Corporate Debt Restructuring Masterclass

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

Evergrande’s dollar bonds jumped over 4 cents on the dollar on Friday after a report cited by Bloomberg mentioned that the Guangdong government plans to release a debt restructuring framework by March that includes a plan to address offshore debt. This is seen as progress with regard to its restructuring after minimal updates ever since its default in December 2021. Sources said that the local government proposed a restructuring of Evergrande’s debt out of court with a plan to separate its offshore debt and assets from the company’s onshore business. As per the report, the plan is to repay RMB 150bn ($23.7bn) of the developer’s offshore debt via asset sales including its EV and property-management units that are alone worth a combined $5.5bn. Evergrande’s dollar bonds are now trading at over 18 cents on the dollar.

Yuzhou Group plans to relaunch an exchange offer for the remainder of its dollar bonds due January 2022 after it said that it will not be able to repay $104.9mn worth of the notes maturing on Tuesday. Yuzhou completed the exchange offer for its $340m 6% bonds due January 25 and $242.069m 8.625% bonds due January 23, after waiving the 90% minimum acceptance condition on January 20. A total of $477.212mn i.e., $265.654mn of the 6% 2022s and $211.558mn of the 8.625% 2022s (representing 82% of the total principal) were validly tendered. The developer added in its exchange filing that while certain events of default can occur on the bonds due January, no event of default will occur on 12 of its dollar bonds including its $300mn Perps under its consent solicitation that was completed on January 20. Yuzhou’s dollar bonds are trading at levels of 15-20.

Agile Group will sell its 26.7% stake in Guangzhou property JV company to Guangdong Zhonghai Property for RMB 1.84bn ($291mn), according to an exchange filing. The buyer is an indirect wholly-owned unit of China Overseas Land & Investment (CHIOLI). Agile estimates a gain of RMB 698.7mn ($110mn) from transaction and plans to use net proceeds for general working capital and future business development. Agile’s dollar bonds are trading at over 32 while its Perps are at 24 cents on the dollar.

 

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