Loans and High Yield

Tesla’s only high yield bond traded at its highest level since mid-March on Tuesday, after CEO Elon Musk said he was considering a take-private deal that led investors to consider the bond’s attractive change of control provision.

After suffering the slowest month in a decade in July, the US high yield pipeline burst into life this week with two new deals on Tuesday and a further $5bn in the pipeline for the rest of the week.

Speculative grade debt buyers believe borrowers will keep deleveraging, according to an August credit investor survey by Bank of America Merrill Lynch. But fund managers also think the market is failing to price leverage correctly.

GCL New Energy’s $500m offshore bond plummeted by more than three points in secondary trading on Monday, after its parent company failed to dispose of an asset in Zhejiang. The price plunge also had a knock-on effect on other Chinese new energy bonds.

China Industrial Securities International Financial Group, a subsidiary of Industrial Securities, has launched a debut loan of up to HK$4bn ($510m).

The funding for KKR’s acquisition of BMC Software is set to add almost $2bn of high yield bonds in euros and dollars this week, the last portion of a cross-border, multi-billion debt deal that has enlivened the leveraged finance markets.

Taiwanese electronic components distributor World Peace Group is back in the market for a NT$10bn ($327m)-equivalent dual-currency loan. Meanwhile, a Foxconn subsidiary is seeking to refinance an old deal.

Primary bond issuance in Asia-ex Japan has carried on well into the summer, albeit with little participation from high yield borrowers. But bond bankers expect a climax this week before the market quietens down until September.

Natixis has made three senior appointments in Hong Kong to support its growing investment banking activities in Asia Pacific.

The financing for the €1bn acquisition of roofing business Imerys Toiture to Lone Star Funds was revised this week to include a subordinated debt tranche, as levfin investors still active in August pocket riskier but higher yielding paper.

Chinese local government financing vehicle (LGFV) bonds are making a comeback in both the primary and secondary markets offshore, as the government suggests a shift in priorities from deleveraging to maintaining economic growth. But will the rally last — and for how long? Addison Gong reports.

The woes surrounding House of Fraser, the distressed UK department store chain, mounted this week, when C.banner International, a Chinese retailer, withdrew from talks to buy a majority stake. But the business said it will complete its company voluntary arrangement (CVA) and find new investors.