On 30 December Andrade Gutierrez (AGE) announced it wasn’t going to make the December interest payment on time related to its 2029 bonds. Back in June, the Brazilian construction company also didn’t make a payment on time. However, that payment was only five days late and there was no announcement saying “we can’t pay on time, please be patient, you’ll get it soon.”

This time, AGE announced it couldn’t pay and that it hired a financial advisor (Rothschild & Co) and that it was already in conversation with Houlihan Lokey, a financial advisor who represents bondholders who have more than 50% of the outstanding for a “comprehensive renegotiation.”

We have the understanding that AGE was counting on receiving some large payments from a project in order to make the interest payment, so the fact that it didn’t make it is a little concerning for us. Given there was an announcement, we would suspect the payment was coming from a public-sector client — where calendar years are firmer lines, possibly requiring new approvals. So, receiving the project payment to make the coupon payment seems unlikely.