Struggling conglomerate Evergrande rocked global markets in September on warning that it could default on its massive debts. Since then, more and more developers have made similar public confessions, confusing investors and raising fears of contagion in the vast area.
It is not known how the crisis will be resolved. Businesses could try to restructure their debts and sort things out with their lenders. They could also search bailouts from the Chinese government, but so far Beijing has said little on the issue besides promising to protect homebuyers.

The final option – and the worst – would be a messy series of flaws, which would send shockwaves through the Chinese economy, and possibly beyond.

Four developers have already run into trouble as China’s once-scorching real estate sector cools rapidly.

Evergrande

Crisis began last month with the warning from Evergrande, which raised fears that banks and investors around the world were exposed to its mountain of debt. Very little has been resolved since.

With total liabilities of some $ 300 billion, including $ 20 billion in international bonds, Evergrande is China’s most indebted real estate company. End of September, Evergrande raised $ 1.5 billion in cash by selling part of its stake in a Chinese bank.
This week the company missed a deadline pay $ 148 million in interest on bonds denominated in US dollars. It was the third of its kind payment that the conglomerate seems to have missed in recent weeks.

Failure to pay usually results in a grace period, 30 days in this case, but time is running out fast – the default clock started ticking on September 23.

Evergrande’s stock has fallen about 80% this year, and its market value has slumped to just HK $ 39 billion ($ 5 billion). It has not been traded since last week, when shares were suspended following reports that a rival developer wanted to buy Evergrande’s property management activity.

Fancy

Developer of luxury apartments Fantasia Holdings is on the brink. The Shenzhen-based company failed to pay $ 315 million owed to lenders last week, including a bond repayment of $ 206 million and 700 million yuan ($ 109 million) Loan from Country Garden Property Management Unit, the second largest developer in China.

Fantasia said it would probably be “by default on [its] external debts, ”according to Country Garden.

Credit rating agencies S&P and Moody’s assigned Fantasia “default” credit ratings and said failure to pay principal would likely default the company on its remaining obligations as well.

Shares of the company, which has a market value of HK $ 3.2 billion ($ 420 million), are down nearly 60% this year.

Modern earth

Based in Beijing developer Modern Land also struggles to pay on time. On Monday, the company asked investors for additional time to repay a $ 250 million bond due October 25.

As Modern Land calls for a respite to sort out its finances, President Zhang Lei and President Zhang Peng are digging into their own pockets to support the business. They said they would loan the company 800 million yuan ($ 124 million).

Modern Land’s stock has fallen nearly 50% this year, dropping its market value to HK $ 1.2 billion ($ 160 million).

Sinic Holdings

Homebuilder Sinic Holdings is the latest to join the struggling developer ranks, saying Monday he would likely default on some of his bond payments worth $ 250 million.

The principal and interest on these bonds are due on October 18.

Last week, the rating agency Fitch downgraded Sinic’s rating to “C”, just a step above the “restrictive default”, which describes a company that has not paid but has not yet entered a formal bankruptcy or liquidation process.

Sinic stock has suffered the most of the four developers this year, down nearly 90%. The market value of the company now stands at 1.8 billion Hong Kong dollars ($ 230 million).

– Jill Disis, Laura He and Michelle Toh contributed to this report.


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