Scott Murdoch, Samuel Shen

HONG KONG, (Reuters) – Chinese developer Kaisa Group Holdings Ltd will not win approval from bondholders to prolong the maturity of a bond worth $400 million due next week. Analysts say this puts more pressure on its peers. Kaisa proposes to defer the maturity date of the bond for 18 months, in light of increasing creditor concern about Chinese property developers’ ability meet short-term offshore repayment obligations.

In late October, some developers called upon the regulators in an effort to increase their off-shore bond maturities and undertake restructuring of debt. The sector has been suffering from increasing defaults.

Analysts said that Kaisa’s struggles to get a lifeline from creditors will impact other small developers who are trying to avoid lengthy and complicated litigation or restructuring.

James Wong is the portfolio manager at GaoTeng Global Asset Management Ltd. He stated that Kaisa’s debt restructuring was “certain” as there was no threshold for passing the bond maturity extension request.

He said that investors are still waiting for the day of restructuring to arrive, and added smaller Chinese developers would continue to be a challenge.

Kaisa requires at least 95% approval from its bondholders to accept a proposal for $400 million in offshore bonds at 6.5% interest rates due Dec. 7, 2023 to swap with new notes due June 6, 20,23.

The Chinese firm became the first to default on their dollar bonds in 2015 and was the first Chinese developer of property. It has now stated that its note exchange proposal will end at 4pm London time Thursday, unless the company extends or terminates it.

Kaisa is China Evergrande Group’s second biggest U.S. Dollar bond issuer. It was China’s number one developer, and it now lies at the center of China’s current liquidity crisis. Recent signs have indicated that Kaisa’s exchange proposal was rejected. A letter from their financial advisor, sent to Kaisa’s board this week and which was available for review by Reuters shows that at least one Kaisa bonds holder has rejected the offer.

The letter stated that “The Group believes the terms of this exchange offer are unacceptable” and showed a refusal on the company’s part to look at more holistic and appropriate ways of addressing Kaisa’s short-term liquidity problems.

Kaisa received a letter from bond holders requesting a forbearance period’ for the company in order to postpone repayments and to keep negotiations going.

Two sources familiar with the matter told Reuters that the bond holders who claim to own half of the debt Kaisa wants to exchange have offered the Chinese company $2 billion to finance its debt.

We are unable to disclose the exact terms or details of the financing. Due to confidentiality restrictions, the sources of funding could not be identified.

According to sources, Kaisa had not interacted with the group much since the Chinese developer offered them a job.

Kaisa didn’t immediately reply to Reuters’ request for comment.