Investing.com -- Hong Kong shares of Chinese property developer Country Garden Holdings (HK:2007) slumped to a new record low on Monday after the firm said it will suspend trading in its onshore bonds amid growing debt problems.

The firm - one of China’s biggest property developers - said in a filing released over the weekend that it will suspend the trading in onshore bonds of 11 of its units, after it missed payments on two dollar bond coupons worth $22.5 million earlier in August.

The move also comes amid Chinese media reports that the firm is seeking a potential debt restructuring, after it flagged a massive, up to nearly $8 billion loss for the first half of 2023.

Country Garden’s shares slumped 17.4% to a record low of HK$0.81 by the midday break. It was the worst performer on the Hang Seng index, which fell 2.5%.

Other major property developers also sank, with Longfor Properties Co Ltd (HK:0960) and Sunac China Holdings Ltd (HK:1918) losing 1.7% and 3.4%, respectively. China Jinmao Holdings Group Ltd (HK:0817), which had also warned last week of a sharp drop in its half-year profit, slumped over 7% on Monday.

Country Garden’s woes mark a reversal for the firm’s position over the past three years, where it was seen as having largely avoided a downturn in China’s massive property market.

Declining construction activity, limited funding sources, and a sharp drop in sales battered China’s property sector over the past three years, with the default of China Evergrande being a particular highlight.

A potential default by Country Garden could end up becoming the most high-profile default in China since Evergrande, and bodes poorly for the country as it struggles with post-COVID economic recovery.

Weakness in Country Garden could also further dent the real estate sector by keeping both buyers and investors away, presenting increasing headwinds to what was once China’s biggest economic engine.

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