China Evergrande Group's main unit said today it would make an interest payment on its domestic bonds on September 23.
The move offers some relief to jittery markets that had been on edge over fears that a default of China's second biggest developer could ripple through the global financial system.
Hengda Real Estate Group said in a statement it would make the coupon payment on its Shenzhen-traded 5.8% September 2025 bond on time tomorrow.
The announcement comes as Evergrande, once the country's top-selling developer, inches closer to a key deadline for an interest payment on a dollar bond.
Financial markets are tense even as investors and analysts played down the threat of its troubles becoming the country's "Lehman moment."
Hengda Real Estate's coupon payment totals 232 million yuan ($35.88m), according to Refinitiv data.
Evergrande is set to make its onshore bond payment on time, but the developer has not indicated whether it will be able to pay $83.5m in interest due on its March 2022 bond on Thursday.
It has another $47.5m payment due on September 29 for March 2024 notes.
Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.
Trade in Evergrande's onshore exchange-traded bonds has been halted since September 16, when Hengda Real Estate applied to suspend trading for a day.
While trading technically resumed on September 17, it now only takes place through negotiated transactions in what traders said was an attempt to curb volatility.
While concerns about the spillover from a messy collapse roiled markets on Monday, US stocks were flat on Tuesday and Chinese shares fell in early trade after a two-day public holiday.
But China's property index recovered losses and was up more than 3%, while banking stocks were down around 3%.
Evergrande is so deeply intertwined with China's broader economy - from retail investors to infrastructure-related firms that are a gauge for global commodities demand - that fears over contagion have kept financial markets on tenterhooks.
"There's been a fair bit of concern about the possibility of contagion," analysts at New York-based Bespoke wrote in a research note.
"But so far that concern isn't showing up in parts of the credit markets that have served well as red flags for broader credit crunches in the past."
Evergrande missed interest payments due on Monday to at least two of its largest bank creditors, Bloomberg reported on Tuesday, citing people familiar with the matter.
The missed payments had been expected as China's housing ministry had said that the company would be unable to pay on time, Bloomberg said.
As investors and policymakers around the world tried to assess the potential fallout, Securities and Exchange Commission (SEC) Chair Gary Gensler said the US market is in a better position to absorb a potential global shock from a major company default than it was before the 2007-2009 financial crisis.