For the third time in less than a month, cash-strapped developer China Evergrande Group avoided a destabilizing default at the last minute, according to a source who said on Thursday that numerous bondholders had received overdue coupon payments.

Evergrande, the world’s most troubled developer, has been missing deadlines in recent weeks as it deals with more than $300 billion in liabilities, $19 billion of which are international market bonds.

Several investors have received interest payments from the three bond tranches that had a total of more than $148 million due last month, according to Chinese media source Cailianshe.

The payments were made at the end of a 30-day grace period that concluded on Wednesday, as did two additional offshore coupon payments that were due in late September and had grace periods that ended late last month.

Failure to pay would have resulted in the company’s formal default and triggered cross-default clauses for other Evergrande dollar notes, aggravating the world’s second-largest economy’s debt crisis, which has unsettled global markets.

“The near-term fix seems to be happening but there’s a long way to go before this issue gets sorted out. These are early days,” said the source with knowledge of the matter, referring to Evergrande and declining to be named without authorisation to talk to the media.

Evergrande did not react to a Reuters request for comment on its latest bond coupon payment, despite being at the center of a rising liquidity constraint in China’s $5 trillion property sector.

Despite the fact that the developer avoided default once again, the property sector’s difficulties showed no signs of abating, with a mountain of debt due.

Evergrande has a total of $255 million in coupon payments due on December 28. It is being pressured by its domestic creditors, and a suffocating financial crunch has cast a pall over hundreds of its residential projects.

Investors’ attention is now turning to other cash-strapped companies, such as Kaisa Group, who have a slew of offshore payments due in the near future.

After Evergrande, Kaisa has the largest offshore debt of any Chinese developer, and last week asked for aid from creditors. It has about $59 million in coupon payments due on Thursday and Friday.

Kaisa, which made history in 2015 when it became China’s first property business to default on an international bond, has already missed payments on some wealth management products at home.

While the US Federal Reserve cautioned this week that China’s problematic property industry could pose global hazards, there were no strong signals that Beijing will intervene with a broader, national plan to address the problem.

However, Chinese regulators have moved to reassure investors and homebuyers in recent weeks, claiming that risks are manageable and that excessive credit restriction by banks is being addressed.

In recent weeks, regulators and government think tanks have met with developers, and the market is anticipating some softening in loan and housing laws to avoid a hard landing for the sector.

Those prospects, combined with Evergrande’s payment, spurred a relief rally in Chinese property stocks, with an index of real estate A-shares up over 8% and Hong Kong’s Hang Seng Mainland Properties Index up nearly 3%.

At lunchtime, Evergrande’s Hong Kong-listed shares were up 5.5 percent.

Bond prices for Chinese developers, which have been battered hard in recent weeks, have climbed even higher.

Image Credit: Getty

You were reading: Evergrande did it again but the sector’s debt worries persist