China’s property development fell into a deep slump, and pandemic restrictions have worsened a liquidity crisis in real estate. Adding to pressure on the sector is the weakening yuan, making it more expensive for the companies to fulfill their offshore debt maturities obligations.

Combined sales at the top 100 developers halved in the first four months of this year. In March, property loan growth slowed to the weakest pace in over two decades.

Amid the risk of joining Evergrande Group, Kaisa Group, and Sunac in the default list, Zhongliang Holdings calls on the bondholder’s approval to extend the repayment.

The total amount of 729 million dollars payment will be due next week while the company is struggling to sell enough houses or secure refinancing for the redemption. As a result, Zhongliang Holdings asked holders of its May and July 2022 notes in late April to delay the maturities by exchanging their bonds for new issuance due next year.

According to Reuters, Zhongliang Holdings would need to pay an extra 1.25 million dollars on its bond coupons due to the yuan depreciation.

Gary Ng, Asia Pacific senior economist of Natixis, said, “It is indeed a double whammy situation that they will face, not only about this weaker revenue but on the other hand it’s this weaker currency plus higher yield.”

Zhongliang Holdings bondholders have until late Monday to give their consent, a deadline extended from May 10. Failure to secure 90% approval would likely result in a default.

A bond default by Zhongliang would deepen investor worries about China’s property sector as Beijing seeks to shore up confidence in the broader economy.

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