Trading heavy in Evergrande subsidiary paper; AMC notes off; Goldman Sachs perpetuals up

By Cristal Cody

Tupelo, Miss., March 24 – Tianji Holding Ltd.’s paper saw the heaviest secondary action in the distressed market on Thursday as parent company China Evergrande Group and subsidiaries face debt defaults.

Trading volume in two tranches of Tianji’s bonds hit more than $100 million over the session.

Overall market volatility swung lower on Thursday with the Chicago Board Options Exchange’s CBOE Volatility index down more than 8% at 21.67, compared to levels of over 35.00 at the start of the month.

The iShares iBoxx High Yield Corporate Bond ETF rose 17 cents to end the day at $81.91.

Oil prices retreated slightly after jumping over $5 to $6 on Wednesday.

West Texas Intermediate crude oil benchmark futures for May delivery declined $2.59 to settle at $112.34 a barrel.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) also saw strong trading levels on Thursday but were going out 1 point lower on the day.

Meanwhile, Goldman Sachs Group Inc.’s 5% perpetual split-rated fixed-to-floating rate non-cumulative notes (Ba1/BB+/BBB-) improved nearly 1 point during the session but trade with a yield of more than 15½%, up from around 10% in February.

Tianji trades heavily

Tianji’s paper was the most active distressed bonds seen on Thursday, according to a market source.

The company’s 11½% notes due Oct. 24, 2022 (C//C) were quoted at 8¼ bid on more than $50.75 million of secondary volume.

Tianji’s 12% notes due 2023 (C//C) fell ¼ point to 8 bid on over $49.98 million of paper traded on Thursday.

Tianji is the financing arm of China Evergrande subsidiary Hengda Real Estate Group Co. Ltd.

Evergrande reported in regulatory filings released Tuesday that it will not complete audit procedures in time to post its audited 2021 earnings on or before March 31.

Trading in the Shenzhen, China-based real estate developer’s stock and structured products listed on the Hong Kong Stock Exchange has been halted since Monday.

AMC secureds dip

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) fell 1 point in heavy trading volume of $26.86 million on Thursday, a market source said.

The notes were quoted at 88¾ bid and yielding over 13½%.

The issue has gained about 2¼ points in the past week since AMC announced a new acquisition.

The Leawood, Kan.-based movie theater owner reported on March 15 that it purchased a 22% stake of Hycroft Mining Holding Corp. for $27.9 million in cash.

Hycroft operates the 71,000-acre gold and silver Hycroft Mine in Nevada.

Goldman perpetuals up

Goldman Sachs’ 5% series P fixed-to-floating rate perpetual notes (Ba1/BB+/BBB-) rose nearly 1 point on Thursday to 94 bid and yielding over 15½%, a market source said.

The issue saw $7.45 million of secondary activity over the session.

Goldman’s notes were seen in mid-February at the 96 bid area and yielding around 10%.

The notes pay a dividend of 5% until Nov. 10, 2022 and then convert to a rate of Libor plus 287.4 basis points thereafter.

The New York-based banking, securities and investment management company issued $1.5 billion of the perpetual paper on Nov. 1, 2017 at par.

Distressed returns eyed

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return remained positive at 0.21% on Wednesday, while it was at 0.46% on Tuesday and 0.08% on Monday.

Month-to-date total returns improved to minus 2.38% from minus 2.59% on Tuesday and minus 3.04% on Monday.

Year-to-date index returns were stronger Wednesday at minus 5.65%, versus minus 5.85% on Tuesday and minus 6.29% at the start of the week.

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