Evergrande steadies; Sunac, Kaisa improve; Agile slides; Talen perks up; Air Methods off

By Cristal Cody

Tupelo, Miss., Oct. 22 – China Evergrande Group’s paper ended mostly unchanged on Friday after the company made a surprise payment on a dollar bond ahead of a looming default deadline expected over the weekend.

Evergrande’s bonds were ending the week about 2 points stronger.

“They were trading with a 22 handle today,” a market source said.

Bonds in China’s property developer space were active in the distressed secondary market over the day with most issues seen up about 1¼ points to over 3 points.

Sunac China Holdings Ltd.’s dollar notes recovered over 1¼ points to 2 points.

Kaisa Group Holdings Ltd.’s notes improved about 1¾ points to 2 points.

Other issuers in the space weakened on Friday on debt default fears.

Fitch Ratings on Thursday dropped Sinic Holdings (Group) Co. Ltd. to RD from C because the company failed to repay its $250 million of senior notes that were due Monday. Fitch noted that there is no grace period for the bond repayment.

Fitch also said it is withdrawing the ratings as Sinic has chosen to stop participating in the rating process.

Agile Group Holdings Ltd.’s 5½% notes due 2026 (Ba3/BB-) sank more than 7½ points to 82½ bid, a source said.

The Guangzhou, China-based property developer’s issue attracted $2.5 million of secondary volume.

Meanwhile, the People’s Republic of China’s $4 billion four-part investment-grade bond offering that priced on Tuesday went out stronger on Friday with the tranches trading about 10 basis points tighter than issuance, a source said.

China’s 1¼% notes due 2025 (A+/A+) tightened to 1 bp bid, 1 bp offered from pricing at a spread of Treasuries plus 12 bps.

“The high-yield market was softer,” a source said Friday.

The iShares iBoxx High Yield Corporate Bond ETF fell 0.24% to $86.84 after declining 0.25% in the prior session.

Distressed issues in the energy space mostly improved as oil rallied.

West Texas Intermediate crude oil benchmark futures for December deliveries jumped $1.26 to settle at $83.76 a barrel.

Talen Energy Supply LLC’s bonds were going out 9 1/8 points higher on the week.

Elsewhere, ASP AMC Holdings Inc.’s Air Methods notes saw further declines on Friday with the paper down about 15 points this month.

Evergrande better on week

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) fell 0.325 point to the 22 1/8 bid range on nearly $7 million of paper traded on Friday, a source said.

The bonds picked up about 2¼ points in light trading on Thursday and were ending the week over 2 points higher.

China Evergrande’s 12% notes due 2022 (C/C/C) were quoted trading at 22½ bid on $2 million of secondary supply on Friday.

China Evergrande made a surprise bond payment that staves off an expected weekend default following a missed payment in September.

Earlier in the week, the Shenzhen, China-based real estate developer announced that it had abandoned plans to sell a 50.1% stake in its Evergrande Property Services unit.

Sunac, Kaisa up

Sunac’s dollar notes were stronger in line with most of the property developer space on Friday, a source said.

The Tianjin, China-based property developer’s 7% senior notes due 2025 (B1/BB-) traded nearly 1½ points higher at 77½ bid. Secondary supply totaled $2 million.

The bonds fell about 1½ points on Thursday and slid 7¾ points on Wednesday after Moody’s Investors Service changed the company’s outlook to stable from positive on Tuesday.

Kaisa’s bonds improved after sinking earlier in the week following a downgrade by Moody’s on Tuesday.

The Shenzhen, China-based real estate developer’s 9 3/8% senior notes due 2024 (B3/B) rose 1¾ points to 32½ bid on more than $6 million of paper traded, a source said.

Kaisa’s 9¾% senior notes due 2023 (B3/B) climbed to 35 bid, up 2 points on $3 million of trading volume on Friday.

Talen on move

Talen Energy Supply’s bonds saw continued gains on strong secondary supply of more than $9 million over the day.

Talen was “moving up” in the secondary space on Friday, a source said.

The Woodlands, Tex., and Allentown, Pa.-based power company’s 10½% senior notes due 2026 (B3/CCC/B-) jumped 2 points to 65½ bid.

The bonds were 9 1/8 points higher on the week.

Air Methods down

In other secondary market action, New York-based ambulance service provider ASP AMC Holdings’ notes traded nearly 2¼ points weaker on Friday, a source said.

Subsidiaries Air Methods’ and ASP AMC Merger Sub Inc.’s 8% senior notes due 2025 (Caa3/CCC) were quoted at 78¾ bid on $6.5 million of trading supply.

“At the beginning of the month, they were trading at 95½, 95¼,” the source said.

Distressed index soft

Distressed index returns remained soft so far in the month.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total returns were 0.09% on Thursday, compared to 0.02% on Wednesday, 0.23% on Tuesday and minus 0.45% on Monday.

Month-to-date total returns totaled minus 0.8% on Thursday, minus 0.72% on Wednesday, minus 0.74% on Tuesday and minus 0.96% on Monday

Year-to-date total returns were 29.18% in the prior session, versus 29.29% on Wednesday, 29.27% on Tuesday and 28.97% at the start of the week.

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