Trading in shares of Chinese developer Kaisa suspended

Trading in shares of embattled Chinese developer Kaisa Group Holdings (1638.HK) was suspended on Wednesday, according to the Hong Kong stock exchange.

The suspension comes after a source with direct knowledge of the matter said Kaisa was unlikely to meet its $400 million offshore debt deadline on Tuesday.

Non-payment by Kaisa would push the 6.5% bond of Kaisa, China’s largest holder of offshore debt among developers after Evergrande, into technical default, triggering cross defaults on its offshore bonds totalling nearly $12 billion.

To avoid default, bondholders owning over 50% of notes due on Dec. 7 and Kaisa notes worth a total of $5 billion sent the company draft terms of forbearance late on Monday, a separate source with direct knowledge of the matter said.

Even in the case of a technical default, Kaisa and offshore bondholders could discuss forbearance terms, two sources with knowledge of the matter said.

Kaisa, whose shares rose 1.1% on Tuesday, said it was open to discussion on forbearance, without elaborating.

Larger rival China Evergrande (3333.HK) also did not make payments on some U.S. dollar bonds at the end of a month-long grace period, sources familiar with the situation told Reuters on Tuesday, setting the stage for a massive default by the world’s most indebted property developer.