Country Garden Holdings, a major real estate developer based in China, has missed $22.5M in interest payments on two dollar-denominated bonds, setting the stage for its possible default.

The company has 30 days to make the payments, after which bondholders can send Country Garden a notice of default, The Wall Street Journal reports.

“The fact that the company is struggling to address an interest payment, rather than a full bond principal repayment, perhaps underscores its very tight liquidity,” Sandra Chow, co-head of Asia-Pacific Research at CreditSights, told the WSJ.

Country Garden warned investors on Thursday in a filing with the Hong Kong Stock Exchange, where it is listed, that it will probably suffer a loss of between $6.2B and $7.6B for the first half of this year.

So far, Country Garden hasn't defaulted on any debt, unlike the rest of the major players in the Chinese development sector. But the markets are betting it will: The company's equity and dollar notes have fallen to their lowest levels since November, Bloomberg reports, with its shares dropping 8.7% in Hong Kong on Friday.

The company's troubles are the latest for Chinese property markets, which have been in crisis since development giant Evergrande stumbled in 2021. That company has defaulted on loans and lost $81B in 2021 and 2022 combined; other major Chinese developers, such as Sunac Holdings, have likewise defaulted.

Even if Country Garden, which was once the largest developer by sales volume, pays the interest on these particular bonds, it has other payments to worry about. The company still faces more than $2B of bond payments in various currencies over the rest of 2023, Bloomberg reports.

At the heart of the Chinese real estate crisis is a domestic economy that isn't supporting the sales volume of houses or commercial properties that it once did. New home sales by the country's 100 largest developers dropped by 33% in July compared with a year earlier, CNN reports.