Evergrande paper on sidelines; Kaisa notes down; Shimao gains; Diamond Sports rebounds

By Cristal Cody

Tupelo, Miss., Dec. 22 – Default fears remained prominent on Wednesday in China’s distressed property developer space with another expected default, this time from Sinic Holdings (Group) Co. Ltd. on its 8½% notes due Jan. 24, 2022, following a previously announced default from the company.

China Evergrande Group’s dollar notes have been quiet since the company defaulted on debt payments.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) were last seen on Dec. 13 at 20¼ bid. The bonds have declined over 60 points since May.

On Friday, S&P Global Ratings dropped China Evergrande and subsidiary Tianji Holding Ltd. to SD from CC following the end of grace periods on missed coupon payments.

The space has seen defaults late in the year from issuers including China Evergrande, Kaisa Group Holdings Ltd., Fantasia Holdings Group Co. Ltd., Sinic Holdings, China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

Kaisa’s 11½% senior notes due 2023 (C//CCC-) traded about 5 points weaker on Tuesday.

Shimao Group Holdings Ltd.’s notes were slightly better over the day after plunging in the prior week.

The company was dropped to pure junk on Friday by Fitch Ratings and downgraded by Moody’s Investors Service.

In other secondary trading, Diamond Sports Group LLC’s secured and unsecured notes traded about ½ point better.

Apex Tool Group LLC’s senior notes were quiet on Wednesday but down about 5 points from a month ago, a source said.

Wanxiang Group Corp.’s discussions to acquire Apex from owner Bain Capital, LP are stalled with the company “shopping” for another buyer, the source said.

“Everyone was thinking they bought at 95 and it would be taken out at par. Those hopes fell through,” the source said. “But hopefully they can find another buyer. It’s down month over month.”

Apex Tool’s notes were downgraded on Dec. 1 by S&P to CCC-.

Secondary activity remained thin with desks lightly staffed ahead of the holidays.

“Everything is ridiculously slow today,” a market source said, “especially on the movers side.”

Overall market tone was strong with measured volatility down more than 10%.

The iShares iBoxx High Yield Corporate Bond ETF added 23 cents after gaining 46 cents on Tuesday to close at $86.91.

February oil prices rallied over $1 after gaining over $2 in the prior session.

West Texas Intermediate crude oil benchmark futures for February deliveries settled $1.64 higher at $72.76 a barrel.

Kaisa declines

Kaisa’s 11½% senior notes due 2023 (C//CCC-) traded under 27½ bid on Wednesday, down from where the notes were last seen in November at the 32½ bid range, a market source said.

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

The Shenzhen, China-based real estate developer also missed the payment on its $400 million of 6½% bonds due Dec. 7, 2021.

Shimao higher

Shimao’s 5.2% notes due 2027 (Ba3/BB/BB) traded about ¾ point higher on Wednesday at 56½ bid, a source said.

The issue is about 3 points softer from last week after finishing Monday about 3¾ points lower.

Shimao’s paper has plunged over 20 points since Dec. 10.

The Hong Kong-based holding company focused on property management, development and sales was downgraded on Friday by Moody’s and Fitch due to weak sales and financing conditions.

Diamond Sports better

In other distressed trading, Diamond Sports’ secured and unsecured notes traded Wednesday about ½ point better, a source said.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) rose about ½ point to 48¾ bid.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) also were about ½ point higher on the day at 27 bid.

Parent Sinclair Broadcast Group Inc. reported earlier in December 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.

Apex Tool quiet

Apex Tool’s 9% senior notes due 2023 (Caa3/CCC-) were not active in the secondary market on Wednesday and last seen trading on Monday at 95 bid, a source said.

“There’s really no movement,” the source said.

The notes have declined from trading at the par area in November.

S&P downgraded the company on Dec. 1, citing concerns of a possible default because the company has not refinanced or reduced its $325 million of senior secured notes due in February 2023.

Apex Tool’s $158 million revolving credit facility and $825 million term loan are now due in November 2022 because of a springing maturity clause, S&P said.

Apex Tool is a Sparks, Md.-based supplier of professional hand tools and power tools.

Distressed returns up

Distressed index daily returns hit positive territory on Tuesday, according to the latest data.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.44% on Tuesday from minus 0.82% on Monday.

Month-to-date return declines narrowed to minus 0.03% versus minus 0.47% on Monday, while quarterly returns were pegged Tuesday at minus 6.52%.

Year-to-date total returns improved on Tuesday to 21.74% from 21.2% at the week’s start.

© 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.