China Evergrande Group's shares slid for a second consecutive session, dropping as much as 8% after a unit of the embattled property developer missed an onshore bond repayment.
Evergrande's main domestic unit, Hengda Real Estate Group, said last night that it had failed to pay the principal and interest for a 4 billion yuan ($547m) bond that was due by September 25.
The news comes after Evergrande said on the weekend that it was unable to issue new debt due to an ongoing investigation into Hengda, sending Evergrande's share price plunging 22% yesterday.
Hengda said it will actively negotiate with bondholders in a bid to reach a solution as soon as possible while working to resolve the debt risks and to safeguard creditors' rights and interests.
The missed payment is the latest setback for Evergrande, which has lurched from one crisis to another since its financial woes became public in 2021 and it defaulted on its offshore debt obligations that year.
Evergrande has been seeking creditors' approval for its proposals to restructure offshore debt worth $31.7 billion that includes bonds, collateral, and repurchase obligations.
Under the plan unveiled in March this year, Evergrande proposed various options to offshore creditors, including swapping some of their debt holdings into new notes with maturities of 10 to 12 years.
Meanwhile, some offshore creditors of China Evergrande Group are planning to join a winding-up court petition filed against the cash-strapped developer if it doesn't submit a new debt revamp plan by next month.
This is according to two sources familiar with the matter.
Evergrande's offshore debt restructuring plan, unveiled in March, has been thrown into uncertainty after the developer said over the weekend it was unable to issue new debt due to an ongoing regulatory investigation into its main unit in China.
Deepening turmoil in China's debt-laden property sector is threatening to undermine Beijing's efforts to get the sputtering economy back on more solid footing, and raising fears among investors of a systemic spillover into the country's banking system.
A group of Evergrande bondholders were surprised by the firm's weekend announcement which said it was unable to issue new notes, and have been seeking meetings with the developer to seek more information, said the two sources.
If Evergrande fails to submit a new debt restructuring plan by October 30, that bondholders' group will support a winding-up petition already filed against the developer, said the sources, declining to be identified due to the sensitivity of the matter.
The number of creditors who are considering the move and the size of their holdings of Evergrande bonds were not known.
Top Shine Global, an investor in Evergrande unit Fangchebao, in June 2022 filed a winding-up petition in Hong Kong because it said the developer had not honoured an agreement to repurchase shares the investor bought in the unit.
In July, the hearing for that winding-up petition against Evergrande was adjourned to October 30, in order to wait for the result from the developer's meeting with creditors to vote on its debt restructuring plan.
Evergrande needs approval from more than 75% of the holders of each debt class to approve the plan.
That meeting is scheduled for mid-October. However, the latest disclosure by Evergrande puts the meeting, as well as its outcome, in doubt and it is not clear if the meeting with offshore creditors will go ahead as planned.
The winding-up petition against Evergrande is one of the many such proceedings launched against Chinese developers as the firms failed to meet debt payment obligations after an unprecedented liquidity crunch hit the sector in 2021.
The liquidity crunch was triggered in part by government efforts to clamp down on high debt levels in the property sector and rein in speculation.
Many of the defaulted developers have been scrambling to get their offshore creditors' approval for debt restructuring plans to avoid collapse or being forced into liquidation proceedings.
Evergrande's latest setbacks also come as the Chinese authorities have been trying to revive homebuyers' sentiment with a raft of easing measures, including a reduction in existing mortgage rates.
