Investor confidence in China’s troubled property sector has been rocked again this week by reports that one of the country’s largest private building conglomerates missed interest payments on two bonds. China’s vast real estate industry was long an important engine of growth in the world’s second biggest economy, accounting for as much as 30% of the country’s GDP. But many major developers racked up huge debts, typified by the collapse two years ago of Evergrande which was followed by a wave of defaults across the industry. The latest major industry player to get into trouble is Country Garden, once China’s largest developer. Shares in the construction giant have plunged 16% in Hong Kong since Tuesday, after reports by Reuters and Chinese media that it missed interest payments on two US dollar-denominated bonds. Several of Country Garden’s yuan-denominated bonds were suspended from trading in Shanghai and Shenzhen on Tuesday after they dropped by more than 20%. Country Garden did not respond to a request from CNN for comment. On Tuesday, state-owned media outlet Paper.cn, citing an anonymous company source, reported that Country Garden suffered “temporary liquidity pressure” due to deteriorating sales and a difficult refinancing environment. It was “actively” seeking funds to resolve the debt crunch and would protect the legitimate rights of creditors, the person was quoted as saying. Although Country Garden still has a 30-day grace period before it can be labeled as a defaulter, the collapse in market confidence shows investors are worried about the company’s future. Ranked No.1 by sales last year, Country Garden is one of the few major private developers yet to default since a liquidity crisis engulfed China’s property sector more than two years ago. But the company slid to No. 5 by sales in the first half of this year, according to the China Index Academy — a leading Chinese real estate research firm, a sign that even the biggest players in the industry are suffering from the worst slump the country’s property market has seen. “If Country Garden, the biggest privately owned developer in China goes down, that could trigger a crisis in confidence for the property sector,” said Edward Moya, a senior market analyst for Oanda. Growing pressure Country Garden’s stock has lost more than 30% of its value since last week, after it warned of an unaudited net loss for the first six months of the year. “The company will actively consider taking various countermeasures to ensure the security of cash flow,” it said in an exchange filing on July 31. “Meanwhile, it will actively seek guidance and support from the government and regulatory authorities,” it added. The next day, it was reported to have canceled an attempt to raise $300 million by selling new shares. On Aug. 3, Moody’s downgraded Country Garden’s credit rating to B1 — meaning it considers its debt to be “high risk.” “The downgrade reflects our expectation that Country Garden’s credit metrics and liquidity buffer will weaken due to its declining contracted sales, still-constrained funding access and sizable maturing debt over the next 12 to 18 months,” Kaven Tsang, a senior vice president at Moody’s, said in a statement. Property crisis deepens China’s property industry has been mired in a historic downturn in the past two years. Households have grown reluctant to purchase new homes, as the now-defunct Covid curbs, falling home prices and rising unemployment discouraged would-be buyers. A series of major defaults by property giants in 2021 also undermined confidence in the sector and led to many home buyers paying for apartments they never received, sparking rare protests. New home sales by China’s 100 biggest developers dropped by 33% in July from a year ago, marking the steepest monthly decline since July 2022, according to industry statistics released last week. Investors see the revival of the sector as crucial to the recovery of the economy after three years of self-imposed coronavirus pandemic isolation. Recent signals from top policymakers suggest Beijing is getting increasingly worried about growth and have recognized the need to bolster the sector. Last Monday, Premier Li Qiang pledged to “adjust and optimize” policies to ensure the healthy and stable development of the property market, urging cities to roll out measures that meet their own needs, Last month, the People’s Bank of China said it would give developers another 12 months to repay their outstanding loans due this year.