Cash-strapped Chinese developers are struggling to negotiate new terms with their bondholders to avoid defaults, with Shimao Group and Yuzhou Group the latest to seek an extension of their debt repayments. The market is also watching the outcome of China Evergrande Group’s onshore meeting with bondholders as the voting period to approve the extension expires on Thursday.

So far, the firm has met onshore bond payments, although it has defaulted on some offshore bonds. Struggling with more than $300 billion in liabilities, the world’s largest real estate firm is seeking a six-month extension of maturity and coupon payments on a 4.5 billion yuan ($157 million) bond.

Chinese real estate developers are facing unprecedented liquidity shortages due to years of regulatory restrictions on borrowing, leading to a string of offshore debt defaults, credit rating downgrades and sell-offs in developer stocks and bonds. A World Bank economic outlook report earlier this week said a severe and prolonged downturn in China’s real estate sector would have serious repercussions for the entire economy, as the combined onshore and offshore liabilities of developers account for nearly 30% of the country’s GDP. It warned of the risks and potential contagion costs of a sharp deleveraging of large Chinese real estate companies. According to documents seen by Reuters on Thursday, Shanghai-based Shimao will hold online meetings with lenders on two asset-backed securities (ABS) on Jan. 17 to vote on proposals to extend payments.

Two onshore ABS products totaling ¥1.17 billion ($183.91 million) are due to mature at the end of this month, and Shimao is seeking to extend the payment terms to the end of 2022 while making some payments in stages until the new maturity date. documents and confirmed by sources. Last week, Shimao said it missed a payment on a $101 million trust loan.

Rating agency S&P, which downgraded the company again this week to ‘B-‘, said Thursday it withdrew the rating at the company’s request. Yuzhou, based in the eastern coastal city of Xiamen, also announced a proposal to exchange two of its 2022 dollar bonds maturing later this month for a total of $582 million to extend the maturity by one year to avoid default.

Coupon payments totaling $110 million are expected to be delayed and are due in January and February, Yuzhou said in a statement. It is also seeking consent from the holders of all its other $4.5 billion in bonds to change the terms to help it avoid cross-default if other bondholders demand repayment.

MAY BE MORE Nomura estimates the sector’s cash shortage could worsen as firms will need to meet onshore and overseas maturities totaling about ¥210 billion each in the first and second quarters, compared with ¥191 billion in the fourth quarter of 2021. Developers are also desperately raising funds to pay down debt. Major player Sunac China Holdings Ltd said on Thursday it would raise $580.1 million from a share sale. A source close to Sunac told Reuters the company had no immediate plans to float its shares or those of its Sunac Services unit to raise capital, adding that it had enough funds to meet debt repayment obligations due in the short term and to develop the project.

Media reported on Wednesday, citing company registry records, that shares worth 110 million yuan in several companies owned by Sunac had been frozen by a Shenzhen court. Responding to the reports, Sunac said the freeze was due to a “minor dispute” between the firm and its partners, but the parties had reconciled and decided to unfreeze the shares.

Separately, smaller developer Agile Group pledged 65.6 million shares in its property management unit, A-Living Smart City Services, on Jan. 6 for an unspecified amount, stock exchange documents showed. Shares of Chinese developers broadly closed down on Thursday, with Sunac and Agile falling 22.6 percent and 13.3 percent, respectively.

 Shimao fell 9.4 percent and Yuzhou fell 6.9 percent. Evergrande fell 3.6 percent. One Yuzhou yuan-denominated bond fell 21.8% in the morning before it was ordered to temporarily suspend trading. Two Shanghai Shimao bonds were also suspended, but after rising more than 30%.