Some context from yesterday's post on Kaisa:

"Trading in Kaisa shares were suspended earlier today, with sources saying that the firm is unlikely to have met its $400 million offshore debt deadline on Tuesday.

Similar to Evergrande's case at the start of the week, this would trigger a cross-default on the firm's offshore bond holdings - totaling to nearly $12 billion."

The downgrade comes as there is no grace period for the $400 million repayment of senior notes on 7 December. The ratings agency adds that:

"Failure to make the principal payment is consistent with Fitch's definition of an 'RD' rating, as the company has experienced an uncured payment default on a material financial obligation but has not yet entered into bankruptcy filing, administration, receivership, liquidation, or other formal winding-up procedures, and has not otherwise ceased operating."

As such, this will trigger a cross-default of Kaisa's other US dollar notes. That makes those payments 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.

So far, there isn't much mention on any plans of restructuring for Kaisa. However, Chinese authorities have come out to play down risks of any major fallout in the property sector.