China property facing key Kaisa test

Kaisa's loan default is a crucial test for offshore investors and lenders. Should Kaisa flunk it, access to funding could be shut off for many property firms.

With a bond interest payment looming, all eyes are on Kaisa after it defaulted on a bilateral bank loan, triggering broader concerns for the Chinese property sector and its ability to continue accessing offshore funding markets.

The default by Kaisa this month on a HK$400 million $51 million loan with HSBC could yet trigger a cross-default on about $2.5 billion worth of its offshore bonds, potentially marking a first for China's sizeable and troubled real estate sector.

Crucially, Kaisa is due to make an interest payment of about $26 million on Thursday on its $500 million 10.25% notes due in 2020.

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