By Clare Jim

HONG KONG (Reuters) – Country Garden’s entire offshore debt shall be deemed to be in default if China’s largest property developer fails to make a $15 million coupon payment on Tuesday, the highest of a 30-day grace period.Non-payment of this tranche is about to trigger cross defaults in other bonds as is standard in bond contracts.

Lack of payment – which is anticipated after Country Garden last week warned about its inability to satisfy offshore debt obligations – would make the firm probably the most recent in scores of Chinese developers who’ve defaulted.

Country Garden has also missed other offshore payments previously few weeks though those payments still haven’t seen their 30-day grace periods lapse.

Country Garden declined to comment.

With nearly $11 billion of offshore bonds and $6 billion of offshore loans, a default by Country Garden would set the stage for one among China’s biggest corporate debt restructurings.

Country Garden has appointed Houlihan Lokey, China International Capital Corporation (CICC) and law firm Sidley Austin as advisers to take a look at its capital structure and liquidity position and formulate a ‘holistic’ solution.

Last week, printed circuit board maker Kingboard Holdings became one among the first known listed corporations to take legal motion against Country Garden when a unit, which is owed HK$1.6 billion ($204 million), issued a statutory demand searching for repayment.

To this point, developers accounting for 40% of Chinese home sales have defaulted on their debt obligations since 2021, in response to JPMorgan. CreditSights figures show Chinese developers have defaulted on greater than $114.6 billion of $175 billion in dollar bonds outstanding since 2021.

As more developers moved towards restructuring debt, their offshore creditors are expected to be offered less favourable terms amid a worsening outlook for the country’s real estate sector.

($1 = 7.8203 Hong Kong dollars)

(Reporting by Clare Jim; Editing by Edwina Gibbs)