Global Credit Highlights – (Friday, June 3, 2022)

In the Americas, stocks rose as market participants straggled back from the long holiday weekend and distressed investors focused increasingly on companies in the auto sector, which is bearing the brunt of component shortages and wage/commodity inflation. The high-yield market had a limited reopening, with eight deals pricing across a variety of sectors including midstream and building supplies. Talen Energy’s chapter 11 proceedings continued, with Talen Montana filing an adversary proceeding to avoid the transfer of certain asset sale proceeds to former parent PPL Corp. and Talen Energy obtaining the support of 71% of unsecured noteholders for its RSA. Chemical manufacturer TPC Group filed for chapter 11, and Service King entered into an agreement that will provide as much as $200 million in new capital.

As in the Americas, companies in Europe are continuing to feel the strain from supply-chain disruptions and inflationary costs. French chilled dough and pancake maker Cerelia is seeking an amendment to be able to raise an €80 million loan amid rocketing input costs. As an added pressure, the primary markets are all but shut, leaving companies with upcoming maturities between a rock and a hard place and banks on the hook for underwritten deals.

As Shanghai is reopening after a months-long Covid-19 lockdown, the Chinese government is eyeing economic recovery and picking winners and losers in the property sector by hosting a virtual road show for five privately held developers to pitch new bond offerings. In Indonesia, a puzzling bondholder identification announcement for palm oil producer Sawit Sumbermas Sarana has market participants chattering, and an unusual judgment shows unpaid creditors can access recourse despite prior appointment of insolvency officer-holders in a company’s place of incorporation if the company can prove sufficient connection with Hong Kong.

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