China Evergrande notes trade up; Fantasia, Tianji lower; Talen rallies; Endo better

By Cristal Cody

Tupelo, Miss., Sept. 21 – China Evergrande Group’s paper staged a small comeback on Tuesday after plunging on Monday and sending ripple effects across the financial markets that contributed to a standstill in new issuance at the week’s start.

China Evergrande’s offshore bonds traded up about ½ point to 3¾ points after declining about 2 points to 5¼ points on Monday.

Other Chinese property developers remained mostly soft on Tuesday, sources said.

Shanghai-based real estate developer Greenland Global Investment Ltd.’s 5¾% senior notes due 2022 (Ba2/BB-) traded 3/8 point weaker at 83 bid.

Fantasia Holdings Group Co. Ltd.’s 10 7/8% senior notes due 2023 (B/B+) were less than ¼ point lower at 41 bid during the session.

The China-based property developer’s notes are down more than 50 points since June.

“Even as risk markets today are recovering a bit from their plunge yesterday, which was driven in part by concerns that major Chinese developer Evergrande might default on its debts, the company still isn’t out of the woods,” according to a Confluence Investment Management research note on Tuesday.

Evergrande is scheduled to make a number of interest payments on its public debt starting Thursday, according to S&P Global Ratings.

In addition, Evergrande's project companies, which are subsidiaries, might have interest payments on bank loans due before Thursday, S&P said.

“A default is likely,” S&P said in a report released Tuesday.

China Evergrande subsidiary Tianji Holding Ltd.’s 11½% senior notes due 2022 (C//CCC) slid 4½ points to 10¾ bid in thin trading on Tuesday.

The company is the Hong Kong-based overseas financing arm of Hengda Real Estate Group Co. Ltd., a subsidiary of China Evergrande Group.

KBRA said in a report on Tuesday that defaults to date in China “had just scratched the surface of debt distress in that country. In systemic terms, direct risks to international creditors remain largely contained because of low non-resident debt holdings, although flows have accelerated over the recent period.”

Market volatility waned but remained high on Tuesday ahead of the Federal Reserve’s monetary policy announcement expected on Wednesday.

Oil futures were modestly higher on the day following declines on Monday.

West Texas Intermediate crude oil benchmark futures for October deliveries settled up 27 cents to $70.56 a barrel.

Talen Energy Supply LLC’s bonds rallied about 1¼ points to 7¼ points on Tuesday on news the company secured up to $175 million of new funding.

In other distressed secondary action on Tuesday, Endo International plc’s paper improved after opening the week softer.

Mallinckrodt LLC’s 4¾% notes due 2023 were down about 1 point on the day.

China Evergrande up

China Evergrande Group’s 8¼% senior notes due 2022 (Caa2/CCC-/CCC) jumped 3¾ points to 29 bid in light trading totaling $2 million on Tuesday, a source said.

The company’s 10½% secured notes due 2024 retrieved ½ point during the session to head out at 24½ bid after shedding 3½ points on Monday.

The Shenzhen, China-based real estate developer’s bonds are down more than 70 points since May.

Talen swings higher

Talen’s paper climbed as much as 7¼ points in secondary trading on Tuesday, a source said.

Talen’s 6½% senior notes due 2025 (B3/CCC/B-) hit 53½ bid, up 7¼ points on the day.

More than $7 million of the notes were traded.

Talen’s 7¼% senior secured notes due 2027 (Ba3/BB-/BB-) rose 3½ points to 93½ bid on $4 million of secondary supply.

Also, Talen’s 10½% senior notes due 2026 (B3/CCC/B-) climbed 7¼ points to 56¾ bid by the close on $2 million of paper traded.

The Woodlands, Tex., and Allentown, Pa.-based power company said in a press release on Tuesday that subsidiary Cumulus Growth Holdings LLC has secured up to a $175 million six-year strategic capital partnership with Orion Energy Partners.

Talen said up to $125 million of the capital will be available following closing and an additional $50 million will be available at agreed milestones.

The investment will be used to fund clean energy efforts and Talen’s bitcoin mining joint venture.

Endo notes rise

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC+) recovered ½ point over the session to 66½ bid, a source said.

The notes fell ½ point on Monday.

Endo’s bonds are trading about 3 points higher so far in the month following the company’s announcement earlier in September that subsidiaries Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Par Pharmaceutical, Inc. and Par Pharmaceutical Cos, Inc. settled three opioid-related cases in New York for $50 million.

The Dublin-based pharmaceuticals maker announced in July that Endo Health and Endo Pharmaceuticals also reached a $35 million opioid-related settlement in Tennessee.

That settlement followed the July 21 announcement of a state and local governments settlement of up to $26 billion with Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

New York still has lawsuits pending against Mallinckrodt and Rochester Drug Cooperative that are moving separately through U.S. Bankruptcy Court.

Mallinckrodt down

Mallinckrodt’s 4¾% notes due 2023 fell about 1 point to trade under the 38¾ bid area on Tuesday, a market source said.

A confirmation hearing for the bankrupt pharmaceuticals maker’s joint Chapter 11 plan of reorganization and disclosure statement was scheduled for Tuesday.

The company, based in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Distressed index weak

Distressed index returns were weak on Monday.

The S&P U.S. High Yield Corporate Distressed Bond index total return for the session was minus 1%.

Month-to-date total returns fell to 0.16% from 1.17% on Friday.

Year-to-date total returns declined on Monday to 26.89% from 28.17% ahead of the weekend.

Market tone recovered on Tuesday as volatility waned.

The Chicago Board Options Exchange’s CBOE Volatility index fell 5.25% to 24.36 after soaring 23.55% in the prior session.

The iShares iBoxx High Yield Corporate Bond ETF rose 15 cents to end at $87.84 after closing down 31 cents on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.