(Reuters) – Brokerage J.P.Morgan warned on Monday an estimated 2.8 trillion yuan ($385.78 billion) worth of assets under the management of Chinese real estate investment trusts (REITs) face higher risk following the debt payment delays by Country Garden.

The Wall Street bank said it expects a “vicious cycle” of real estate financing challenges, which could intensify the liquidity stress for developers and their non-bank creditors.

Country Garden, China’s largest private developer, is seeking to delay payment on a private onshore bond for the first time after suspending trading in 11 onshore bonds.

“Unlike banks, which have holding power and are able to roll over credit to wait for eventual resolution, alternative financing channels such as trusts may default once trust investors are unwilling to roll over the products,” JPM analysts led by Katherine Lei in a note.

Trusts may have to use their own profits to bail out existing investors if they fail to honor payments on issued products, Lei and team warned.

This may force banks to fill the funding gap, the note said, although they flagged a low probability of the same.

More broadly, rising trust defaults would drag economic growth by 0.3-0.4 percentage points directly, JPM warned.

Along with Monday’s disappointing China credit data for July, JPM said there could be a rise in policy support, including a cut to the reserve requirement ratio and a “small-scale” government bail out program for local-government financing vehicles.

“However, we do not expect large-scale monetary easing or fiscal stimulus at this moment,” Lei said.

($1 = 7.2581 renminbi)