Reorg on the Record: Volatility and wild price swings in Asian high-yield… | 11/17/21

Written by Stephen Aldred, Managing Editor|| China Evergrande and Chinese real estate developers continue to dominate the news cycle and activity in Asian high-yield, and will do so for some time to come. Last week, widespread rumors that the People’s Bank of China (PBOC) had discussed a potential lifting of restrictions on its current “three red lines” policy controlling developers’ leverage led to a jump in stocks and offshore bonds of benchmark names such as Country Garden, Sunac China Holdings, Yuzhou Group, Shimao Group and China Aoyuan.

The strong run continued into the early part of this week, until yesterday when overall offshore China bonds traded off 1-3 points on profit taking, although sources also suggested the earlier news may not have justified the optimism. Volatility and wild price swings remain the norm in a market susceptible to rumors.

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• Hong Kong-listed property developer KWG Group Holdings told some investors that it will use cash on hand onshore as well as offshore funds in an escrow account under its Upper Riverbank residential project in Hong Kong’s Kai Tak district to repay its $300 million 8% privately placed senior notes due Dec. 6, said two market sources familiar with the matter. Read more.
• Reorg’s analysis on Chinese property developer Yango Group looks at the company’s proposed liability management exercise launched shortly before the company’s $247 million 10% notes due 2023 became puttable Nov. 12. We consider the company’s holdco cash levels, its September contracted sales – which reached a 2021 high – and its high spend on third quarter land banking against the rationale of the proposed transaction and company’s guidance. Read more.
• Indonesia’s Deputy Minister for State-Owned Enterprises (SOEs) Kartika Wirjoatmodjo told House members at a House hearing today, Nov. 9, that Indonesia’s flag carrier PT Garuda Indonesia Tbk is planning to file a UK scheme of arrangement, on top of the ongoing in-court restructuring (PKPU) in Indonesia, confirming Reorg’s earlier reporting. Read more.
• Management of Kaisa Group said during a meeting held between central government think tank the Development Research Center of the State Council and several local real estate developers Monday, Nov. 8, that Kaisa’s liquidity is “very tight” and it has lost its investment capacity, according to a written summary of the meeting seen by Reorg and sources who were briefed on the matter and confirmed the authenticity of the document. Read more.
• A three-judge bench of the Supreme Court of India, at a hearing Nov. 11, attended by Reorg, ordered Future Retail not to seek recourse in any other forum or court until it further hears the special leave petition filed by Future Retail against the Delhi High Court’s Oct. 29 interim order, on Nov. 23. Read more.
• Recent developments around stressed Chinese companies including property developer China Evergrande have again brought to the fore mechanisms for enforcing keepwell deeds for offshore notes issued by the companies. Catch up on this recent webinar, discussing the latest developments, their implications for creditors and considerations around enforcing keepwell deeds. Watch the replay now.

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