HONG KONG -- China Evergrande Group has missed a second bond coupon payment in as many weeks, renewing concerns over its ability to repay over $300 billion in liabilities.
Evergrande, the world's most indebted developer, has little cash left and has missed payments to suppliers, banks and retail debtholders too. It was due to pay $46 million in interest to holders of an offshore bond by 11:59 p.m. Wednesday New York time, but two investors said on Thursday that they had neither received payment nor any notice from the company.
"It is a repeat of what happened last week," said one investor who did not receive a payment due Sept. 23 either. "All we have is silence."
Both investors said that they and other bondholders have started working with advisers to form a committee that would be able to jointly press their claims with the company.
Evergrande did not publicly comment on the missed bond payments, but Hengda Real Estate, its mainland operating unit, said in a WeChat post on Thursday that work at more than 20 suspended development projects had resumed. Some 400 projects had ground to a halt in recent months as the company fell behind on paying suppliers and contractors.
Last week, holders of one of its dollar bonds had been due to receive $83 million interest. Evergrande has another $721 million in coupon payments for offshore bonds due through year-end, with a further $350 million to be paid in January. It also has $7.7 billion in bonds maturing next year.
According to the terms of Evergrande's sales prospectus, it has a 30-day grace period to make good on the dollar bond coupons before being labeled in default.
Fitch Ratings on Wednesday cut its credit rating on the company from "CC" to "C," the last rung above default. The agency indicated it sees bondholders likely recovering less than 10% of the sums owed.
The company also was supposed to make a 230 million yuan ($35.6 million) coupon payment on a domestic bond on Sept. 23. It has said the payment was "resolved" without giving details.
Evergrande has hired Houlihan Lokey and Admiralty Harbour Capital as financial advisers to assess its capital structure and explore solutions to its liquidity crunch.
Some Evergrande bonds are trading less than a quarter of their face value, indicating investors see default or a restructuring as a near certainty. The group's shares have lost more than four-fifths of their value this year, slipping another 3.9% on Thursday to HK$2.95.
Efforts to sell assets have slowed in recent days, though this week Evergrande sold a 19.9% stake in regional lender Shengjing Bank for $1.5 billion. The lender, however, demanded the sum be used to set off debts owed by the developer.