Four people with knowledge of the matter said that the offshore bondholders of China Evergrande Group did not receive coupon payments by the end of a 30 day grace period on Monday New York time.
A failure to make $82.5 million in interest payments due last month could be the developer's first offshore default on a public bond.
The default on all the company's about US $19 billion bonds in international capital markets would put Evergrande at risk of becoming China's biggest-ever default, which would ripple through the property sector and beyond, further rattling global investor confidence.
Evergrande saw its stock fall by 8.3 per cent on Tuesday morning after losing 20 per cent a day before.
On Monday, the developer said it had established a risk-management committee that included officials from state entities to assist in mitigating and eliminating the risks. It said that creditors had demanded US $260 million and that it could not guarantee funds to repay debt. Authorities summoned its chairman and reassured markets that broader risk could be contained.
The consequences of its troubles will be less widely felt, as policymakers in Beijing become more vocal and markets familiar, compared to a couple of months ago, and the Evergrande fallout had been broadly contained inside China.
By midday Tuesday, Evergrande's stock had trimmed its gains to 0.6 per cent, leaving it at HKUS $1.82, which hit a record low on Monday.
Notes due November 6, 2022, one of two tranches nearing the payment deadline, were trading at 18.282 cents on the dollar, according to Duration Finance data, little changed from Monday.
Other bonds, including a 2024 bond, were trading at record lows.
The firm is one of a number of developers that have been starved of liquidity due to regulatory curbs on borrowing, prompting offshore debt default and credit-rating downgrades, while investors have sold off developers' shares and bonds.
Kaisa Group Holdings Ltd -- China's largest offshore debtor after Evergrande -- risks defaulting on a US $400 million bond maturing on Tuesday after failing to make a deal with bondholders.
In order to avoid an overall default, bondholders with over 50 per cent of 6.5 per cent of notes due Dec. 7 sent Kaisa draft terms of forbearance late on Monday to work toward a solution, a person with direct knowledge of the matter, old Reuters. The person said that Kaisa started talking about forbearance with bondholders last week.
Another person with direct knowledge said the discussions are at preliminary stages and that it will take time to come to a conclusion.
The people didn't want to be identified as the information was confidential.
Kaisa said it was open to discussion on the topic of forbearance without elaborating, because of Reuters' request for comment.
Sources previously told Reuters that the bondholders offered Kaisa US $2 billion in funding last month, but that no major progress was made on the offer.
The share of Kaisa -- the first Chinese developer to default on an offshore bond in 2015 -- went up 3.3 per cent on Tuesday.