the Chinese property sector. In recent weeks many developers in the country have been under a series of offshore debt defaults, credit rating downgrades and sell-offs in their shares and bonds.

Over the next year Kaisa has the most offshore debt coming of any Chinese developer after troubled China Evergrande Group, which is reeling under more than $300 billion in liabilities.

According to the developer, Kaisa’s finance unit had missed a payment on a wealth management product (WMP), while it was also raising funds to ease the pressure by taking measures such as speeding up asset sales.

According to few documents, the finance unit by the end of 2022 is planning to sell 18 of its assets in Shenzhen city, mostly retail and commercial properties, worth a total of 81.8 billion yuan ($12.78 billion).

The proceeds from the above will be used to repay the wealth management products. In Shenzhen, the developer is also reported to have around 95 urban renewal projects, which is valued at 614 billion yuan, and can help restock its capital after sales upon completion or early disposal.

According to media outlet Cailianshe, it had cited few unidentified sources familiar with the matter, and mentioned that the state-owned enterprises such as China Resources Land were in talks to buy some of Kaisa’s urban renewal projects in the southern city.

In the next 12 months, Kaisa is due about $3.2 billion in offshore senior notes, with the next maturity worth $400 million that falls on Dec. 7. It also has coupon payments that totals to over $59 million due on Nov. 11 and Nov. 12.