AMC notes decline; Logan paper lower; Agile holds onto gains; China bond defaults eyed

By Cristal Cody

Tupelo, Miss., Jan. 27 – AMC Entertainment Holdings, Inc.’s paper saw declines on Thursday with the paper trading about 2 points to 2¼ points weaker in the distressed secondary market.

Overall measured market volatility was down 4.6% after the Federal Reserve left the target range for the Federal Funds rate unchanged the previous day but remained high at 30.49, compared to the 17 range at the start of the month.

Stocks dropped with the Nasdaq off 1.4% by the close.

The iShares iBoxx High Yield Corporate Bond ETF closed down 37 cents to $84.44 following declines of 29 cents on Wednesday and 25 cents on Tuesday.

Oil gave back small gains after rallying over much of the week.

West Texas Intermediate crude oil benchmark futures for March deliveries settled down 74 cents to $86.61 a barrel.

Looking at China’s distressed property developer space, Logan Group Co. Ltd.’s paper softened on Thursday following the company’s placement on a credit watch.

Agile Group Holdings Ltd.’s 5¾% senior notes due 2025 (B) were quiet and held onto the 7½-point gain from Wednesday.

“China’s corporate bond default rate will be pushed up by privately owned property developer defaults in 2022, but defaults on capital market debt from the state sector, including local government financing vehicles, are likely to remain at a similar or modestly higher level than in 2021,” Fitch Ratings said in a report on Thursday.

In 2021, 15 issuers defaulted on offshore bonds, which sent the offshore Chinese corporate default rate up to 2.8% of issuers from 2.5% in 2020, according to the report.

The sector is forecast to post strong defaults in 2022 following numerous defaults in late 2021 from issuers that included China Evergrande Group, Kaisa Group Holdings Ltd., Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

“We expect access to debt capital markets to remain curtailed for most privately owned developers in the first half of 2022, with refinancing activity significantly limited until investor confidence improves,” Fitch noted.

The space’s maturing or putable bonds will climb to $30 billion in the first half of 2022 from $21.2 billion in the second half of 2021 and $27.9 billion in the first half of the prior year, which “should result in more developer defaults, including distressed debt exchanges,” Fitch said.

AMC softens

AMC’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) declined 2¼ points to 92½ bid by the close, a source said.

The issue had gained 2 1/8 points on Wednesday after softening 1 5/8 points in the first two sessions of the week.

The secured notes are down 1½ points from the prior week.

AMC’s 6 1/8% senior subordinated notes due 2027 (Ca/CCC-) also fell 2 points to 69 bid during the session but are up 1 point on the week so far.

The Leawood, Kan.-based movie theater owner reported at the start of the month that the company is considering refinancing debt in 2022.

Logan notes down

Logan Group’s 5¼% senior notes due 2023 (Ba3/BB-/BB) dropped 2½ points to trade at 85 bid on Thursday, a source said.

The issue is down from the 97½ bid area in December.

S&P Global Ratings said on Thursday it placed Logan Group on CreditWatch with negative implications, noting reports of possibly unreported debt guarantees that range from $800 million to $1.3 billion.

The Shenzhen, China-based property developer has $300 million of 7½% offshore bonds that are due on Aug. 25.

Agile paper quiet

Agile Group’s 5¾% senior notes due 2025 (B) were quiet on Thursday in the secondary market after adding 7½ points to hit 45 bid in the prior session, a source said.

The Guangzhou, China-based property developer’s issue is down from the 69 bid range in December.

Distressed returns up

Distressed returns improved midweek.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.81% from minus 0.05% on Tuesday and minus 0.78% on Monday.

Month- and year-to-date index returns narrowed declines to minus 0.37% versus minus 1.18% on Tuesday and minus 1.13% 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.