Loans and High Yield

The successes and failures of a handful of deals last week showed that floating rate notes are not just for financial credits, but can also serve corporations well — especially in times of real need.

Indonesian credits got a quick boost late last week as investor sentiment rose following an interest rate hike. But while the buy-side is again warming up to the country’s bonds, the debate continues over whether the optimism is sustainable.

A challenging market backdrop pushed China Vanke Co to go down the floating rate note route for its bond return on Thursday. It wasn’t disappointed, with bankers saying the $650m bond was priced around 15bp inside a hypothetical fixed rate deal.

Zhongyuan Yuzi Investment Co, a provincial level local government financing vehicle (LGFV), has postponed a planned dollar bond amid weak sentiment for the sector. On the other hand, Nan Hai Corp, which pulled a deal last September, managed to get its second bond attempt past the finish line by opting for a private placement style execution.

The movement to create free investment benchmarks to support the Sustainable Development Goals is gathering pace, with the launch this week of a major survey of corporate human rights performance.

Market sources said rising political uncertainty in the eurozone was to blame for the second deal pulled from the European high yield bond market so far in May, as Greek issuer Pangaea cancelled its high yield roadshow on Thursday.

Two Chinese transactions on Wednesday served as perfect examples of how duration can make a difference. Greenland Holding Group Co’s $500m sub-one year bond attracted a larger-than-expected order book, while China Overseas Grand Oceans Group (Cogo) had to pull a five year trade as a result of insufficient demand.

Dollar bond investors got their first taste of a Cambodian credit this week when casino operator NagaCorp grabbed $300m from its debut outing. But a huge tightening in the secondary market reflected the struggle in finding a fair price for the issuer. Morgan Davis reports.

Chinese automobile financing retail transaction platform Yixin Group is tapping the loan market for a $150m borrowing, six months after listing through a HK$6.8bn ($867.2m) IPO in Hong Kong.

How worried are international investors and DCM bankers about the spate of corporate bond defaults in China’s onshore debt market? Addison Gong finds out.

Hermes has launched a European direct lending fund, as the investment manager looks to carve out part of a market that has recently reached record highs by volume.

Speculative grade investors are being tempted by higher total returns in the leveraged loan market, but lack of supply and growing demand is favoring a loosening of default protection covenants.