Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Agile was downgraded to B- from B+ after the delay in publishing its audited 2021 results, indicating weak reporting, governance, and risk management. A potential acceleration of debt payments could occur, further weakening its liquidity. As per its 2021 interim results, Agile had RMB 17bn ($2.7bn) in offshore bank loans and HKD 2.4bn ($310mn) in equity-linked notes due after the end of 2021. Most of them require the company to remain listed on the HKEX or issue financial statements within 120 days from the end of the reporting year with varying grace periods, S&P notes. Besides, tight funding channels and possible cash restriction from banks following the delayed results would weigh on the developer.

Agile’s dollar bonds were trading stable – its 2022s were at 55 cents on the dollar, 2025s at 31 cents and Perps at ~20 cents.

KWG was downgraded to B- from B+  after missing its publication deadline for its audited financial results for 2021. Similar to Agile, potential acceleration of debt payments could occur if its does not publish results by end-April. In mid-2021, KWG had RMB 50bn ($7.9bn) of onshore/offshore bonds and offshore bank loans, requiring the company to issue its audited financial statements within 120 days from the end of the reporting year, with a 10 day grace period. As with Agile, this could lead to possible cash restriction from banks alongside existing tight funding in capital markets.

KWG’s dollar bonds were weaker – its 2002s were at 58 cents on the dollar while its other bonds were trading at 38-40 cents.

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