High Yield Bonds


Intel and searchable data on high-yield bonds for investors, lawyers and other restructuring professionals to incorporate into their daily workflows and research. Our coverage breaks down the high yield market through analysis and reporting on high-yield bonds, high-yield debt, high-yield trading, bond investing and more.

Gaming Sector Review
Thu Jan 4, 2024 4:20 pm High Yield Bonds  Leveraged Finance

Download the full report now!

Daily Rates and Online Businesses Support Growth in Global Gaming Companies in Third Quarter While Retail Decelerates, Leverage Declines Across Most Borrowers, Interest Coverage Holds up

Reorg is launching a quarterly global report focused on the gaming sector, highlighting key data points and developments relevant to high-yield and leveraged loan issuers. To see the report in a print-friendly format, click HERE. A relative value discussion will follow.

Despite subdued consumer confidence, the global sub-investment grade gaming market continues to demonstrate resilience, posting continued growth in the third quarter. However, a closer look reveals emerging signs of deceleration.

In Reorg’s Gaming Sector Review, our team of credit analysts delves into critical data points and industry developments tailored for high-yield and leveraged loan issuers. Our comprehensive report explores advancements in key sectors, covering U.S. and Asian casinosonline gamingsports bettinggaming technology, and the European gaming landscape.

Equip yourself with data-backed insights for informed decision-making – download the full report today!

For more reports and guides by Reorg, please click here.

If you would like to be panelist on any upcoming webinars, please contact marketing@reorg.com, and if you would like to be notified for the upcoming webinars, sign up for Reorg on the Record.

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Reorg EMEA Webinar: BVI’s Overlevered Structure, Eroding Liquidity, Maturity Runway Require Support
Thu Jan 4, 2024 4:18 pm High Yield Bonds  Leveraged Finance

Register Now!

Reorg will host another episode of our deep-dive webinar series on Jan. 10, 2024. BVI Medical, a U.S.-headquartered manufacturer of eye surgery products, is struggling with an overlevered  balance sheet and persistent cashburn, which has caused its liquidity to dwindle, while its maturities are edging closer. As a result, the group looks likely to need additional support from sponsor TPG Capital to fortify liquidity and create a sustainable capital structure.

Join our team of experts for a deep dive into the causes of BVI’s underperformance, how the sponsor might deal with the group’s capital structure and what the potential outcomes are for lenders.

Panelists:

  • Robert Schach, deputy managing editor, EMEA Credit
  • Chetna Mistry, senior legal director
  • Wayne Jambawo, credit analyst

You can find recent analysis on BVI HERE

Attendees can submit questions during the webinar or email them in advance HERE.

Webinar details:

When: Wednesday, Jan. 19, at 3 p.m. GMT/10 a.m. ET 

Registration: To register for the webinar, click HERE

If you would like to be panelist on any upcoming webinars, please contact marketing@reorg.com, and if you would like to be notified for the upcoming webinars, sign up for Reorg on the Record.

To keep up on the latest coverage with Reorg, follow Reorg on LinkedIn and X.

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Reorg London Credit Seminar

Exploring current themes and what lies ahead for the primary and distressed markets.
In-person only event at the Biltmore, Mayfair.

November 2, 2023
3:30 PM-8:00 PM

You’re Invited! If you haven’t registered yet, we cordially invite you to join us.

Agenda at a Glance

  • Registration: 3:30 – 4:00 p.m.
  • Welcome by Global Head of Editorial, Mario Oliviero: 4:00 – 4:05 p.m.
  • Performing Credit Panel: Debut Issuers Return as Sponsors and Investors Embrace New Normal, moderated by Bart Capeci, including audience Q&A: 4:05 – 4:55 p.m.
  • Spotlight on ESG by Luke Wood: 4:55 – 5:05 p.m.
  • Distressed Panel: Lenders Take Charge as Sponsors Run Out of Options in High Interest Rate Market, moderated by Magnus Scherman, including audience Q&A: 5:05 – 5:55 p.m.
  • Cocktails, Canapes and Networking: 5:55 – 7:45 p.m.

Bart Capeci will moderate the performing panel ‘Debut Issuers Return as Sponsors and Investors Embrace New Normal’ featuring guests Camille Mcleod-Salmon from Fidelity International, Jamie Cane, CFA from Muzinich & Co, Natalie Day Netter from J.P. Morgan and Pieter Staelens from CVC Capital Partners.

London credit seminar Reorg November 2 
https://ow.ly/vsNK50PYufP

Magnus Scherman will moderate the second panel ‘Lenders Take Charge as Sponsors Run Out of Options in High Interest Rate Market’ which will be moderated by Magnus Scherman. This panel includes experts Christian Herrmann from Polus Capital Management, Gani Diwan from Triton Partners, Sam Whittaker from Lazard and Toby Smyth from Simpson Thacher & Bartlett LLP.

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In-person only attendance for credit professionals in London.
Register today for great content and networking over cocktails and canapes.

We send a weekly roundup of Reorg content ranging from breaking news to in-depth financial and legal analysis as well as the latest podcasts that you can listen to and webinars that you can register to attend. Sign up to Reorg on the Record here.

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Asia Credit Daily

Chinese regulators take further steps to cut down payments for home buyers and encourage banks to lower interest rates on existing mortgages, according to joint statements issued by the People’s Bank of China and National Administration of Financial Regulation on Thursday, Aug. 31. The minimum down payment will be uniformly reduced to no less than 20% for first home purchases and no less than 30% for second home purchases. The lower limit of mortgage interest rate for second home purchase had been adjusted to the level of related LPR+20 bps while the lower limit of mortgage interest rate for first home purchases remained at the level of related LPR-20 bps.

India’s GDP surged by 7.8% in April-June, surpassing predictions of 7.7% and up from 6.1% in the previous quarter and marked the highest in four quarters, driven by strong services sector and government capital spending. However experts suggest faster expansion in the first half of the financial year might give way to slower growth in the latter half, Nikkei Asia reported.

Shanghai Composite Index went up 0.34% to 3,130 as of 2:04 p.m. Beijing Time. Japan’s Nikkei 225 Index went up 0.28% to close at 32,711, while Australia’s S&P/ASX200 went down 0.36% to close at 7,279. Hong Kong market is closed today due to No. 9 Typhoon.

If you would like to be panelist on any upcoming webinars, please contact marketing@reorg.com, and if you would like to be notified for the upcoming webinars, sign up for Reorg on the Record.

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H1 2023 European Sustainability-Linked Bonds Wrap
Fri Aug 18, 2023 3:01 pm High Yield Bonds  Leveraged Finance

An Overview of the Sustainability-Linked Bond Market

Following the issuance of the first European sustainability-linked high-yield bond by Paris-headquartered aluminum maker Constellium in 2021, the European high-yield SLB market has grown considerably. New issuance in the first half of 2023 was €4.2 billion, nearly double the €2.8 billion issued in the first half of 2022. While it is tempting to attribute this increase to a heightened awareness of sustainability among issuers and investors, it needs to be considered in the context of the growth in the size of the European high-yield bond market as a whole. Within Reorg’s coverage universe, a total volume of €33.3 billion of European high-yield bonds was issued in H1’23 – more than double the €15.5 billion volume of bonds issued in the same period last year. Consequently, the SLB market has maintained a similar overall position in H1’23 in terms of share of the European high-yield bond market compared with the same periods in 2022 and 2021. SLBs made up 13% of H1’23 European high-yield bonds compared with 15% in H1’22, 11% in H1’21 and 13% in 2022 and 16% in 2021.

In terms of the number of SLB deals, the picture is slightly different. While five SLBs were issued in each of the first halves of 2023 and 2022, there were 15 SLB deals in H1’21 and only one in H2’22. So while the size of the SLB market has grown, its share of the broader European high-yield bond market has remained relatively constant, with the number of SLB deals in any period fluctuating with the broader market. Although we would have liked to see SLBs grow their share of the broader European high-yield market, we’re happy to settle for a show of resilience in a turbulent market.

Download the report here.

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Americas Primary Quarterly: Credit Spreads, Rates and Mixed Macro Messages
Wed Aug 2, 2023 7:30 pm High Yield Bonds  Leveraged Finance

Every quarter, our Americas Performing Credit Research team compiles a comprehensive primary report showcasing key highlights from the preceding quarter.

Download the whitepaper.

The unusual market conditions in the second quarter, discussed in more detail in the report, were not associated with any obvious across-the-board improvement in covenant quality. As deal volume picked up, the second quarter’s high-yield issuances included several sponsored LBO deals, which generally featured aggressive covenant packages. However, in a number of deals, investor pushback resulted in meaningful improvements in covenant protections for noteholders, potentially indicating a more hospitable climate for noteholders seeking to reduce risk through stronger covenants.

In this report, our team highlights deals by Copeland, Cvent, Citrix/Cloud Software, Univar, MoneyGram and more. Also, we suggest that there may be opportunities for investors to seek better covenant protection in the current market.

For a detailed analysis, the full report can be downloaded below.

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EMEA Primary Market Half-Yearly Wrap: Primary Market
Fri Jul 21, 2023 11:37 am High Yield Bonds  Leveraged Finance

Register for the Primary Market Insights Webinar on July 26 to hear about our findings in further detail here.

The European leveraged finance primary market recovered from its 2022 lows during the first half of this year. Term loan B amend-and-extend transactions, add-ons and refinancings formed the bulk of issuance and helped to push out maturities but resulted in higher interest costs and squeezed interest coverage ratios.

The second half of this year is expected to see similar activity, with high levels of primary issuance and large investor appetite for the high yields on offer, but M&As will remain suppressed. Interest rates remain stubbornly high and new supply will continue to be limited given private equity firms are unwilling to sell portfolio companies at valuations below their expectations.

We examine the bond and loan issuance trends from Jan. 1 through June 30, 2023, using data available on Reorg platforms.

High-Yield Bond Issuance Doubles Amid Rate Hike Fears

Within Reorg’s coverage universe, a total volume of €33.3 billion has been issued in the European high-yield bond market in the first half – more than double the €15.5 billion volume of bonds issued in the same period last year. A major upswing in issuance came in May this year, during which €11.2 billion of paper was issued, double the volume of the prior two months combined. Issuance volume in the month was dominated by names at the highest and lowest end of the sub-investment grade rating range from BB+ to B-. The bulk of the issuance was within the first two weeks of the month, coinciding with an expectation of an increase in rates set by the European Central Bank and the Bank of England, which came on May 10 and May 11, respectively. With this in mind, we could expect to see a similar wave of conveniently timed issuances should inflation expectations remain elevated, prompting a need for further increases in rates set by the central banks.

Read the full article here.

Register for the Primary Market Insights Webinar on July 26 to hear about our findings in further detail here.

If you would like to be panelist on any upcoming webinars, please contact marketing@reorg.com, and if you would like to be notified for the upcoming webinars, sign up for Reorg on the Record.

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Global Credit Spotlight May 2023
Fri May 12, 2023 3:13 pm Distressed Debt  High Yield Bonds  Leveraged Finance

Reorg delivers critical data and analysis for leveraged finance and restructuring professionals.

Here are some examples of coverage through the credit lifecycle from performing and primary markets to distressed, restructuring and post-reorg that you and your team could access through a subscription to Reorg.

Americas

In the Americas, 14 debtors filed for chapter 11 over the past two weeks, including six with liabilities in excess of $100 million. Bed Bath & Beyond entered the process on April 23, stating that “long shot transactions” failed to stabilize the company; the debtors now seek speedy store liquidations and potential 363 sales of other assets. Earnings season has kicked into high gear, with regional banks including First Republic a particular point of focus as the collapse of Silicon Valley Bank prompted a flow of deposits into larger institutions. The Federal Reserve meets next week, with most market participants expecting another rate increase of 25 bps despite a lower-than-expected first-quarter GDP print; nonfarm payrolls for April were released May 5.

Elevate Textiles

Elevate Textiles and sponsor Platinum Equity are negotiating with lenders to the textiles maker on a potential deal to be executed in a bankruptcy filing that would hand over substantially all reorganized equity to lenders in exchange for debt cancellation. Platinum Equity is expected to receive a small amount of new equity following restructuring, the sources said. Lenders are also expected to receive take-back paper. However, negotiations are ongoing and the parties may execute a restructuring out of court. >> Continue reading.

Securus Technologies

Securus Technologies disclosed last week that its majority owners committed $60 million of additional capital to support the business and that it is seeking a refinancing of its near-term debt maturities. The Dallas-based provider of telecom services to incarcerated people told investors that it expects to refinance its outstanding debt this year. Securus has an RCF due August 2024, a first lien term loan due November 2024 and a second lien term loan due 2025. >> Continue reading.

Europe

In Europe, the primary bond and loan markets resumed after the Easter break. A mixed bouquet of borrowers including hotel group Travelodge, chemicals producer CABB and a number of pharmaceutical-linked companies raised new debt to refinance, while frozen bread specialist Monbake locked in terms for a two-year amend-and-extend solution to its 2025 maturity. In restructuring, all eyes were on Justice Thomas Leech’s 164-page judgment in Adler’s contested English restructuring plan, which rejected a pari passu challenge to the company’s plan. The English High Court later ruled that the dissenting hedge funds cannot appeal the judgment.

Casino Guichard-Perrachon SA

A group of Casino’s €1.425 billion term loan B holders have mandated law firm Latham & Watkins as the retailer considers options to merge its French retail arm with Teract, sources told Reorg. While details on the merger remain limited, the transaction contemplates that two separate entities will be created. One will house all the retail activities of Casino and Teract in France (newco) and is expected to be listed and controlled by Casino. The other, named Teract Ferme France, would be in charge of supplying local agricultural products and controlled by InVivo. >> Continue reading.

UniCredit

Italian bank UniCredit said this week it will call its €1.25 billion 6.625% additional tier one notes at par, together with accrued and unpaid interest, on June 3. Investors had been buying into the discounted bond through April on the back of shivers stemming from Credit Suisse’s regulator led merger with UBS, which resulted in a $16 billion wipeout of Credit Suisse AT1 notes. >> Continue reading.

Asia

In Asia, Dalian Wanda focused attention on differing dynamics influencing onshore versus offshore China creditors through the lens of commercial bank loans as it seeks maturity extensions, while in India, eyes are again on perennial last-minute escape artist Vedanta, which managed to reduce its gross debt by about $1 billion in April but still faces a $500 million bond maturing in May. In Indonesia, Lippo Karawaci CEO John Riady has publicly expressed support for Lippo Malls Retail Investment Trust ahead of a widely anticipated liability management exercise. But the true nature and extent of that support from Lippo Karawaci – a 58.07% shareholder in Lippo Malls – remains to be seen.

Lippo Karawaci / Lippo Malls Indonesia Retail Trust

John Riady, CEO of Indonesian property and healthcare conglomerate PT Lippo Karawaci Tbk, or LPKR, said on an April 27 earnings call that the company continues to support Lippo Malls Retail Investment Trust, or LMIRT, “as much as we can.” But the nature and extent of that support from 58.07% shareholder LPKR remains an open question, as LMIRT heads toward a widely anticipated liability management exercise. >> Continue reading.

Sunac China Holdings

A group of dissenting creditors advised by Alvarez & Marsal and Latham & Watkins emerged to contest Chinese real estate developer Sunac’s announced restructuring proposal. The company’s advisors cautioned the action was value destructive and that the company reserved all rights and remedies. Meanwhile, A&M and Latham advised creditors on a conference call not to sign the company’s RSA and to demand that the company address specific material deficiencies in its proposal. >> Continue reading.

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Global Credit Spotlight

Reorg delivers critical data and analysis for leveraged finance and restructuring professionals.

In this paper, access a curated selection of data-driven insights into credit situations developing around the world right now.

March 31, 2023

Reorg’s expert global team research and publish thousands of analysis and intelligence articles every year to bring clarity to investors, bankers, lawyers and consultants. We’re obsessed with providing actionable insight on the sub-investment grade credit markets.

Here are some examples of coverage through the credit lifecycle from performing and primary markets to distressed, restructuring and post-reorg that you and your team could access through a subscription to Reorg. If you are interested in understanding how a Reorg subscription can benefit your business, request trial access here www.reorg.com/trial.

Americas

In the U.S., 19 debtors filed for chapter 11 protection over the past two weeks, according to Reorg’s First Day Database; seven of those names came to court with liabilities in excess of $100 million. Some of the fears surrounding contagion from SVB Financial’s collapse have begun to abate, as shown by a slight uptick in primary market activity, as two bond deals and several leveraged loan transactions came to market. Nevertheless, regional banks remain a focus, and Reorg’s analyst team commenced coverage of some of the most prominent among them. The possibility of an economic slowdown remains a focus, as investors wait for signs that the Fed’s tightening program is taking effect amid expectations that the central bank will hike rates again this year as inflation remains stubbornly high. Advisor mandates are also increasing, as the impact of higher rates on floating-rate debt saps cash flows.

Fundamentals by Reorg: Reorg’s Fundamentals and ESGx analyst teams launched their debut report on Zayo this week. Our report includes the following sections: Capital Structure, Forecasts and Leverage Trajectory, Comparables and Industry Dynamics, ESG, Financial Overview, Business Overview and M&A Strategy. Access is limited to Zayo lenders, bondholders or parties under an NDA.

Citrix Systems: Bookrunners for Citrix Systems’ $3.95 billion SOFR+700 bps second lien bridge loan began talking to a select group of funds late last year about a potential takeout of the software company’s bridge loan with new paper yielding about 14%. The structure and pricing have yet to be finalized, but the banks have some time, as the bridge does not expire until October. However, in light of risks associated with the company, the yield could widen to as much as 16%. Read more on Citrix Systems.

U.S. Regional Banks: The Americas credit analyst team has initiated coverage of nine regional banks that have come into focus since the collapse of Silicon Valley Bank: Zions Bancorp, KeyCorp, BankUnited, HomeStreet Capital, SVB Financial Group, Signature Bank, First Republic, PacWest Bancorp and Western Alliance. Read more.

Shoes For Crews: A group of lenders to Shoes For Crews’ $258 million L+500 bps first lien term loan B has organized with King & Spalding, according to sources. The Boca Raton, Fla.-based provider of slip-resistant footwear for various industries, including food service, retail and industrial workers, has struggled with high leverage and weak performance during the Covid-19 pandemic.

Western Global Airlines: an Estero, Fla.-based cargo carrier, has hired Weil Gotshal, Evercore and FTI Consulting as legal counsel and financial advisors, respectively, as the company contends with tightening liquidity, a pilot shortage and operational challenges amid the slowing air cargo market. The company’s bondholders are working with Ducera Partners as financial advisor, and an upcoming $21 million coupon payment in August is in focus.

Americas Municipals

Puerto Rico Electric Power Authority: The judge overseeing the Title III restructuring of the Puerto Rico Electric Power Authority, or PREPA, delivered a critical opinion on bondholder liens ahead of a confirmation trial scheduled for July. Judge Laura Taylor Swain’s decision noted that the bondholder’s lien was limited to a $16 million sinking fund, but that bondholders of PREPA debt had recourse through an unsecured net revenue claim. Uninsured bonds traded up on the news from the high 60s to low 70s, indicating a potential settlement ahead of confirmation. Parties to the dispute have filed a joint statement outlining their views on the next steps in PREPA’s restructuring. Read more.

American Rescue Plan Act: The state of Ohio filed a petition for writ of certiorari with the U.S. Supreme Court seeking review of a November 2022 opinion by the Sixth Circuit holding that Ohio’s challenge to the offset restriction provision, or tax mandate, of the American Rescue Plan Act, or ARPA, which prevents states from using ARPA funds to directly or indirectly offset net reductions in tax revenue resulting from changes in state law, was mooted by a clarifying regulation issued by the Treasury Department.

Ohio asks the Supreme Court to answer whether federal courts still have jurisdiction to adjudicate states’ challenges to the tax mandate in light of the clarifying regulation and whether the tax mandate is unconstitutional, arguing that the provision is unconstitutionally ambiguous and coercive. In January, the Supreme Court denied a similar petition by Missouri seeking review of an Eighth Circuit determination that the state lacked standing. Read more.

Europe

In Europe, additional tier 1 bond investors are still aching from a controversial decision announced on Sunday evening, March 19, by the Swiss financial regulators to wipe out $17 billion of Credit Suisse AT1 debt as part of a merger with domestic rival UBS. The move sent shockwaves through the markets because the regulators allowed Credit Suisse shareholders, junior to AT1 creditors, to walk away from the imploding bank with a small minority equity stake, valued at $3 billion, in the new, much larger UBS – thereby disregarding the absolute priority rule. Global litigation firms are now in full swing to prepare legal challenges.

Credit Suisse: Law firms are preparing multiple litigation strategies to push back on Switzerland’s March 19 decision to write CHF 16 billion of Credit Suisse additional tier 1 debt down to zero. Quinn Emanuel and Pallas Partners are both pitching disgruntled investors, trying to build a large enough group to lead the charge in Switzerland, which, according to Pallas’ Natasha Harrison, has “annihilated its reputation as a safe haven.” Reorg’s legal analysis shows that Credit Suisse’s AT1 bond documentation does allow for the regulator to write down the subordinated debt in a non-liquidation scenario. Read more.

Deutsche Bank’s additional tier 1 notes fell 8% to 10% on March 24, the most hit in Europe, as policymakers are struggling to calm waters after the 16 billion Swiss franc ($17.4 billion) vaporization of Credit Suisse AT1s. The German lender’s shares are down 10%, while its five-year credit default swap was indicated at 302 basis points last Friday, March 24, up 18% compared with the day before. The banking sector, as well as broader markets, have fallen because of the turmoil caused by the collapse of three U.S. regional banks and the last-minute merger between Credit Suisse and UBS, in which the former’s AT1 notes were wiped out completely and its equity took a big loss but were not fully written down. Read more.

Flint Group said more than 75% of first lien debt lenders by value and 90% of second lien debt lenders have acceded to a lockup agreement for its recapitalization deal. The Luxembourg-based printing and packaging company added that it expects this level of support to enable the group to implement the transaction by way of a U.K. scheme of arrangement. The transaction will cut debt by €740 million and reduce interest costs by €75 million in financial year 2023. Lenders will provide €72 million of new liquidity and extend maturities by up to four years. The transaction would cut operating group debt by more than 50% through a partial restatement of the first lien debt, with the rest of the first and second lien pushed up into new holdco debt. Read more.

Codere: Spanish gaming company Codere, which previously restructured its debt in 2020 and 2021, said it intends to raise €100 million of super senior new money, and defer interest due under its 2026 and 2027 PIK super senior notes and principal under its 2026 PIK super senior notes. The group is using a consent solicitation to implement the key terms of the deal, requiring the consent of just 50% of each note’s tranche and in addition launching an exchange offer. The company is dealing with a significant interest burden, which is eroding its liquidity. As of the nine months ended Sept. 30, 2022, the group’s total cash interest burden amounted to €68.4 million, of which €44.3 million related to bond net cash interest payments. Including PIK interest of €61.5 million, total interest amounted to €129.9 million. Read more on Codere.

Tricor/Vistra: Investors who considered the $1.66 billion-equivalent incremental term loan B being marketed to support the merger of corporate services companies Tricor and Vistra highlighted that the company’s scale will more than double as a result of the deal. Both businesses are based in Hong Kong and have activities in Asia, however Vistra’s activities in the EMEA region and in the Americas will enable Tricor to expand its focus beyond Asia. Relatively low capex also means that free cash flow generation is strong, investors said. The deal comes with significant execution risk and large integration costs. Additionally, the two companies may have overlapping activities and clients. The dollar portion of the deal priced at SOFR/Euribor+ 475bps with a 97.5 OID.

Quark: Arcano Partners has been appointed to run the sale of Spanish consulting and engineering company Quark, sources told Reorg. The founders of Quark are looking for a new partner to continue the company’s growth and international expansion.The process is at an early stage, sources noted.

Asia

In Asia, earnings were a focus for investors. CIFI Holdings started negotiating with holders of its over RMB 2B onshore bond to cancel a put option, and Reorg began coverage of Chindata Group.

Logan Group: We dialed into a conference call held by the company’s chief restructuring officer, who told investors that Logan aims to distribute a detailed restructuring proposal to all creditors in the next few weeks, and that the terms will feature amortization payments throughout the extended period. Read more.

China Evergrande: Reorg compares key terms of recent liability management and restructuring exercises launched by Chinese real estate developers against the proposed restructuring terms under China Evergrande Group’s restructuring term sheet. Among other details, we highlight the three schemes under the plan and benchmark various terms against historical and ongoing restructurings such as the restructuring consideration, debt/equity swap terms, money terms, asset sales undertaking and credit enhancements. Read more.

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New Report: China Real Estate Analysis
Thu Mar 30, 2023 10:18 am High Yield Bonds

Reorg has compiled a non-exhaustive list of almost 100 onshore bond principal and coupon payment extensions which occurred in 2022 and January 2023, conducted by 15 Chinese real estate developers with offshore USD note issuances within Reorg’s scope of coverage. This summary analysis compares and contrasts the revised repayment schedule and credit enhancements offered under these extensions.

Highlights

  • The contrasting “piecemeal” approach involves principal payment extensions of around one year for individual onshore bonds.
  • In exchange for onshore principal payment extensions, issuers have pledged equity stakes in onshore project companies as credit enhancements for onshore bondholders.
  • The impact of these types of onshore bond extensions is negative for offshore noteholders, as collateral and temporal subordination compounds offshore noteholders’ already structurally subordinated position in credit structures for Chinese issuers.
  • Inclusion of relatively long grace periods for both missed principal and coupon payments – in some cases as long as 50 business days – is non-standard when set against offshore liability management exercises involving offshore notes and significantly weakens onshore bondholder protection.

Download the report here and request trial access to Reorg here.

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