Kaisa Group Holdings Ltd. doubled its debt in six months and triggered China’s first property bond default
"There, in footnote No. 15 of the Shenzhen-based company’s balance sheet, is a reference to 11 billion yuan ($1.8 billion) in advance deposits for property projects from third parties and for 1.15 billion yuan that needed to be refunded.
At issue is whether these deposits were initially classified properly as current liabilities on Kaisa’s books. Analysts at Lucror Analytics Pte, Mitsubishi UFJ Securities HK Ltd. and BDO Ltd. say the payments have characteristics of interest-bearing debt, and booking them the way Kaisa did may have made metrics that investors use to assess a company’s riskiness appear stronger than they actually were."
JPMorgan Checks Fine Print as Kaisa Default Alerts S&P on China
Origins of Chinese Bond Default Buried in Accounting Footnotes
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