The final — and worst — option would be a disorderly series of defaults, which would send shock waves across China’s economy, and perhaps beyond.
Four developers have already run into trouble as China’s once red-hot real estate industry cools rapidly.
The crisis started last month with Evergrande’s warning, which sparked fears about which banks and investors across the world might be exposed to its debt mountain. Since then, very little has been resolved.
A failed payment commonly leads to a grace period, 30 days in this case, but time is fast running out — the default clock started ticking on September 23.
Fantasia said that it would probably “default on [its] external debts,” according to Country Garden.
Ratings agencies S&P and Moody’s slapped “default” credit ratings on Fantasia and said the non-payment of principal would likely also put the company in default on its remaining bonds.
Shares in the company, which has a market value of 3.2 billion Hong Kong dollars ($420 million), are down nearly 60% this year.
While Modern Land appeals for breathing space to sort out its finances, Chairman Zhang Lei and President Zhang Peng are dipping into their own pockets to support the business. They said they would lend the company 800 million yuan ($124 million).
Modern Land’s stock has fallen nearly 50% this year, cutting its market value to 1.2 billion Hong Kong dollars ($160 million).
Homebuilder Sinic Holdings is the latest to join the ranks of struggling developers, saying on Monday that it would likely default on some of its bond payments worth $250 million.
The principal and interest on those bonds are due October 18.
Sinic’s stock has suffered the most of the four developers this year, down nearly 90%. The company’s market value now stands at 1.8 billion Hong Kong dollars ($230 million).
— Jill Disis, Laura He and Michelle Toh contributed to this report.