NEW YORK/HONG KONG--China Evergrande Group’s main unit said on Wednesday it would make a bond coupon payment on Sept. 23, offering some relief to jittery markets that had been on edge over fears that a default of China’s No. 2 developer could ripple through the global financial system.

U.S. stock futures, the yuan and the risk-sensitive Australian dollar rose, while safe-haven assets such as the yen and U.S. Treasuries slipped.

Hengda Real Estate Group said in a statement it would make the coupon payment on its Shenzhen-traded 5.8 percent September 2025 bond on time on Sept. 23.

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, with financial markets 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 ($35.88 million), according to Refinitiv data.

Trade in Evergrande’s onshore exchange-traded bonds has been halted since Sept. 16, when Hengda Real Estate applied to suspend trading for a day. While trading technically resumed on Sept. 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, U.S. stocks were flat on Tuesday and Chinese shares opened sharply lower after a two-day public holiday. But China’s property index later recovered losses and was up more than 3 percent, while banking stocks were down around 3 percent.

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 on Tuesday. “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 is set to make its onshore bond payment on time, but the developer has not indicated whether it will be able to pay $83.5 million in interest due on its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes.

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

Evergrande missed interest payments due 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 U.S. 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.

FED MEETING

Fed Chair Jerome Powell will likely be asked about the fallout from Evergrande when he speaks after the Fed’s two-day meeting that wraps up on Wednesday at 2 p.m. ET. (1800 GMT).

Despite the looming default, some funds have been increasing their positions in recent months. Fund giant BlackRock and investment banks HSBC and UBS have been among the largest buyers of Evergrande’s debt, Morningstar data and a blog post showed.

Other bondholders include UBS Asset Management and Amundi, Europe’s largest asset manager.

In any default scenario, Evergrande, teetering between a messy meltdown, a managed collapse or the less likely prospect of a bailout by Beijing, will need to restructure the bonds, but analysts expect a low recovery ratio for investors.

S&P Global Ratings said on Monday it believed the Chinese government would only act in the event of a far-reaching contagion posing systemic risks to the economy.

“I would characterize Evergrande as a telegraphed and controlled detonation,” said Samy Muaddi, the portfolio manager of the $5.1 billion T. Rowe Price Emerging Markets Bond fund, who does not have a position in the company.

BNP Paribas estimated in a research note that less than $50 billion of Evergrande’s $300 billion outstanding debt is financed by bank loans, suggesting the Chinese banking sector will have a sufficient buffer to absorb potential bad debts.

Citigroup Inc. subsidiaries serve as trustee and payment agent for a China Evergrande bond that matures in March 2022 and has $83.5 million in interest coming due on Thursday.

“We do not have any direct lending exposure to Evergrande; our indirect exposure through counterparty credit risk is small and with no single significant concentration,” Citigroup spokesperson Danielle Romero-Apsilos said in an email on Tuesday. She declined to comment on Evergrande’s scheduled payments.

In an effort to revive battered confidence in the firm, Evergrande Chairman Hui Ka Yuan said in a letter to staff that Evergrande will fulfil responsibilities to property buyers, investors, partners and financial institutions.

Evergrande’s Hong Kong-listed shares fell as much as 7 percent on Tuesday, having tumbled 10 percent the previous day, on fears its $305 billion in debt could trigger widespread losses in China’s financial system in the event of a collapse. The Hong Kong stock market was closed on Wednesday for a holiday