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Country Garden last month said it had not paid coupons on the bonds due on Aug. 6 totalling $22.5 million, exacerbating market fear that the developer was slipping into a worsening liquidity squeeze.
Both payments had 30-day grace periods, ending on Tuesday.
The deadline looms just days after Country Garden won approval from onshore creditors to extend a private bond worth 3.9 billion yuan ($536 million), bringing relief to markets.
Failure to make the latest payments before the grace period ends would risk default and demand by holders of other dollar bonds to accelerate payments, bondholders and lawyers said.
Country Garden had not missed a debt payment obligation until it failed to pay coupons on the two dollar bonds last month after slowing home demand hurt its cash flow.
Its predicament highlights the fragile state of China’s real estate sector, which accounts for roughly a quarter of the economy and whose debt situation has been dire since at least 2021.
Authorities have taken a series of policy measures in recent weeks to support the sector and revive a stumbling economy after a post-pandemic recovery fell away quickly.
The measures included lowering existing mortgage rates and preferential loans for first-home purchases in big cities.
“With domestic demand weak and house prices on the slide in smaller Chinese cities in particular, there are still worries about the fragility of the real estate sector,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown, U.K.
“Stimulus efforts to increase mortgage lending are welcome but a much larger package of support is likely to be needed to restore more confidence in the sector, and put exposed property firms on a firmer footing.”
Country Garden did not immediately respond to a request for comment.
