Loans and High Yield

Hong Kong-based New World Development Co was able to find enough demand to cover a $500m ‘fixed-for-life’ perpetual bond, returning to a structure that lost attraction amid expectations about rising rates.

The brief default of a dollar bond by local government financing vehicle (LGFV) Qinghai Provincial Investment Group last week caused next to no impact in the China offshore bond market. That is a bad sign.

Nokia had much to be thankful for on Monday when it issued a €750m seven year bond at 170bp over mid-swaps — the same level at which its older five year bond was trading at the beginning of this year.

With market conditions strong last week, leads on the most hotly anticipated leveraged financing of the year decided to press ahead and launch. The $10.5bn debt package backing Brookfield’s buyout of Johnson Controls’ Power Solutions business will hit all the major pockets of demand, with term loans in dollars and euros, senior secured bonds in dollars and euros, and unsecured notes as well.

China real estate companies Zhenro Properties Group and China Evergrande Group started the new month with fresh dollar deals at the end of last week, marking Zhenro’s fourth trade of the year and Evergrande’s second.

Indian generic drugs producer Jubilant Pharma raised $200m from its return to the bond market after investors rushed to snap up a rare Indian high yield credit.

Loan investors succeeded in the ‘game of chicken’ in setting deal terms on the first two major new money acquisition loans in the European market this year, winning a package of concessions that could help achieve a better balance between borrowers and lenders in a market that has seen documentation deteriorate.

Canada’s Barrick Gold launched an almost $18bn hostile swoop on rival Newmont on Monday, as the wave of consolidation in the gold sector reaches new heights.

None of the high yield bond issues from telecoms group UPC will have their change of control provisions triggered, despite Liberty Global’s sale of the group to Sunrise Communications Group, announced on Thursday morning. High yield investors would be unlikely to take the deal, with bonds trading over the put price, and Sunrise targeting an investment grade rating, but it underlines the weakness of these protections in high yield documentation.

Should bond investors be worried about Chinese local government financing vehicles (LGFVs)? After a recent default had almost no impact on the secondary or primary markets, most investors appear to have put aside their concerns. At least for now. Addison Gong reports.

Sichuan Languang Development Co returned to the bond market on Wednesday with a $150m tap of an outstanding deal, bringing its 11% 2020 notes to a total size of $400m.

PlayTech, the UK-based gambling technology company, announced its second high yield bond issue on Tuesday afternoon, seeking to raise €350m to redeem an out-of-the-money convertible bond issued in 2014. During the roadshow, it confirmed a new contract with UK gaming group GVC, which helped it print tight in a market that was already supportive.