Evergrande reportedly missed recent bond payments as developer struggles to avoid default

Evergrande continues to falter this week as bondholders say the at-risk property developer missed a key payment deadline, according to a Bloomberg report.

The report, citing people familiar with the matter, said that a Chinese company co-owned by Evergrande, called Jumbo Fortune Enterprises, had missed payment on a $ 260 million bond. The news pushed Evergrande bonds to new lows – now trading at less than a quarter to the dollar.

Details on the privately issued bond were difficult to come by, but the episode signaled markets that a partial default may be more likely than expected. Observers have been wondering for weeks whether the Chinese government will step in to back Evergrande, after asking the company to avoid a short-term default.

Reports of Evergrande’s non-payment came just days after another real estate company called Fantasia Holdings Group failed unexpectedly. Fantasia failed to repay a $ 206 million bond on Monday, prompting rating agencies to downgrade its defaulted debt.

“We believe that the existence of these links means that [Fantasia’s] the liquidity situation could be more strained than expected, “Fitch analysts wrote in a Monday note downgrading the company to CCC, or substantial credit risk.

Analysts are now considering other possible failures in China’s real estate sector, which could portend a wave of failures or sweeping government intervention. For example, another developer called Xinyuan Real Estate has a $ 229 million bond due Oct. 15, according to Bloomberg.