The company's decision last week to cut coupon payment on the debt by more than 70% angered investors and prompted the Shanghai stock exchange to demand an explanation on whether the coupon adjustment met the conditions in the bond's prospectus.

The developer said on Wednesday that it would keep the coupon on a 1 billion yuan ($141.31 million) May 2021 bond unchanged at 5.29%.

In an official filing, the company said it was keeping the bond's coupon unchanged after "careful consideration", saying the earlier decision to lower the rate to 1.50% violated the conditions in the bond prospectus.

The company also "deeply apologised" for the financial market impact caused by its improper move.

Bond yields in the world's second largest economy have been steadily falling this year, in line with the trend seen in market rates. China's central bank has adopted an easing monetary policy stance since the coronavirus outbreak by cutting key policy rates multiple times to lower financing costs to cushion a faltering economy.

The 1 billion yuan May 2021 bond was issued in May 2018, with the company having an option to raise the coupon rate at the end of the second year.

In a separate filing last week Gemdale attributed its decision to lower the coupon to "current market environment".

($1 = 7.0768 Chinese yuan)

(Reporting by Andrew Galbraith and Winni Zhou; Editing by Muralikumar Anantharaman & Shri Navaratnam)