Offshore Bondholders of Kaisa Proposed to Buy Onshore Bad Debts

A group of holders of offshore bonds issued by debt laden Chinese developer Kaisa Group Holdings Ltd. agreed to set aside up to $1 billion to buy bad loans from the firm’s onshore creditors, two people with the direct knowledge of the matter said to Reuters.

Owning onshore bonds would give the offshore bondholders more influence of restructuring of the company.

Kaisa holds the largest offshore bonds among Chinese developers after Evergrande. According to Reuters, Evergrande hold in total more than $300 billion in liabilities including both onshore and offshore debt.

Earlier the developer did not pay $400 million bonds which had matured last week, thus triggered cross default provision across all of its offshore bonds. This also prompted Fitch Ratings to downgrade the company to “restricted default”.

According to Reuters, the same bondholder group holds aggregated $5.5 billion of Kaisa’s total $12 billion offshore bonds. The group earlier offered various options including the option of $2 billion in fresh debt. However, no material consensus has been reached yet.