** Chinese property developer Kaisa drops 6 percent, the third straight day of declines after resuming trade following a suspension of more than a month.
** Bonds fall by 5 to 8 points across maturities on worries the company may not repay investors in full, following a notice to the stock exchange.
** Kaisa Group said on Wednesday it had begun reviewing and assessing options for its debt obligations as part of plans for rival Sunac China Holdings Ltd to take a stake in the company.
** Kaisa’s liquidity will be tested once again as it has coupon payments due next month on its bonds due 2017 and 2018. Last week, it paid a coupon on its bonds due 2020 in the grace period afer missing the deadline in January.
** Overnight the company said in a statement “bondholders should not expect payments of principal and interest according to existing terms. The company expects material modifications to the Group’s offshore debt obligations to be necessary so as to not frustrate the transaction under the Share Purchase Agreement”.
** Lucror Analytics said in a note: “We believe that this will result in a distressed exchange for USD bondholders. A distressed exchange occurs when an offer is made to creditors that is less than the original obligation with the effect of the transaction being the avoidance of an eventual payment default.”