Date
25 September 2017
A loan default by Kaisa, which is led by its chairman Kwok Ying-shing (inset), is unlikely to drag investor confidence in the renminbi bond market, says David Chin of UBS. Photo: HKEJ
A loan default by Kaisa, which is led by its chairman Kwok Ying-shing (inset), is unlikely to drag investor confidence in the renminbi bond market, says David Chin of UBS. Photo: HKEJ

RMB bond market seen robust despite Kaisa default

Kaisa Group Holdings’ (01638.HK) default on a loan from HSBC Holdings Plc (00005.HK) is unlikely to affect new issuances in the offshore renminbi bond market, according to a senior executive at UBS.

David Chin Hung-I, managing director and head of investment banking for UBS Asia, said he expects issuance of the so-called Dim Sum bonds to continue to rise, especially from large corporates and lenders, the Hong Kong Economic Journal reported Thursday.

UBS estimates that total volume of bonds issued in Asia could top US$200 billion this year amid growing corporate restructuring activities. 

The concerns over Kaisa are unlikely to hold back the market.

Kaisa, a Chinese property developer, has been called in by HSBC on a loan plus interest worth a combined HK$400 million (US$51.58 million). 

The company’s corresponding corporate interest rate has surged to over 65 percent, leading to concerns over potential chain effects and cross defaults.

Some financial institutions based in Shenzhen are said to be looking into the possibility of taking legal action to freeze the developer’s assets. Kaisa is said to have faced a fee call worth HK$1.52 billion from a business partner.

It also has a HK$200 million interest payment due Thursday on some bonds that will mature in 2020.

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VW/JP/RC

Freelance journalist

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