A small Chinese real estate company could make waves in the fixed-income and related exchange traded funds markets, raising default concerns on U.S. dollar-denominated emerging market debt as the USD continues to appreciate.

Bond investors are watching China as Kaisa Group Holdings missed a $23 million interest payment earlier this month, which puts the company at risk of being the first Chinese real estate company to default on USD-denominated bonds, Bloomberg reports.

Ever since the Chines government began blocking approvals on property sales and new projects in some areas across China to rein in an overheating housing market and fight against corruption, borrowing cost among many developers have surged. For instance, yields on Chinese dollar-denominated speculative grade debt rose to 12.38% on January 16, the highest since June 2012.

Additionally, observers are worried that the mounting financial stress could spill over into a broader credit crisis in China.

Chinese local-currency-denominated bond ETFs have also been weakening so far this year. Year-to-date, the PowerShares Chinese Yuan Dim Sum Bond Portfolio (NYSEArca: DSUM) dipped 0.8% and Market Vectors ChinaAMC China Bond ETF (NYSEArca: CBON) fell 1.2%. The Global X GF China Bond ETF (NYSEArca: CHNB), though, remained flat.