Loans and High Yield

The European Central Bank is expected to broaden its asset purchasing to include bonds from issuers that have lost their investment grade ratings as a result of the coronavirus crisis — a funding lifeline to companies now rated BBB- or with one foot already in the junk camp.

Banks providing reserve-based lending facilities to oil exploration companies are looking to sell these loans, usually held and refinanced as ultra-secure relationship products, at bargain basement prices.

Italian-American car company Fiat Chrysler has drawn down on its €6.25bn revolving credit facility to shore up its finances during the Covid-19 pandemic, though the company has left a new bridge loan untouched.

A divergence is forming between loans bankers and bond market investors over how to treat oil borrowers after the historic crude price falls, with the fixed income investor market seemingly taking a more bullish approach on the industry.

China’s Dr Peng Telecom & Media Group Co is looking to extend the maturity date of a bond coming due in June.

Shenzhen Zhaoheng Hydropower Group has obtained a maturity extension for a $128m loan sealed in 2017, after difficult market conditions put pressure on its refinancing abilities.

Helaba has been far more active than other arrangers in the Schuldschein market, launching at least three deals after the pandemic struck European capital markets in March. While others told clients to postpone deals until clarity emerged on price and investor appetite, the Frankfurt-based Landesbank has ploughed ahead.

Recent dollar bonds in Asia offer timely insight into the ingredients needed to seal deals in the Covid-19 environment.

Companies in the US high yield market have started adding a "corona claw" provision to bond documents, allowing a big chunk of new bond issues to be paid back early if the company gets cash from the federal government. But it’s not clear yet where any public money will fit in the capital structure of leveraged corporates — and whether bondholders could end up primed by the government.

The UK’s DFS Furniture is in talks with its lending group for an additional credit facility of up to £70m to sit alongside the sofa seller’s main bank line, as companies continue to lean heavily on their lenders to get them through the worst of the coronavirus pandemic.

Lenovo Group took a cautious approach to its $650m bond issuance last Friday, opting for size instead of price and offering investors a hefty premium for its deal.

Chinese property firm Country Garden Holdings Company is wooing lenders to a $140m loan to support its investments in two start-ups.