Moody’s downgrades Kaisa

Moody’s Investors Service said it downgraded Kaisa Group Holdings Ltd.’s corporate family and senior unsecured debt ratings to Caa3 from B3.

The outlook is negative.

The downgrades follow news that Kaisa failed to repay its HK$400 million loan due Dec. 31, Moody’s said.

The downgrades also reflect Kaisa’s heightened default risk following the default on its loan, which will likely trigger a cross-default on its offshore bonds, the agency said.

Kaisa’s outstanding offshore bonds totaled about $2.5 billion, including renminbi-denominated convertible bonds, Moody’s said.

The company unlikely will be able to repay the bonds using its internal resources if the bond repayments are accelerated, the agency said.

The incident will weaken Kaisa’s access to funding and its sales performance, Moody’s added.

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