Loans and High Yield

Two Chinese government-owned entities, Chengdu Communications Investment Group Corp and Qinghai Province General Aviation Group Co, priced their dollar bonds on Wednesday, but opted for very different tenors — the former a 10 year and the latter 363 days.

Four Chinese corporate issuers Wanda Holding Group Co, Shandong Iron & Steel Group Co, Hefei Industry Investment Holding (Group) Co and Wuhan State-Owned Asset Management Company are fighting for investors’ attention on a busy Thursday in the primary bond market.

McGraw-Hill Education launched a new payment-in-kind (PIK) toggle high yield bond on Wednesday, as part of a bigger refinancing package. Once an indicator of peaking credit conditions, PIK toggle deals have become increasingly rare as borrowers head to cheaper and more flexible second lien loans.

Twelve deals last week led many in the corporate bond market to believe this week would be the final busy week of the year. However, the roadshow schedule is now bare and investors believe they are starting to see the end of 2017.

Mizuho has laid off three people in its high yield team, two in sales and one in trading.

It’s a week for issuance from Chinese local government financing vehicles (LGFV), with two firms hitting the market on Wednesday and a third company meeting fixed income accounts in Hong Kong.

US tax reform proposals are expected to weigh on investment grade corporate debt issuance next year, while the decreasing tolerance of equity investors to corporate leverage levels could also change M&A financing behaviour, said credit analysts at Bank of America Merrill Lynch’s 2018 outlook event on Tuesday.

Investor support for leveraged loan deals where the issuer is only seeking to cut margins remains so strong that some borrowers, such as French real estate group Foncia, may do it twice this year.

Indonesian power producer Paiton Energy returned to the international debt market on Monday to add another $100m to its August bonds, in a bid to extend its debt maturity profile.

Dongxing Securities (HK) Financial Holdings has found success with its maiden loan outing, managing to raise the size of the deal to $400m from $300m.

State-authorised asset operator China Reform Holdings Corp found only marginal international support for its debut dollar bond on Monday, as the buyside struggled to relate to the company’s story and the deal’s structure.

A novel green loan for Singapore-listed Wilmar has put a focus on sustainability-based borrowings in Asia — or the lack thereof. But now the agribusiness company has provided a template for such financings, the onus is on banks and borrowers to push for change in the region. The benefits may be intangible, but they will be more far-reaching than a few extra basis points on the P&L.