Fitch Downgrades China Evergrande, Kaisa

Developers China Evergrande Group and Kaisa Group were downgraded to "restricted default" by rating agency Fitch, citing non-payment of offshore bond dues.

The downgrades came on Thursday even as Evergrande and Kaisa have not officially announced the defaults that could result in long debt restructuring processes.

In its note on Evergrande, Fitch said the developer did not respond to its request for confirmation on the coupon payments worth US$82.5 million that were due last month with the 30-day grace period ending this week.

"We are therefore assuming they were not paid," it said.

Fitch defines a restricted default as indicating an issuer has experienced a default or a distressed debt exchange, but has not begun winding-up processes such as bankruptcy filings and remains in operation.

The non-payment has triggered an "event of default" on Evergrande's bonds and its other US dollar notes will become due immediately and payable if the bond trustee or holders of at least 25 percent in aggregate amount declare so, Fitch said.

The rating agency also said Kaisa, a smaller property company but one of China's most indebted, had defaulted on US$400 million of bonds. (Reuters & AFP)