HONG KONG (Reuters). Several holders of offshore bonds from debt-laden Chinese developers Kaisa Group Holdings Ltd have agreed to make a reserve of up to $1B to purchase bad loans from their onshore creditors. Two persons with knowledge of this matter confirmed that they had made the agreement.

Fears of knock-on consequences have gripped the financial markets over recent months, with investors expressing concern about Kaisa and China Evergrande Group, as well as other Chinese property firms that are in default, despite Beijing trying to reassure them.

Kaisa, China’s biggest holder of offshore debt after Evergrande (which has over $300 billion in liabilities), is China’s top property developer.

People spoke out to say that Kaisa’s onshore debt would allow offshore bondholders greater insight into the financial situation of the developer. This is because it is more senior than the offshore debt.

Kaisa failed to repay the $400 million in bonds it had due last week. This triggered cross-default provision for all of its offshore bonds, prompting Fitch Ratings’ downgrade to “restricteddefault”

A bondholder group representing $5.5 Billion of Kaisa’s offshore bonds totaling $12 Billion had proposed last month other options to Kaisa, such as $2 billion new debt. But, these talks have yet not produced any tangible results.

According to people familiar with the matter, Kaisa’s nonperforming loans would also be an asset in the recovery of offshore bondholders. It would stop current creditors onshore from liquidating assets.

Representatives from the bondholder group refused to comment.

Kaisa didn’t immediately reply to Reuters’ request for comment.