Kaisa pays $26m bond coupon just before grace period expires: notice

Chinese property developer Kaisa Group has finally made a $26 million interest payment on one of its bonds, bringing relief to investors who feared it would become the first Chinese property developer to default on its foreign debt.

Kaisa has paid the coupon just before a 30-day grace period to pay the money was up, after missing the scheduled payment deadline on January 8, according to a notice to bondholders seen by Reuters.

"The Principal Paying Agent has informed the Trustee that it received on February 5 a sum of $25.6 million," the notice said referring to the half-yearly interest for the period between July 9 and January 8.

The 2020 bonds the coupon was due on jumped to 80 cents on the dollar after the news.

The developer's funding problems have spooked foreign investors in the Chinese offshore debt market for the past two months, causing high-yield bond issuance to slow to a trickle while the market waited to see how the situation would be resolved.

Offshore bondholders were nervous about how they would be treated in the event Kaisa went bankrupt, and there was concern that onshore creditors would get more favorable treatment.

However the purchase by developer Sunac China Holdings of a 49.25 percent stake in Kaisa on Thursday has appeared to ease the embattled property firm's financing difficulties.

That followed a deal on January 1 in which Sunac agreed to buy two of Kaisa's units and acquire majority stakes in two others in a $385 million deal.

"The fact that someone is stepping in to keep it afloat one way or another is an overall positive for the market," said Gregory Wells, managing director at Forum Partners, a real estate investment and asset management firm.

Kaisa troubles began late last year when the local government in its home base of Shenzhen, South China's Guangdong Province, blocked sales at some of its projects in the city.