SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Fitch upgraded certain classes of bonds issued by Temasek-backed Astrea IV, V and VI:

  • Astrea IV’s Class A-1 bonds upgraded to AA-sf, Class B bonds upgraded to Asf.
  • Astrea V’s Class A-2 bonds upgraded to A+sf, Class B bonds upgraded to A-sf
  • Astrea VI’s Class B bonds upgraded to BBB+sf

The three series of bonds are all asset-backed securities backed by private equity funds issued by units of Azalea Asset Management, which is wholly-owned by Temasek. For all the three entities, Fitch believes the liquidity position to be very strong, which will allow them to meet capital calls, expenses, and interest even if distributions were to decline, for example due to an economic downturn. The rating agency further added:

  • Astrea IV: For the year through December 14, 2021 liquidity needs included about  $11mn in capital calls, $5mn in expenses, $27mn in bond interest, for a total of $43mn. For the same period, liquidity sources included $177mn of liquidity and capital call facilities and $292mn in cash from distributions, translating into a liquidity coverage ratio for a 1Y period at 11x as per Fitch estimates.
  • Astrea V: For the year through December 20, 2021 liquidity needs included about  $31mn in capital calls, $7mn in expenses, $27mn in bond interest, for a total of $66mn. For the same period, liquidity sources included $180mn of liquidity facility and $420mn in cash from distributions, translating into a liquidity coverage ratio for a 1Y period at 9.1x as per Fitch estimates.
  • Astrea VI: For the six months through September 18, 2021 liquidity needs included about  $21mn in capital calls, $4mn in expenses, $11mn in bond interest, for a total of $35mn. For the same period, liquidity sources included $194mn of liquidity facility and $309mn in cash from distributions, translating into a liquidity coverage ratio for a 6M period at 14.2x as per Fitch estimates.

Astrea IV’s Class A-1 4.35% 2028s callable in June 2023 at par are trading at 105.7, Astrea V’s Class A-1 3.85% 2029s are trading at 103.7 and Astrea VI’s Class A-1 3% 2031s are trading at 102.5.

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