(Bloomberg) -- China Aoyuan Group Ltd. won’t make payments on four dollar bonds and said that will trigger defaults on all other offshore debt, becoming the latest Chinese developer to succumb to the industry’s liquidity crisis.

The company won’t pay off a dollar note that matures Thursday or a separate bond due Sunday, it said in a Hong Kong stock exchange filing late Wednesday. The notes have a combined $688 million of principal outstanding, according to data compiled by Bloomberg. The builder also said it wouldn’t pay interest before the end of a 30-day grace period on two other notes. Those periods end Thursday and the coupons total $15.3 million, according to Bloomberg-compiled data.

“Events of default will occur (or have occurred) under all other offshore financial indebtedness of the group,” Aoyuan said in the statement. It said it’s exploring asset sales and is in preliminary discussions with potential investors and purchasers.

Read a Bloomberg spotlight on China Aoyuan

Aoyuan becomes the latest Chinese developer to renege on its debt obligations amid a cash crunch sparked by a crackdown on excessive borrowing in the industry. The crisis has fueled a property market slump that has prompted the government to dial back some of the measures, with news on the easing of the use of proceeds from presold homes spurring a bond and stock market rally Wednesday. 

Aoyuan made the decision not to pay the debts “to preserve its limited cash resources and maintain fairness among all of its creditors pending a holistic debt restructuring,” it said. 

Aoyuan is based in the southern province of Guangdong, which is also home to industry giants China Evergrande Group and Kaisa Group Holdings Ltd., which were declared in default last month. Aoyuan has $5 billion of onshore and offshore bonds outstanding, according to Bloomberg-compiled data.

It was ranked 37th by sales among Chinese developers last year, according to China Real Estate Information Corp. 

“The continued market downturn and the dampening of purchasers’ confidence have caused difficulties for the group to realize its inventories and dispose of its assets on reasonable terms,” it said. 


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