Moody’s has decided to downgrade Chinese real estate developer Country Garden’s long-term credit rating to Ca from Caa1, while maintaining a negative outlook.

According to the agency, the Ca rating is highly speculative and may be at or very close to default, and is the final rating in Moody’s ratings.

“The downgrade with a negative outlook reflects Country Garden’s limited liquidity and increased default risk, as well as weak recovery prospects for the company’s bondholders,” Moody’s said.

Given its weak sales and large debt maturities over the next 12 to 18 months, Moody’s estimates the company does not have sufficient internal cash resources to address upcoming foreign bond maturities.

Given the company’s high debt, the company expected that the recovery opportunities for Country Garden’s external bondholders would be limited if it defaulted.

On August 1, Moody’s downgraded the credit rating of Chinese real estate company “Country Garden” by three points from “B1” to “Caa1” after defaulting on interest payments on its dollar bonds.

The company’s financial obligations stood at about 1.4 trillion yuan ($199 billion) at the end of last year, raising the risk of the company’s general bankruptcy if it does not pay this week’s dues within 30 days.

Log loss and possible default warnings

Earlier today, Country Garden warned it could default on its debt and raised concerns about staying in business after the Chinese developer posted a first-half loss of nearly $7 billion.

Country Garden could officially find itself in default if it doesn’t pay its dues when the thirty-day grace period ends in early September.

The company also faces the maturity of bonds worth a total of 3.9 billion yuan (about 500 million euros) in a few days.

Today, Country Garden is negotiating with its creditors and rescheduling its payments in an effort to avoid a default.