SHANGHAI, (Reuters) – Shares and bonds of Chinese property developer fell on Tuesday amid fears over financial contagion. This was due to a debt swap by one of China’s 20 largest homebuilders. The exchange triggered a flurry credit warnings.

Yango Group Co Ltd, Monday’s exchange offer was for U.S. dollars bonds to be traded for new notes personally guaranteed to it by its Chairman to prevent default on debt payments.

Fitch Ratings on Tuesday said that they considered Yango’s offer as a distressed loan exchange and downgraded Yango to “C”, from “B”. Moody’s Investors Service had earlier lowered Yango’s corporate family rating from B2 to Caa2 by Moody’s Investors Service, citing liquidity risks.

Yango might not be able mobilize its entire cash reserves to pay off its maturing loans, as most of the money is in its projects companies. Moody’s also stated that Yango’s exposure in its joint ventures could make it less able to manage its cash flow.

China Chengxin International (a national agency) said that it placed the company on a watchlist in case of possible downgrades. Dagong Global Credit Rating Co, however, on Monday reduced its outlook for Yango from negative to negative because of uncertainty about funds to repay debt.

Yango Group didn’t immediately reply to Reuters requests for comment.

Market sentiment was affected by the downgrades and warnings on Tuesday. Hong Kong’s mainland property sub-index fell more than 4 percent, taking it to almost 17% since its Oct. 22 peak, when China Evergrande Group managed to avoid a $19 million default.

Yango’s share price fell by as much as 9% while A-shares in the CSI300 index of real estate fell over 3%.

Yango Group bonds dropped sharply again for the second day. Duration Finance quoted its 12% March 2024 bond as falling almost 58% to under 13 cents. This yielded nearly 160%. The company’s Shenzhen-traded April 2020 bond dropped more than 15%.

Evergrande Scenery Journey’s November 2022 bonds and 2023 bonds fell to 20%, or more than 12%, before coupon payments totaling $82.5 millions this weekend.

Developers Yuzhou Group Holdings Co., Ronshine China Holdings. and Zhenro Properties Group all issued bonds that fell over 10%.

Evergrande was able to prevent a catastrophe default by paying a late payment on a bond coupon for $16. Its shares lost 2.5% of their early gains on Tuesday.

Evergrande’s problems have caused collateral damage to China’s property sector. Some Chinese developers were forced to default last month on dollar bonds, while others proposed extended payment terms.