30+ Debtors File in US, China Real Estate Contagion Spreads…

Interest rates remain a critical point of concern for global investors as distressed activity accelerates across North America, Europe and Asia.

In North America, 32 debtors have filed for chapter 11 thus far in August, heavily represented by real estate names as commercial property owners wrestle with increased interest costs for floating-rate debt. While market participants are encouraged by benign consumer and producer price data, stronger-than-expected retail sales last week and Federal Reserve minutes on Wednesday highlighting “upside risks to inflation,” many now expect that a fed funds rate of over 5% will likely endure. 

In the wake of the tragic Maui wildfires, restructuring advisors have been circling Hawaiian Electric Industries, triggering questions and concerns regarding potential liabilities by market participants in both the municipals and corporate markets. 

Meanwhile, the European Central Bank, after boosting its key interest rate to a 22-year high in June, is confronting inflation that is much stronger than the United States, even as economic growth is weaker. 

In Asia, The Peoples Bank of China held its prime loan rate at 4.2% yesterday and lowered its one-year LPR to 3.45% from 3.55%, a smaller move than was expected by many economists. China is facing increased stress in its property sector, with bellwether developer Country Garden and shadow banking giant Zhongzhi Enterprise Group each lurching toward restructurings. 

Reorg’s editorial team is delivering the most in-depth data, analysis and reporting on thousands of credits across the full credit lifecycle. A glimpse into our offering is below:

Country Garden
Country Garden Holdings Co. Ltd.’s onshore corporate bonds have all been suspended. The suspension announcements cited Country Garden’s Aug. 10 profit warning announcement to the Hong Kong exchange, in which the company stated the difficult situation facing the real estate industry.
» Continue Reading

Ukraine
The country’s sovereign eurobonds have stabilized in price following a 10-point climb in the past month, marking the highest price for Ukraine’s $19.7 billion of hard currency notes since June 2022. Ukraine’s $912 million 7.75% 2024 bonds have risen to 34/35, nearly doubling in price since mid-May when they were at 18 cents. 
» Continue Reading

Hawaiian Electric Co.
The utility provider, a subsidiary of Hawaiian Electric Industries Inc., is potentially liable for the damage associated with the Lahaina/Maui fire if the lawsuits brought against it should prove successful, according to market sources. Hawaiien Electric Co. is the parent company of Maui Electric Co., the operating company that allegedly started and perhaps exacerbated the speed and intensity of the Aug. 8 wildfire. 
» Continue Reading

GoTo Group
The group’s sponsors snapped up $160 million of the company’s outstanding debt during the second quarter of 2023, according to sources. It was not immediately known whether the amount was bought back by one, or both, of the company’s sponsors.
» Continue Reading

To get our industry-leading coverage delivered directly to your inbox every week, sign up to receive Reorg on the Record.