Loans and High Yield

The volatility and widening of corporate bond spreads in Europe since February has led many bankers to comment that the balance of power has shifted from issuers to investors. Investors, however, suggest otherwise.

House of Fraser, the department store chain, has joined the trail of UK high yield retailers that have turned to company voluntary arrangements (CVAs) to deal with financial difficulties. But this time, the borrower has also found a new owner, a development its 11% shareholder Sports Direct is threatening to block in court.

After four years away from the high yield market, UK North Sea operator Ithaca Energy was back with a bond refinancing deal this week, as European oil and gas issuance runs well ahead of last year’s pace.

There is an eerie silence in Asia’s high yield bond market. Issuers have pressed the pause button as they reflect on a nosedive in the secondary market and rising fears about investors hoarding cash.

Indomobil Finance Indonesia has returned to the offshore loan market for a new $100m borrowing, according to a banker invited to participate in the deal.

Kangde Xin Composite Material Group has made its debut in the offshore loan market, launching a $200m three year deal into syndication.

Chinese telecommunications firm ZTE Corp, which has failed to comply with a covenant on a $450m syndicated loan due in July, has requested lenders to waive the breach, according to bankers close to the situation.

Property firm Greentown China Holdings has returned to the offshore debt market for a $630m term loan to refinance a similar deal sealed in 2016.

A handful of Chinese investment grade rated state-owned companies are gauging investor appetite for new deals amid a weak market backdrop.

Sri Lanka has received proposals from four different groups of banks for its latest offshore borrowing of up to $1bn.

The underperformance of China Aoyuan Property Group’s bond on Thursday cast a shadow over new issues from Yuzhou Properties Co and Fantasia Holdings Group Co, with pretty muted responses for both deals.

The high yield bonds electric vehicle maker Tesla sold last August dropped in the secondary market on Thursday, after its first quarter earnings showed the firm spent $1.1bn of cash during the quarter and CEO Elon Musk abruptly cut off analysts who asked questions during the company’s earnings call.