Reorg on the Record: China steps in to halt selloff, but who will survive? (03/16/22)
Guested edited from Hong Kong by Stephen Aldred, Managing Editor, Asia Core Credit || High-yield bonds of some Chinese real estate developers rebounded March 16 after four straight days of selloffs, as official state media outlet Xinhua reported that the country’s top financial policy committee, led by its top economic official Liu He, had vowed to actively support property companies and stimulate the economy.
Russia’s invasion of Ukraine, rising commodity prices and rising Covid-19 cases in Mainland China had all accentuated fears of a chaotic collapse in the country’s property market. Debate over whether the selloff was technical or fundamental continues – even bellwether names such as Country Garden Holdings (CoGard), which previously had avoided precipitous price falls on their bonds, got sucked into the downdraft, as investors sold out to get out, or sold out to raise cash where they could.
Questions remain as to who will survive: liquidity gaps will show more clearly as the annual reporting season for China’s property firms ends March 31. In a volatile market fueled by rumors, the bearish whisper is that we haven’t seen the bottom yet.
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Our Asia teams are delivering the most in-depth data, analysis and reporting on hundreds of credits that are either stressed, distressed, performing, going through restructuring or post-reorg. Below is a glimpse into our editorial offering:
Logan Group
Chinese residential and commercial property development company Logan Group told certain investors that it plans to use its own cash resources to repay its RMB 1.51 billion ($237.4 million) corporate bond putable March 19 “19 Longkong 01”. The company was previously trying to convince holders to withdraw their puts for the RMB 1.51 billion bond. The put option registration window was set between Feb. 21 and Feb. 23 while holders have until March 14 to withdraw their puts. » Continue Reading
Vedanta
Indian diversified natural resources company Vedanta Resources Ltd. plans to use the approximately $450 million proportionate third interim dividend announced at the Vedanta Ltd. level to repay around $240 million in amortization payments on loans due at the Twin Star Holdings level, according to two sources briefed on the matter. As reported, Vedanta Ltd. announced March 2 that its board approved an INR 48.32 billion ($638.9 million) third interim dividend at INR 13 per equity share for the financial year 2021-22. » Continue Reading
Zhenro
Shanghai-headquartered property developer Zhenro Properties Group’s (Zhenro) liability management exercise looks to address its near-term 2022 offshore note maturities by effectively terming out the debt until March 2023 via an exchange offer and exit consent, while simultaneously embarking on separate consent solicitations for its called but unredeemed perpetual capital securities and its longer ended offshore notes. » Continue Reading
Times China
While the Guangzhou-headquartered property developer’s recent repurchases of its $342.2 million offshore senior notes maturing in April 2022 increase the likelihood of repayment, the company still faces RMB 2.7 billion ($427.5 million) of onshore notes puttable or maturing in the third quarter of 2022. Given the absence of material offshore assets and investment properties, the company could be largely dependent on its Guangzhou land bank – which could have an attributable saleable value of RMB 38.9 billion, according to Reorg’s estimates – to meet any potential near-term financial requirements. » Continue Reading
Dip in Indonesian High-Yield Credits
While the Russian invasion of Ukraine creates negative headlines and accentuates the risk-off sentiment, its further strengthening of the commodities cycle points to underlying strengths and offers a tailwind to certain Indonesian credits, which even in the country’s property space tend to fare well in a strong commodity market, due to buoyant consumer demand, according to the sources. » Continue Reading
Russia Sanctions Webinar: Register Now
Join Reorg and partners Fiona Huntriss and Matthew Getz from law firm Pallas Partners LLP, as we examine the impact of sanctions on loan and other financial obligations owed to and by Russian parties. We consider practical immediate issues around payment obligations, and discuss how the U.K., EU and other sanctions may impact loans and other arrangements with Russian banks, including where lenders and borrowers may be caught out.
Sri Lankan Sovereign Debt Webinar: Watch the Replay
With the maturity dates drawing closer, Reorg convened a discussion of legal and financial considerations ahead of a potential sovereign debt restructuring of Sri Lanka’s existing $12.55 billion bond curve. On this webinar, editor Nidhi Pandurangi moderated a panel discussion with Reorg Asia Core Credit reporter Poonam Bansal, EM Debt strategist and portfolio manager at Vontobel, Carlos de Sousa and international lawyer and sovereign debt restructuring expert at Orrick, Thomas Laryea. Watch the replay here.
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