Loans and High Yield

The European markets for leveraged debt were on holiday this week, with no primary deals, moderate trading volumes and a slow but persistent widening. Some investors believe this week’s recess will be replaced by tougher markets in September.

European corporate bond market participants are enviously looking at their counterparts in the financial and SSA sectors as supply started to flow again in those areas this week. There is no sign yet of any corporate bond issuers returning from the summer hiatus, but investors have clear ideas about what they want.

Indonesia’s Modernland Realty raised $150m on Tuesday to offset some of its pressing debt maturities, becoming the country’s first high yield bond issuer since May.

Chinese industrial name Fufeng Group raised $350m from a bond on Tuesday, offering a coupon step-up to show its commitment to maintaining its investment grade rating from S&P. Logan Property Holdings Co also separately bagged $300m on the same day.

The UK and Italy are potential flashpoints in a European credit market where political fragmentation is the biggest internal risk, Standard & Poor’s warned on Tuesday. Continued low interest rates will be crucial to companies staying in good financial health.

Hangzhou Jianggan District Urban Construction and Comprehensive Development Co has raised $200m from a bond, shrugging off news from last week that a Xinjiang local government financing vehicle (LGFV) had unexpectedly missed payments on a renminbi note.

Chris Munro, co-head of leveraged finance for Europe, Middle East and Africa at Bank of America Merrill Lynch, is leaving London to take up a new role as the bank’s sole global head of leveraged finance in New York.

European private equity firms are raising an increasing number of mega-funds this year, according to data and software firm PitchBook. At the same time, their share of high yield bond issuance has almost doubled.

India's Shriram Transport Finance Corp is tapping the loan market for a $350m five year borrowing, its first dollar-denominated fundraising.

Chailease International Finance Corp is turning to the loans market for an up to $250m borrowing, just a few months after sealing renminbi-denominated and Japanese yen facilities.

Taiwan’s Paiho Shih Holdings has returned to the offshore loan market, seeking a $120m refinancing loan through KGI Bank.

Private equity firms have bolstered their high yield footprint in European and Nordic issuance, but yield spreads are also running up, according to SEB this week.