Like its troubled competitor Evergrande, any collapse of Country Garden would have catastrophic repercussions for the Chinese financial system and economy.
The privately owned firm estimated its debt at some 1.15 trillion yuan ($159 billion) at the end of 2022, and had said on the weekend that it would suspend trading of onshore bonds from Monday.
"We're facing the greatest difficulties since our establishment," Country Garden boss Yang Huiyan said in a statement on Friday.
Its shares plummeted more than 18 percent in Hong Kong on Monday.
Country Garden is on Forbes' list of the 500 largest companies in the world, and Yang was until recently one of the richest women in Asia.
The firm has long been deemed financially solid but was unable last Monday to make two bond payments, and after a 30-day grace period, it risks defaulting in September if it still cannot pay.
Additional liabilities mean other estimates of its overall debt are as high as 1.4 trillion yuan ($193 billion), according to Bloomberg.
Adding to the pressure, 31 billion yuan ($4.27 billion) in the firm's bonds are set to mature in 2024, according to rating agency Moody's, which last Thursday downgraded its rating for the group to "Caa2", indicating "very high credit risk".
Country Garden said this month that it expected a net loss for the first half of this year of 45 billion to 55 billion yuan (about $6.2 billion to $7.6 billion).
"Due to the recent deterioration of sales and refinancing environment, the available funds in the book of the Company have been continuously reduced, resulting in a phased liquidity pressure," Country Garden said in an announcement at the Hong Kong Stock Exchange.
In the last month, 42 percent of the company's value has been wiped out.
- Boom and bust -
Housing reform in China during the late 1990s unleashed a boom in the real estate sector, spurred by social norms that consider owning a property a prerequisite for marriage.
But the massive debt accrued by the industry's biggest players has in recent years been perceived by Beijing as an unacceptable risk for China's financial system and overall economic health.
To reduce the sector's indebtedness, authorities have since 2020 gradually tightened conditions for developers' access to credit, drying up sources of financing for firms already in debt.
A wave of defaults followed -- notably that of Evergrande -- which undermined the confidence of potential buyers and reverberated through the industry.
The downturn in the once-thriving sector has occurred against a backdrop of a general economic slowdown in China.
Country Garden is particularly susceptible to weak demand because it focuses on the lower end of the property market, launching ambitious projects in secondary cities where local buyers wield less purchasing power.
sbr-pfc/je/qan
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