Morning Commentary: NiQuan Energy Trinidad holds off on pricing; China deals active

By Rebecca Melvin

New York, Dec. 18 – NiQuan Energy Trinidad Ltd., a subsidiary of NiQuan Energy LLC, is now expected to push pricing of its planned notes offering until 2019 as market volatility and the holiday lull undercut chances to price in the past few sessions, according to market sources. But issuance from China continues to trickle in.

Niquan, a Trinidad and Tobago-based gas to liquids plant operator, is now expected to price $100 million to $150 million of notes in early January.

Meanwhile, Fantasia Holdings Group Co. Ltd., a high-yield property development credit based in Shenzhen, issued $130 million of 15% notes due 2021 on Monday, and Nanjing, China’s Redsun Properties Group Ltd. also priced a $200 million add-on to its 13½% senior notes due 2020.

China property credits remain among Bank of America’s recommended list for 2019 although it is urging investors stay defensive going into the new year as “things could get worse before they get better,” the bank wrote in a recent Asia outlook report.

The bank said it prefers investment-grade names over high yield and focus on short-dated carry opportunities including quality and short-dated high-yield property.

“We turn more constructive on HY as more supply materializes and trade tensions de-escalate,” Bank of America credit analysts wrote referring to the China-U.S. trade dispute.

Bank of America said that it is supportive of Asian credits, which have attractive valuation and solid fundamentals despite the expectation that defaults will pick up in 2019.

But a gradual recovery of China’s onshore credit market should help alleviate the offshore supply and refinancing risks for China corporates and help drive high-yield spreads tighter into the end of the year. It predicts an 80 basis points contraction in high-yield spread to 650 bps, while investment-grade was expected to remain little changed at 160 bps at the end of 2019.

The bank said that U.S. investment-grade space will be a big driver of Asian spread.

© 2015 Prospect News.
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