S&P downgrades Kaisa

Standard & Poor’s said it lowered the long-term corporate credit rating on Kaisa Group Holdings Ltd. to SD (selective default) from BB-.

S&P also said it lowered Kaisa’s long-term Greater China regional scale rating to SD from cnBB+, along with the rating on its senior unsecured notes to CC from BB- and the Greater China regional scale rating to cnCC from cnBB+.

All of the ratings were removed from CreditWatch, where they were placed with negative implications Dec. 23, the agency said.

The downgrades were due to Kaisa’s default on HK$400 million offshore term loan, S&P said. This could cause an acceleration of debt repayment on all its other debt, the agency said.

Kaisa’s other debt instruments have cross-default clauses, the agency added.

The company failed to repay its HK$400 million offshore loan Dec. 31 when the resignation of Kaisa’s chairman, Kwok Ying Shing, triggered a mandatory repayment, S&P said.

The rating on the company’s offshore senior unsecured notes also was downgraded because there is a high likelihood that the company will default on its upcoming obligations, the agency said.

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