Since a government drive to curb excessive debt in the property sector, China’s developers have sagged under the weight of massive borrowing which funded their building sprees.

The latest property giant with spiralling debt woes is Sunac, one of China’s top developers by sales, which missed a deadline to pay the US$29.5 million offshore bond coupon yesterday.

In a filing to the Hong Kong stock exchange today, the company warned it “does not expect that it will make payments” on an additional US$75 million worth of interest payments due in the coming weeks.

Sunac blamed its liquidity woes on a slump in sales caused by a recent Covid-19 outbreak as well as difficulties obtaining new financing, pointing to “dramatic changes to the macro environment in the property sector in China”.

Contracted sales in the country’s largest cities fell by 65% from a year ago in March and April, due to the coronavirus wave, Sunac said in its statement.

So far, one of the most prominent real estate developers embroiled in Beijing’s drive to stamp out debt is Evergrande – arguably the first domino to fall in China’s property crisis.

Last year it began to buckle, leading to protests from homebuyers and investors as executives struggled to restructure US$300 billion in liabilities.

The company’s travails have reverberated through China’s property sector in recent months, with multiple smaller firms also defaulting on loans.

China’s top leaders in April vowed to “improve real estate policies” and promote “stable and healthy development”, in a meeting seen by analysts as a sign that officials were poised to ease their regulatory grip on the sector.

The International Monetary Fund warned in late January that the property crisis could have spillover effects on the broader economy and global markets.

Sunac’s Hong Kong-listed shares were down more than 5% as of noon today.