BEIJING — Moody’s downgraded Chinese property developer Shimao Group HoldingsOn Wednesday, the company was expected to find it more difficult to repay its investors in time.

It is indicative of the ongoing difficulties in China’s vast real estate sector despite some local government announcements over the past few weeks that aimed to encourage more homebuying.

Moody’s cut its rating on Shimao by two notches, to Caa1 from B2 — both in the “non-investment grade” category. According to Moody’s, the outlook for this developer has changed from negative. This is in line with a rating review that started on January 10.

Shimao was once considered one of China’s healthiest property developersIt had satisfied all Beijing’s debt requirements, which was a big difference to the extremely indebted. Evergrande. Last year, global investor concerns were focused on Evergrande’s ability to repay its debts and the potential spillover effects to China’s economy.

Shimao, like many real estate developers has now revealed its debt problems.

It is reported that the company went bankrupt in January and now has no prospects of future income. Contract sales for 2021 fell by 10.4% compared to the previous year, reaching 269.11 trillion yuan ($42billion).

Moody’s anticipates these sales to decline “significantly”, this year and the next. All cash Shimao holds will be used to repay project-level debts and for construction expenses. This leaves insufficient funds to pay back investors.

The ratings agency released that Shimao’s debt maturity at the holding company level is due to or will be puttable by 2022. This includes offshore bank loans totaling $1.7 billion and offshore bonds totaling approximately RMB6.9 trillion.

Among other negative headlines around real estate developers like Shimao, S&P Global Ratings said last week the auditors for Shimao’s mainland China subsidiary, Hopson Development HoldingsChina and. Aoyuan GroupAll resigned by late January.

Such resignations are quite rare, and could prevent the Hong Kong-listed developers from submitting financial statements in time for an end-of-March deadline, Edward Chan, director at S&P Global Ratings, said in a phone interview Monday.

Chan stated that stock trading could be suspended if there is a delay in filing. This will undoubtedly lower investor confidence.

After months of selling shares, Shimao’s Hong Kong traded shares increased by 12% in January. However, they are still down more than 6% for February. Aoyuan shares ended their months-long selloff by posting 10% gains in January. However, shares are now down about 7%.

Hopson shares have fallen slightly after January’s 1% drop.