Loans and High Yield

The coronavirus pandemic, in terms of the financial markets has had its winners as well as its losers. The loan market, after years of decline as borrowers sought better terms in bond markets, has shown its worth in times of trouble by being able to offer liquidity lifelines to companies left in dire need of the stuff when other markets could not provide it.

Chinese battery maker Leoch International Technology has returned to the loan market for a $100m refinancing.

Chinese oil and gas company MIE Holdings Corp has missed interest payment on a dollar bond during the grace period, triggering cross-defaults on its loan facilities. The firm has been hit hard by tumbling oil prices this year, putting pressure on its liquidity.

Rubis Terminal looks set to make the first European high yield debut since the coronavirus crisis hit, announcing a new €410m issue to fund a minority investment by I Squared Capital. Business has boomed at the company, which operates bulk liquid storage, thanks to the collapsing oil price.

With leveraged companies largely shut out of central bank bond buying and price support schemes, sponsors are mulling government-backed lending schemes in several European countries, as they seek to show other creditors that they have abundant access to liquidity. But the schemes often come with strings attached, which could do nearly as much damage to a sponsor's investment thesis as a restructuring.

Indofood CBP Sukses Makmur has sent out a request for proposals for a loan to back its acquisition of instant noodle maker Pinehill Company.

Chinese technology company Lenovo Group took advantage of improving sentiment and small new issue premiums on recent deals to reopen a dollar bond sold in April. It raised $350m from the tap on Thursday, but investor interest was quite muted.

The merger of the UK’s largest mobile phone operator, O2, with cable company Virgin Media, agreed on Thursday, will generate a £6bn financing need which the parties want to complete before the deal closes, expected to be in 2021 — and later on, it could lead to an IPO, say sources close to the deal.

Macau casino operator SJM Holdings is in talks with lenders for covenant waivers on a HK$25bn ($3.2bn) facility, as it faces delays over opening a new resort in Asia’s gambling hub.

GlobalCapital and Standard Chartered hosted a virtual roundtable in mid-April to discuss the changes China's high yield issuers have faced in 2020 — and the challenges they will have to contend with for the rest of the year due to the Covid-19 pandemic.

Chinese conglomerate HNA Group has missed yet another payment, this time of $750m, on a loan it raised in 2016 to acquire Ingram Micro, a US information technology and products distributor.

Hertz, Avis and Europcar are all facing the same problem. Nobody is travelling, and so nobody is renting cars. Vast airport car parks full of ready-to-go rental cars stand idle, and cash flows at all three companies have stopped almost dead. But they have fared very differently — from near-bankruptcy to leaning hard on government.