(Bloomberg) -- Kaisa Group Holdings Ltd. has become the latest Chinese property developer to default, as Fitch Ratings downgraded its rating following a missed dollar bond payment.  

Fitch cut its long-term foreign-currency issuer default rating on Kaisa to restricted default, citing its failure to repay a $400 million dollar bond that matured Tuesday.

The non-payment of that security also “triggered events of default for the company’s other U.S. dollar notes, which will become immediately due and payable if the bond trustee or holders of at least 25% in aggregate principal amount of the offshore notes declare so,” Fitch said.

Kaisa is the third-largest issuer of dollar notes among Chinese developers, with $11.6 billion outstanding, including the Dec. 7 bond. It had become a symbol of the boom years in Chinese credit markets after emerging from a high-profile default in 2015.

The default adds to contagion risks in Chinese credit markets, which are already grappling with a looming restructuring by China Evergrande Group after noteholders were yet to receive overdue dollar bond coupon payments. 

A group of Kaisa bondholders is close to signing non-disclosure agreements with the developer, people with knowledge of the matter said earlier. Such a deal could pave the way for discussions around a potential financing deal for the beleaguered firm.

New York-based Lazard Ltd. is advising the group of Kaisa bondholders. The same group sent Kaisa a formal forbearance proposal on Monday, people familiar with the matter said. Shenzhen-based Kaisa failed last week to win approval for a debt swap that would have extended its repayment deadline. 

While markets have so far taken the developments at Evergrande and Kaisa in their stride -- thanks largely to signals of policy easing by the Chinese government -- offshore borrowing costs for all but the strongest developers remain prohibitively expensive. The yield on a Bloomberg index of Chinese junk-rated dollar bonds exceeds 20%.

Shares of Kaisa were halted in Hong Kong Wednesday pending an announcement by the company. The stock has dropped 75% this year. 

©2021 Bloomberg L.P.