(Adds detail on price moves and analyst comment)
* Kaisa requests help to pay investors - source
* Developer met Chinese govt think-tank in Shenzhen - source
* U.S. Federal Reserve warns strains could hit global growth
* Investment grade Chinese firms being dragged in
* Fitch downgrades Kaisa, citing deteriorating liquidity
SHANGHAI/BEIJING/LONDON, Nov 9 (Reuters) - China's property
sector suffered a fresh pounding on Tuesday as Kaisa Group made
a desperate plea for help, Beijing-backed firms began to wobble
and the U.S. Federal Reserve sent its first direct warning about
potential global damage.
Bonds issued by developers slumped after sources said Kaisa
, which was the first Chinese property firm to default
back in 2015, told a meeting on Monday with a government
think-tank and some of its peers and the country's banks and
that it needed help to pay loans, workers and suppliers.
Much larger companies were tumbling too. Country Garden
, China's biggest developer by sales, and China Vanke
, which is seen as one of the sector's most solid
firms due to partial state ownership, saw their biggest bond
price falls on record.
Investment grade bonds issued by Shimao, meanwhile, fell
below some of their junk-rated rivals.
"Investment grade firms and the state-owned names are now
feeling the heat," said Seaport credit analyst Himanshu Porwal.
"It is more about the fear factor playing out and people
trying to exit as soon as they can and going into 'sell first,
think later' mode."
The slides in bond prices came just hours after the U.S.
Federal Reserve warned that China's troubled property sector
could pose global risks https://reut.rs/3C4DMTn.
"Financial stresses in China could strain global financial
markets through a deterioration of risk sentiment, (and) pose
risks to global economic growth," the Fed said in its
twice-yearly financial stability report.
Underscoring the liquidity crunch, Fitch downgraded Kaisa
closer to default on Tuesday, citing its deteriorating finances,
struggle to sell assets and undisclosed debt in its wealth
"We sincerely ask investors to give Kaisa Group more time
and patience," the company said in a plea on its official WeChat
account late on Monday.
CRY FOR HELP
Kaisa is China's 25th largest developer by sales but only
China Evergrande Group, the poster child for the
current crisis, has a bigger bond repayment bill next year.
Kaisa attended a meeting on Monday with the Development
Research Center of the State Council, other developers and banks
in the southern Chinese city of Shenzhen, a well-placed source
The think-tank makes policy proposals on China's national
development and its economy but is not a decision-making body.
At the meeting, Shenzhen-based Kaisa urged state companies
to help struggling privately run peers by buying some of their
projects and making other strategic purchases, the source said.
Participants at the meeting included China Vanke, Ping An
Bank, China Citic Bank, China Construction
Bank, CR Trust, Southern Asset Management and
developer Excellence Group, according to the source.
Kaisa said it was facing significant difficulties and some
financial institutions had transferred funds from its accounts.
It also called for lawsuits seeking to freeze its assets to be
handled centrally in a Shenzhen court, the source said.
Kaisa, Vanke and Citic Bank declined to comment. Neither
Excellence, other banks that participated in the meeting nor the
State Council Information Office immediately responded to
requests for comment.
China's property woes rattled global markets in September
and October. There was a brief lull in mid-October after Beijing
tried to reassure markets the crisis would not be allowed to
spiral out of control but concerns have resurfaced https://reut.rs/3qmXXK4.
"The problem is, it is getting systemic," said Viktor Szabo,
a London-based emerging market portfolio manager at abrdn,
saying many Chinese property developers could no longer access
borrowing markets and get financing.
"The big issue is that we don't know what (Beijing's)
ultimate plan is ... and how long can you hold on to the view
that China can handle it?"
Trading in shares of Kaisa and three of its units was
suspended last week, a day after an affiliate missed a payment
to onshore investors.
Evergrande, the world's most indebted developer, has been
stumbling from deadline to deadline in recent weeks as it
grapples with more than $300 billion in liabilities, $19 billion
of which are international market bonds.
Another overdue $148 million bond payment must be made on
Wednesday and it has coupon payments totalling more than $255
million on its June 2023 and 2025 bonds on Dec. 28.
Beijing has been prodding government-owned firms and
state-backed property developers to purchase some of
Evergrande's assets to try to control the fall.
Its shares ended higher on Tuesday after it sold a $52
million stake in HengTen Networks Group, taking its
fundraising from selling down its holding in the Chinese
internet services provider to $144 million since Nov. 4.
Separately, shares of small developer China Aoyuan
jumped more than 6% after Infini Capital told Reuters on Tuesday
it had been accumulating stakes in the firm's property
management unit Aoyuan Healthy Life Group and was now
its second-largest shareholder.
($1 = 7.7840 Hong Kong dollars)
(Reporting By Samuel Shen, Cheng Leng and Tony Munroe;
Additional reporting by Joy Leung and Clare Jim in Hong Kong and
Marc Jones in London; Writing by Anne Marie Roantree; Editing by
Kim Coghill, Muralikumar Anantharaman, Jan Harvey and David