China Default Silver Linings Seen in 100%-Plus Returns on Kaisa
- Kaisa bonds lost 70%, then rallied 167% amid restructuring
- Value Partners says developers don’t want to ‘scare’ investors
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China’s first bond defaults are delivering relatively high recovery rates, providing the promise of profits for some investors.
Kaisa Group Holdings Ltd.’s 2018 notes lost 70 percent from their sale price to 29.6 cents on the dollar in January 2015, when it became the nation’s first developer to default on offshore bonds. A restructuring plan, approved by 96 percent of holders in May, helped the securities rally 169 percent to around 80. Renhe Commercial Holdings Co. offered 77 to 88 cents in a 2014 reorganization, while rival developer Greentown China Holdings Ltd. paid 85 in 2009.