Loans and High Yield

Since the financial crash, the crucial part of relationship banking has been pretty straightforward: offer borrowers cheap cash and become a core lender, then pitch for ancillary business. But the disastrous effects of Covid-19 on corporate finance mean that cozy relationships will be tested, with companies under pressure and in serious need of extra cash. We’ll soon know which relationships were real and which were not.

The coronavirus crisis is shaking up companies' financing arrangements in the most drastic way since the 2008-9 financial crisis, as firms strive to secure liquidity for what are likely to be many tough months. So far there have been only a few high profile cases of companies drawing down revolving credit facilities, but this is expected to grow, as long-established norms crumble and new patterns emerge.

Chinese issuer Shandong Ruyi Technology Group Co missed an interest payment on a Rmb1bn ($143m) domestic bond on Monday, just days after holding a bondholder meeting.

Xinjiang Guanghui Industry Investment (Group) Co has priced $59m of new bonds as part of an exchange offer. It received lukewarm response for the transaction, with existing investors of less than a fifth of the original deal agreeing to roll over.

Ping An Bank has stepped up in the offshore loan market, launching its first deal on a sole basis for Shandong Energy Group.

Hong Kong financial services firm Sun Hung Kai & Co has returned to the loan market after nearly four decades for a HK$500m ($64m) deal.

Central banks are dusting off the 2008 playbook, thrusting liquidity at the banking system and hoping some of it gets through to banks' end clients. It’s better than nothing, but the coronavirus crisis one primarily of corporates — and the rescue toolkit needs updating.

Private debt funds in Europe may be the hot new thing to some in capital markets but they could be about to come of age, having never been through a serious credit downturn before. The market is under scrutiny over how it will cope with the credit ramifications of Covid-19.

Malaysia’s Press Metal Aluminium has raised a $300m dual-tranche financing to support its acquisition of Bintan Alumina Indonesia (BAI).

The liquidity crisis at two Chinese dollar bond defaulters, Peking University Founder Group Co and Kangde Xin Composite Material Group Co, has deepened further amid more non-payments.

Singapore hard disk drive company MMI International is looking to amend and extend an old loan ahead of a looming maturity, as it faces pressure on its financials.

Property developer New World China Land has closed a HK$6.85bn ($880m) loan, attracting nine participants during syndication.