China offshore bonds mixed; Evergrande, Fantasia, Agile up; Diamond Sports notes down

By Cristal Cody

Tupelo, Miss., Oct. 12 – China’s property developer dollar bonds continued to dominate distressed secondary trading on Tuesday as the U.S. bond markets reopened following the long holiday weekend.

China Evergrande Group reportedly missed a third round of bond payments due on Tuesday following missed bond payments in September.

“The interest payments total $148 million, on top of the $83.5 million in offshore interest payments the company missed last month, which set off a 30-day grace period before the company formally defaults,” according to a Confluence Investment Management research note on Tuesday.

Fantasia Holdings Group Co. Ltd. also missed a bond payment due last week.

China Evergrande’s 8¼% senior notes due 2022 (C/C/C) edged up ¼ point, while Fantasia’s 7.95% senior notes due 2022 (C/CC) recovered 1¾ points over the day.

China Evergrande subsidiary Tianji Holding Ltd.’s notes were flat to about 3/8 point softer and now trading in the teens.

Agile Group Holdings Ltd.’s 6.7% senior notes due 2022 (Ba3/BB-) gained 7 points during the session.

Kaisa Group Holdings Ltd.’s notes were mixed.

Stocks ended the day weaker, while Treasury yields on the long end pulled back from last week’s climb.

The iShares iBoxx High Yield Corporate Bond ETF rose 0.18% to $86.65.

Oil prices were mixed but mostly unchanged on Tuesday.

West Texas Intermediate crude oil benchmark futures for November deliveries settled up 12 cents to $80.64 a barrel.

Earnings season kicks off this week with major banks including JPMorgan Chase & Co. reporting third-quarter profits.

In other secondary supply, Diamond Sports Group LLC’s notes gave back gains after improving in the prior week on additional funding discussions by parent Sinclair Broadcast Group Inc.

Fantasia, Agile up

China Evergrande’s 8¼% senior notes due 2022 (C/C/C) edged up ¼ point to 24¼ bid on $2 million of secondary supply on Tuesday, a market source said.

The Shenzhen, China-based real estate developer has entered into a 30-day grace period following missed bond payments in September.

Fantasia Holdings Group’s 7.95% senior notes due 2022 (C/CC) recovered 1¾ points to trade at 20¾ bid on Tuesday, a source said.

Fantasia was downgraded by Moody’s, S&P and Fitch last week after the company missed the payment on its bond due Oct. 4.

The Shenzhen, China-based property developer has $1.9 billion of offshore bonds maturing through the end of 2022, according to Fitch.

China Evergrande subsidiary Tianji Holding’s 11½% senior notes due 2022 (C//CCC) were quoted at 17½ bid, down ¼ point on $5 million of secondary action Tuesday.

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

Guangzhou, China-based property developer Agile Group’s 6.7% senior notes due 2022 (Ba3/BB-) improved 7 points to head out at 88 bid on $2 million of paper traded.

Shenzhen, China-based real estate developer Kaisa Group’s 11.95% notes due 2022 (B2/B) declined 5 points to 50 bid on just under $3 million of trading volume.

The notes dropped 6½ points ahead of the weekend.

Kaisa’s 10 7/8% notes due 2023 (B2/B) were better bid, up 3 points at 46 bid on $2 million of supply Tuesday.

Diamond Sports down

Diamond Sports’ paper softened on Tuesday after improving nearly 1 point to 1½ points a day after Sinclair reported continuing funding discussions, a source said.

The 5 3/8% senior secured notes due 2026 (Caa1/CCC) fell ½ point to 61¾ bid.

The notes traded Friday up nearly 1 point.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) were down 1 point at 39 bid by the close.

The notes traded 1½ points higher on Friday.

On Thursday Sinclair Broadcast reported a Sept. 28 proposal to secure new funding for the Chesapeake, Va.-based sports broadcast group.

The company reported in June that it made two proposals to lenders and noteholders of Diamond Sports dated March 22 and April 29.

Distressed index soft

Distressed index returns ended Friday with month-to-date total returns down 0.17% but improved from minus 0.49% on Thursday.

The S&P U.S. High Yield Corporate Distressed Bond index total returns on Friday were 0.31%, down from 0.35% in the prior session.

Year-to-date total returns totaled 30% on Friday, up from 29.59% in the prior session.

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