China developer Kaisa's bonds rebound on rescue hopes

HONG KONG (Reuters) - Bonds of struggling Chinese property firm Kaisa Group rallied sharply on Thursday on hopes it could be rescued by a capital injection from rival companies, after it had missed payment deadlines on a bank loan and bond coupon.

Traders say there was speculation the Shenzhen government is holding talks with several property developers which could make a bid for Kaisa.

Bloomberg reported on Thursday that officials in Shenzhen were speaking to a number of developers about making an investment in Kaisa.

Kaisa and Shenzhen local government officials were not available for comment.

Kaisa offshore dollar bonds were trading in the 44/48 cents on the dollar range in thin trade at 0700 GMT, up from the morning's 36/39.

Trading in Kaisa shares is suspended.

Earlier this month Kaisa missed an interest payment on the 2020 bonds, and now has a 30-day grace period to pay up or else become the first Chinese property company to default on its foreign debt.

The company is struggling after a string of senior executives left unexpectedly and government officials blocked sales at some of its projects in the Southern Chinese city of Shenzhen.

The Shenzhen-based company has since received a waiver from banking group HSBC on a loan it failed to repay late last month. The HK$400 million (S$68.83 million) loan and its interest became compulsory on Dec. 31, after its chairman resigned.