Can China’s Developers Just ‘Lie Flat’ and Not Repay Debt?
With defaults looming, some property firms can still anticipate leniency from investors.
Kaisa Group Holdings Ltd.'s City Plaza development under construction in Shanghai, China.
Photographer: Qilai Shen/BloombergEveryone gets a second chance or numerous second chances — like Argentina, which has defaulted plenty of times, and yet foreigners still buy its bonds. We may now be entering a similar realm with companies, where defaults are so accepted — even expected — they have few consequences.
It’s an urgent question for China’s distressed real estate developers. China Evergrande Group on Friday warned it may not have enough money to “continue to perform its financial obligations.” Meanwhile, Kaisa Group Holdings, the second-largest high-yield issuer after Evergrande, is dangerously close to becoming a repeat offender. Can China’s developers just “lie flat” when it comes to paying their debts — getting by while doing as little as possible?