Country Garden bondholders are forming groups and seeking urgent talks with the troubled property developer after it missed a US$15 million coupon repayment, putting it at risk of default, according to three sources with direct knowledge of the matter.

Two bondholder groups have emerged seeking discussions about a potential debt restructuring package, with a major one close to appointing either Moelis or PJT as financial advisers, said the sources, who declined to be identified because the information is confidential.

That group holds about US$2 billion of the debt-laden Chinese property developer’s offshore bonds, one of the sources said, and consists of international and fund manager investors.

PJT, Moelis and Country Garden declined to comment.

Country Garden on Wednesday (Oct 18) was due to pay a US$15 million coupon payment on a bond due September 2025 when a 30-day grace period ended, but two bondholders told Reuters they were yet to receive it.

Non-payment would put the developer at risk of default on its nearly US$11 billion of outstanding offshore bonds, and could trigger one of China’s biggest corporate debt restructuring.

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The company has not commented on whether it made the payment. On Wednesday, it said it was unlikely to be able to meet most of its upcoming offshore debt payments.

Country Garden has appointed Houlihan Lokey, China International Capital Corporation and law firm Sidley Austin as advisers to examine its capital structure and liquidity position, and formulate a “holistic” solution.

“The focus now is on how Country Garden’s debt restructuring will proceed from here,” said CreditSights, which noted its dollar bond prices have already priced in expectations of an imminent restructuring, adding the road to restructuring is likely to be “long and bumpy”.

Approval of the restructuring plan could provide room for the developer to dispose assets and maintain operation, which could be helpful in stabilising the market in the medium term, HSBC said in a report.

Country Garden said on Thursday its founder Yeung Kwok Keung and chairperson Yang Huiyan, his daughter, are at work as usual, according to its official WeChat account, denying online reports of the pair leaving the country.

Yeung quit Country Garden’s board in March and Yang became chairperson. Yeung remains a special adviser.

Yeung was shown in photos receiving chairman of state-owned China National Agricultural Development Group (CNADC) in the company headquarters in Shunde, Guangdong province, on Tuesday, according to a separate company post late on Wednesday.

CNADC chairman Cao Jianglin was cited as saying Country Garden is “a corporate with responsibility and devotion to the country”, in a rare visit and remark by a state-owned enterprise official regarding a troubled developer.

Country Garden’s missed payment comes on the heels of an investigation into the chairman of beleaguered peer China Evergrande, which has defaulted and has been at the centre of the sector’s debt crisis. REUTERS