Loans and High Yield

Macroeconomic conditions have converged to create a strong market for new investment grade corporate bond issues in Europe, with a more dovish US Federal Reserve, a potential delay to Brexit, and signs of progress in the US-China trade discussions prompting investors to turn risk-on.

Chinese government-related issuers Zhaojin Mining Industry Co and Yunnan Provincial Investment Holdings Group Co priced dollar bonds after what bankers said was smooth bookbuilding, defying fears that followed a recent default by a local government financing vehicle.

Even credit geeks relegate accounting geeks to the back corners of the classroom. It’s proverbially dry, and shouldn’t affect real world issues, such as whether a company can deliver returns for its shareholders and pay its debts. But seemingly esoteric accounting changes can mean major real world consequences. It’s not just for the geeks; it’s time to get real about IFRS.

French electricals group Rexel launched a €600m high yield bond on Tuesday, looking to refinance its 3.5% 2023 notes. The strong demand for the new bond, against a backdrop of anaemic high yield supply in euros, meant the firm printed the new issue much tighter than the bond it replaces.

German industrial services company Bilfinger has launched a Schuldschein months after pulling a transaction in public markets. The BB-rated company is offering a spread substantially higher than the typical Schuldschein borrower, in the hope that lenders will forego its failed foray and be charitable with its chequered past.

Philippine oil company Petron Corp has returned to the offshore loan market after a two year absence, picking a bigger lead group that has allowed it to achieve much tighter pricing.

When will the supply of Chinese property bonds end? Bankers detected hints of indigestion after a rush of deals last week, but that does not appear to have slowed down the mass of supply. Five more companies turned to dollar bond investors on Monday.

China’s Guorui Properties priced a smaller-than-expected new bond ahead of a looming $250m maturity on March 1. But investors are still wary of another one of the company’s bonds: a $300m deal that becomes puttable in the same month.

Wind turbine manufacturer Senvion revealed on Sunday night that it was exploring debt restructuring options, following a torrid week in which its bonds dropped more than 15 points. The company’s largest shareholder, private equity firm Centerbridge, pledged to "support this transformation", while the company will draw on its super-senior guarantee facility to keep operating.

Qinghai Provincial Investment Group has once again put state support for Chinese local government financing vehicles (LGFVs) under the microscope, after reportedly missing a coupon payment at the end of last week.

Taishin Financial Leasing (China) is making its debut in the offshore loan market with an $80m borrowing helmed by Bank Sinopac.

Former Bank of China syndicate head Sebastian Ha has joined SPDB International as its head of fixed income.