China Evergrande dives; Kaisa softens; Diamond Sports paper mixed; Talen Energy slides

By Cristal Cody

Tupelo, Miss., Dec. 6 – China’s property developer space ventured further into the distressed market on Monday with several issuers facing default on bond payments.

China Evergrande Group’s dollar notes sank about 1¾ points to 9 points as reports circulated that all of its offshore bonds will be included in a restructuring as the company grapples with maturing debt.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) declined 1¾ points to below a 20 handle.

China’s “real estate woes” continued as the week kicked off, Confluence Investment Management analysts said in a research note.

On Monday, Sunshine 100 China Holdings Ltd. announced it defaulted on $170 million of its 10½% senior notes due Dec. 5, 2021, according to filings with the Hong Kong Stock Exchange.

The Beijing-based property developer said that it is in discussions to reach a repayment extension, but the default will trigger cross default provisions for other debt, including $219.6 million of 13% senior green notes due 2022 and $120 million of 12% senior notes due 2023.

Issuers including Evergrande, Kaisa Group Holdings Ltd., Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd. and Modern Land (China) Co. Ltd. have missed bond payments since September.

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) fell 3¼ points over the day.

“China is facing some serious long-term issues,” according to the Confluence note.

Among those concerns includes the expected-to-increase delisting of Chinese firms as app-based ridesharing and services company DiDi Global Inc. prepares to delist from the New Yok Stock Exchange.

DiDi said Thursday that it will delist the company’s American Depositary Shares from the NYSE and list its class A ordinary shares on the Hong Kong Stock Exchange.

Also Monday, the Biden administration said it will not send an official delegation to the Winter Olympics, set for Beijing in February, to protest human rights abuses.

In other secondary trading, Diamond Sports Group LLC’s paper was mixed on Monday after improving 1 point to 3¼ points ahead of the weekend following a multiple-year renewal agreement with the National Hockey League.

Market tone was stronger as the first full week of December opened.

Volatility eased with the Chicago Board Options Exchange’s CBOE Volatility index down over 10% at $27.30 after ending Friday nearly 10% higher.

The iShares iBoxx High Yield Corporate Bond ETF gained 36 cents to finish at $86.36 after going out Friday unchanged.

Oil prices rallied over $3.

West Texas Intermediate crude oil benchmark futures for January deliveries settled Monday up $3.23 at $69.49 a barrel.

In the distressed energy space, Talen Energy Supply LLC’s 10½% senior notes due 2026 (Caa1/CCC/B-) softened another 2¼ points after declining 1½ points on Friday and 5¼ points on Thursday.

Fitch Ratings said Monday that it placed the company and the senior secured and unsecured notes on rating watch negative due to a significant decline in available liquidity.

Evergrande skids lower

China Evergrande’s notes dropped about 1¾ points to 9 points in trading over Monday’s session, a source said.

Evergrande’s 8¼% senior notes due 2022 (C/C/C) dove 9 points to 23 bid on $2 million of volume.

The notes were seen Friday down about 2 points.

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) declined 1¾ points over the day to 18½ bid. Trading volume totaled $1 million.

The notes headed out Friday over 2 points weaker.

On Friday, the Shenzhen, China-based real estate developer said in a regulatory filing that there was “no guarantee that the group will have sufficient funds” for its financial obligations.

Kaisa declines

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) fell 3¼ points over the day to 34 bid, a market source said.

The notes were quiet on Friday after gaining about 4¼ points in the prior session.

Kaisa was downgraded in November following missed interest payments on its 11.7% senior notes due 2025 and 11.95% senior notes due 2023.

On Tuesday, the Shenzhen, China-based real estate developer faces $400 million outstanding of 6½% dollar bonds that mature Dec. 7, 2021.

Diamond Sports mixed

Diamond Sports’ notes were mixed on Monday after the paper improved ahead of the weekend on the announcement of a renewal agreement with the NHL, a source said.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) softened about ¼ point to 49¾ bid.

The notes were up 1 point on Friday.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) improved about ½ point from where the issue last traded ahead of the weekend to 26¼ bid on Monday.

The unsecured notes traded up about 3½ points on Friday.

Parent Sinclair Broadcast Group Inc. reported Thursday that Diamond Sports entered into a multiple-year renewal of its distribution rights agreement with the NHL.

Sinclair said the Chesapeake, Va.-based sports broadcast group’s networks serve as the televised home to more than half of all U.S.-based MLB, NHL and NBA teams.

Talen notes soften

Talen Energy’s notes remained weak on Monday on the heels of being placed on a negative ratings watch, a source said.

Talen’s 10½% senior notes due 2026 (Caa1/CCC/B-) dropped 2¼ points by the close to 55 bid on $7.5 million of paper traded.

The notes fell 1½ points on Friday after declining 5¼ points on Thursday following The Woodlands, Tex., and Allentown, Pa.-based power company’s announcement that it obtained a financing commitment for a $788 million first-lien facility due in 2024.

Closing on the new facility is expected in mid-December but is subject to a majority vote of lenders under Talen’s existing revolving credit facility, along with other conditions.

Fitch said Monday the facility will stabilize Talen’s liquidity profile but will adversely affect the ratings of its existing debt.

Distressed index stronger

Distressed index returns closed Friday higher, according to the latest data available.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return climbed to 1.08% on Friday from minus 0.6% on Thursday, 1% on Wednesday, minus 0.65% on Tuesday and minus 0.15% at the week’s start.

Month-to-date returns totaled 1.47% on Friday, up from 0.39% on Thursday.

Year-to-date total returns on Thursday grew to 23.56% versus 22.25% on Thursday, 22.99% on Wednesday, 21.77% on Tuesday and 22.57% on Nov. 29.

© 2015 Prospect News.
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