Loans and High Yield

Chinese company Shandong Linglong Tire Co has chosen dollars and euros for its maiden overseas fundraising.

Recent heavy supply in the Asian dollar bond market has found its first victim in Yango Group Co, which called off a planned $250m deal on Monday. While the Chinese developer’s high leverage raised some concerns, volatility in US Treasuries also played its part in the underwhelming demand.

A recent syndication for Omani borrower Bank Sohar made market observers take notice, thanks to the presence of Axis Bank at the top group, reflecting Indian banks’ rising eagerness to provide liquidity for foreign currency deals. Yet the country rarely features in the roadshow schedule for fundraisings — an oversight that banks should rapidly correct.

US lottery and gaming group Scientific Games International sold its first euro bonds this week, in a European high yield market that bankers and investors described as ready and steady for opposite reasons.

Private equity firm PAI's divestment of its majority stake in Kiloutou, the French equipment rental firm, is pumping supply into the term loan market this week through a secondary buyout. Meanwhile, PAI is itself funding its leveraged buyout of Albéa, a French beauty product packaging group, with a high yield pay-if-you-can (PIYC) bond.

The first issue of 2018 on London Stock Exchange’s Order book for Retail Bonds (ORB) is set to be a dollar offering from Burford Capital, the litigation finance firm.

Tsinghua Unigroup Co raised $1.85bn from a three-part bond on Thursday that included a last minute 10 year tranche on the back of reverse enquiry. But the chunky issuance size and the lack of ratings meant the borrower offered investors a generous return.

Trans Maldivian Airways has landed back in the Asian loan market for a $305m senior secured deal, following its acquisition by a consortium led by Bain Capital Private Equity at the end of last year.

Ronshine China Holdings sold a three year puttable bond at a 9% handle on Thursday, in a deal catering to reverse enquiry demand. But the issuer’s challenges are far from over, with high leverage, tight liquidity and ballooning refinancing needs putting pressure.

The ritual warnings about the ‘junk bond market’ are filling business pages again as the new year rolls on. They are inaccurate, and help hide the actual potential dangers under the surface of overheated high yield bonds.

Investors looking for lower rated high yield bonds welcomed the roadshow of a three tranche, multi-currency deal from Algeco Scotsman, a US modular space and secure storage group, this week.

Bonds backed by standby letters of credit have fallen from grace, as tightening spreads in the dollar bond market and growing risk appetite among investors ensure that issuers can do without credit enhancement. Have SBLCs had their day in Asia? Addison Gong finds out.