HONG KONG/SHANGHAI (Reuters) -China Evergrande Group has secured an extension on a defaulted bond, financial provider REDD reported on Thursday, offering rare respite to the developer a day after a deal to sell a $2.6 billion stake in its property services unit failed. Evergrande has won a “more than three month” extension to the maturity of a $260 million bond issued by joint venture Jumbo Fortune Enterprise and guaranteed by Evergrande beyond Oct. 3, after agreeing to provide extra collateral, REDD reported, citing holders of the bond. Evergrande did not respond to a Reuters request for comment. News of the extension came after Evergrande said on Wednesday it had scrapped a deal to sell a 50.1% stake in Evergrande Property Services Group Ltd to Hopson Development Holdings Ltd as the smaller rival had not met the “prerequisite to make a general offer”. Both sides traded blame for the setback, with Hopson saying it does not accept “there is any substance whatsoever” to Evergrande’s termination of the sales agreement, and it is exploring options to protect its legitimate interests. The deal is the developer’s second to collapse amid its scramble to raise cash in recent weeks. Two sources told Reuters last week the $1.7 billion sale of its Hong Kong headquarters had failed amid buyer worries over Evergrande’s financial situation. The setback also comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond, at which time China’s most indebted developer would be considered in default. Evergrande in an exchange filing on Wednesday said the grace periods for the payment of the interest on its U.S. dollar-denominated bonds that had become due in September and October had not expired. It did not elaborate. “The scrapped transaction has made it even more unlikely for it (Evergrande) to pull a rabbit out of a hat at the last minute,” said a lawyer representing some creditors, requesting anonymity as he was not authorised to speak to the media. “Given where things are with the missed payments and the grace period running out soon, people are bracing for a hard default. We’ll see how the company addresses this in its negotiations with creditors.” REASSURANCES Trading in the Hong Kong-listed shares of China Evergrande, its property services unit and Hopson all resumed on Thursday after a more than two-week suspension. Evergrande trimmed opening losses and was down 9.8% in early trade. Its property services unit dropped 5%, while its electric vehicle arm plunged as much as 10.3%. Shares of Hopson rose 5.6%. Mainland China’s property index gained nearly 2%. Evergrande was once China’s top-selling developer yet is now reeling under more than $300 billion of debt, prompting government officials to come out in force in recent days to say the firm’s problems will not spin out of control and trigger a broader financial crisis. The string of official reassurances are likely aimed at soothing investor fear that the developer’s debt crisis could ripple through China’s broader property sector, which contributes around a quarter to the country’s economic growth. Since the government started clamping down on corporate debt in 2017, many real estate developers have turned to off-balance-sheet vehicles to borrow money and skirt regulatory scrutiny, analysts and lawyers said. Statements from other property developers on Thursday exacerbated investor concern of contagion. Chinese Estates Holdings Ltd said it would book a loss of $29 million in its current fiscal year from the sale of bonds issued by property developer Kaisa Group Holdings Ltd. Modern Land (China) Co Ltd said it had ceased to seek consent from investors to extend the maturity date of a dollar bond due on Oct. 25. Its shares were suspended from trading on Thursday. While Chinese high-yield spreads, as indicated in an index of Chinese corporate high-yield issuers, continued to narrow as of Wednesday evening U.S. time, Modern Land’s decision weighed on investors’ mood, said Clarence Tam, fixed income portfolio manager at Avenue Asset Management in Hong Kong. “The market is worried all single-B companies will choose not to pay,” he said. Reporting by Clare Jim in HONG KONG and Andrew Galbraith in SHANGHAI, additional reporting by Anshuman Daga in SINGAPORE; Writing by Anne Marie Roantree; Editing by Jacqueline Wong and Christopher Cushing