Zhenro Properties’ shares and international bonds fell even more on Monday after the company indicated existing internal resources might be insufficient to discharge the debt due in March, Reuters reported on Feb. 21.

The comment was contrary to a previous commitment to redeem a $200 million perpetual bond due on March 5. Zhenro boasted that one of its units had secured a $1.44 billion credit line from state-owned Bank of China Ltd. Zhenro’s short-dated bonds were trading at near 80 cents on the dollar, compared with 17 cents for embattled property giant China Evergrande Group.

Shanghai-based developer Zhenro said the lack of capital market funding and bank loans to property developers since the second half of last year had caused liquidity pressure. As a result, it may be unable to redeem the notes due on March 5, according to a Hong Kong stock exchange filing.

In addition, Zhenro’s Hong Kong-listed shares plunged more than 13% to a record low of 9.6 cents. Its Aug. 3 dollar bond traded at 15.871 cents on the dollar, down from 20.345 cents on Friday.

If it defaults, Zhenro, China’s 30th-largest property developer by sales, also asked perpetual bondholders to waive claims against the business. If they agree, it will pay $17.50 per 1,000 dollars of the principal amount.

After the consent solicitation, Fitch downgraded Zhenro’s long-term issuer default rating from B to C. Fellow rating agency Moody also lowered Zhenro’s rating to C2 from B3, reflecting heightened default risk. In addition, Moody’s said in a statement, “Zhenro had provided inconsistent debt repayment plans to the market over the past two months, which raises concerns over the company’s financial strategy and risk management.”

According to Refinitiv data, Zhenro has another $50 million bond due on March 6, with a total of $3.65 billion in international bonds outstanding.

The company’s shares and bonds first took a hit on Feb. 11 after reports that it had plans to restructure its dollar bonds. The company issued a statement on Feb. 14, calling the reports “untrue and fictitious” and saying it reserved the right to pursue legal action.

Home sales have continued to plunge, crimping developers’ primary source of cash. As reported by BloombergQuint, Zhenro said on Friday that its sales had tumbled nearly 30% in January from a year earlier.

According to Leonard Law, senior credit analyst at Lucror Analytics, “Zhenro’s proposal is highly disappointing and akin to a distressed restructuring, as it gives perpetual holders lower compensation compared to the original terms.”

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