After narrowly avoiding default twice already this month, troubled Chinese real estate developer Country Garden will face yet another liquidity test on Monday with a deadline to pay $15 million in interest associated with an offshore bond.

Country Garden will have a 30-day grace period to pay the penalty before it is deemed in default. Country Garden’s financial difficulties have deteriorated the outlook for the real estate sector and prompted a slew of support measures from Beijing.

In September 2025, the $500 million, 6.15% bond matures. One holder of the bond tranche, who requested anonymity because they were not licenced to speak to the media, said that the coupon payment had not been received by late Monday afternoon.

According to Sandra Chow, co-head of Asia-Pacific research at CreditSights, if Country Garden doesn’t pay the coupon before the grace period expires in mid-October, the principal will become due and any failure to service will result in cross-default conditions.

“It’s going to be really hard,” for Country Garden to meet debt obligations due to its tumbling cash levels at a time when property sales in the world’s second-largest economy remained very weak, Chow said.

An inquiry from Reuters for comment regarding Country Garden’s most recent debt repayment obligation was not answered by a spokesman.

Shares of Country Garden, one of the few significant Chinese developers that has not had a debt default, closed the day down nearly 2%, outpacing a decline in the benchmark index of 1.4%.

The business issued a warning last month about default risks if its financial performance kept declining. It only had around 101 billion yuan in cash as of June, but it has debt of 108.7 billion yuan ($14.9 billion) that is due within a year.

It avoided default by obtaining creditors’ consent to postpone payments for an onshore private bond, which was a huge relief for the troubled Chinese developer and the struggling real estate market.

The developer missed $22.5 million in coupon payments related to two dollar bonds in August, but was able to transmit the money before a grace period expired this month, preventing a default.

Onshore investors accepted a three-year repayment extension on seven additional Country Garden notes last week.

If Country Garden does not receive cash support soon, many of its creditors think that company will be forced to restructure its offshore debt.

If the developer attempts to restructure debt, several offshore creditors have begun discussions with the law firms Kobre & Kim LLP in New York and Ashurst in London and are considering establishing groups.

The property industry, which makes up about a fifth of China’s economy and has been suffering from an extraordinary liquidity crisis since 2021, has received backing from the government.

However, a poll study released by JPMorgan last week revealed investors’ top worries were “ineffective” policy responses, a banking system spillover, and a twofold dip un real estate sales.

The study of Chinese and international investors revealed that the property crisis is still far from over.

Two state-owned financial companies have been hired to support operations and management for ailing shadow bank Zhongrong International Trust Co. as an indication of Beijing’s efforts to control spillover risks.

Since late July, Zhongrong, which has historically had significant real estate exposure, has fallen behind on payments for dozens of so-called trust products, causing market turmoil and escalating concerns that the crisis in the real estate market could endanger the financial system.

It wasn’t immediately obvious if the two enterprises’ backing had been orchestrated by the government, but Beijing has rescued ailing financial institutions in the past by enlisting state-owned companies to reduce the risk of a larger contagion.

The establishment of a new state-backed insurance business, Hai Gang Life, to assume the assets and liabilities of the insurance division of insolvent developer China Evergrande Group was also given approval by China’s financial regulator on Friday.

During the transition to the state-backed company, the new company would protect the interests of the unit’s customers and creditors, the regulator stated in a statement.

Evergrande, the most indebted real estate developer in the world and the face of China’s real estate crisis, filed for bankruptcy in late 2021, which set off a series of defaults at other builders.

(Adapted from ChannelNewsAsia.com)