Four sources with knowledge on the matter have revealed that some offshore bondholders of China Evergrande Group did not receive coupon payments before the end of a 30-day grace period on Monday. Failure to make interest payments of $82.5 million due last month might be the developer's first offshore default on a public bond.
Such a default would result in cross-defaults on all of Evergrande's approximately $19 billion in international capital markets bonds, putting the company at risk of becoming China's biggest-ever defaulter, with ramifications throughout the property sector and beyond, further shaking global investor confidence.
Evergrande's stock recovered as much as 8.3% on Tuesday morning, after plunging 20% the day before.
The developer announced on Monday that it has formed a risk-management committee with representatives from state agencies to help in "mitigating and eliminating future risks."
It had previously stated that creditors had demanded $260 million and that it could not guarantee funds to repay debt. As a result, authorities summoned its chairman to reassure markets that the greater risk could be contained.
Unlike a few months ago, the Evergrande fallout was largely contained within China, as policymakers in Beijing become more vocal and markets become more familiar, the consequences of the company's problems will be felt less worldwide.
Evergrande's stock, which had reached a new low on Monday, had cut its gains to 0.6% by midday Tuesday, putting it at HK$1.82.
Duration Finance data revealed that notes due November 6, 2022, one of two tranches nearing payment deadline, traded at 18.282 cents on the dollar, little changed from Monday. Other issuance, such as a 2024 bond, was trading at all-time lows.