Kaisa’s securities due 2018, on which it defaulted last month, increased 0.4 cent on the dollar to 63.5 cents as of 11:43 a.m. in Hong Kong for a third straight daily advance. The Shenzhen-based builder will probably base any restructuring offer on a 73 cent proposal Sunac had made, according to one of Kaisa’s noteholders, who asked not to be identified because the details are private.

Investors are now focused on what Kaisa Chairman Kwok Ying Shing, who returned to that role last month after resigning in December, might do next. Six of the eight money managers in Kaisa’s offshore bondholder committee had agreed with Sunac on a proposal that equated to about 73 cents on the dollar in net present value terms for Kaisa’s dollar debentures, people familiar with the matter said earlier this month.

“The offshore bondholders are expecting a better offer by Chairman Kwok or another white knight coming to rescue Kaisa,” said Yin Chin Cheong, a credit analyst at independent research firm CreditSights Inc. in Singapore.

Kaisa’s 10.25 percent securities due 2020 climbed 0.4 cent to 63.5 cents.

The developer needs to restructure some $10.5 billion equivalent of interest bearing debt, including $2.5 billion of dollar notes. Kwok told offshore bondholders earlier this month he may offer them a better restructuring proposal than the one Sunac made, people with knowledge of the matter said at the time.

Negative Outlook

Moody’s Investors Service changed the outlook on its Ca rating of Kaisa to negative on Thursday, saying the termination of the proposed Sunac acquisition will weaken repayment prospects for the homebuilder’s creditors.

The bond’s gain this morning is counterintuitive given that Sunac’s departure from the agreement adds to uncertainty surrounding the repayment of the notes, Charles Macgregor, head of Asian high-yield research at independent research firm Lucror Analytics said today by e-mail.

“I am as bewildered as anyone,” he said. “Apparently hedge funds were picking up the bonds, so they must know something that I don’t.”