By Gina Lee

Investing.com – Shimao Group Holdings Ltd.’s , with the price of bonds issued by flagship unit Shanghai Shimao Co. Ltd. also falling, after one of its units defaulted on a loan.

Shimao Group shares plunged 7.04% at HK$4.62 ($0.72) after falling by more than 17% Friday. Shanghai Shimao issued a July 2022 Shanghai stock exchange-traded bond. It also plunged more than 25 percent, prompting a trading stop due to “abnormal fluctuations” by the Shanghai Stock Exchange.

The Bloomberg Index of Total Returns on China High-Yield Dollar Bonds fell 1.9% Thursday. This could be a sign of wider economic turmoil.

Shimao Group suffered its biggest-ever bond rout on Thursday after a creditor said one of the developer’s units defaulted on a local loan. According to the notice sent by China Credit Trust Co. to investors, the unit did not pay CNY645million ($101.10million) on a total CNY792million due Dec. 25. China Credit Trust demanded that the developer repay the loan early, citing insufficient installments.

The unit that failed to pay the amount stated in a stock market filing that it would not be subject to investor demand for an accelerated repayment of public-market debt. According to the filing, the unit is under liquidity pressure. The unit will make efforts to accelerate asset sales and insist that it has not been in default on its public-market debt.

An exchange filing revealed that Shanghai Shimao Investment Management has pledged 265,000,000 shares or a 7.06% share in Shanghai Shimao. This was to help fund the company’s operations. Shanghai Shimao Investment Management has pledged to buy 560,000,000 shares of Shanghai Shimao from two companies that Hui Wing Ma controls, an 14.93% stake.