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

Fantasia Holdings was downgraded by Moody’s to B3 from B2 and its senior unsecured bond ratings were cut to Caa1 from B3. All the ratings were placed ‘under review for further downgrade’ from ‘negative’.  The downgrade came on the back of “increased refinancing risks because of its weakened funding access and sizable amount of maturing debt”, as per Moody’s. Fantasia’s sales growth is expected to fall significantly and its cash collection cycle to be prolonged due to the tight credit conditions. Fantasia has an outstanding $212mn on its 7.375% bonds due October 4. It also has a maturing $250mn 6.95% 2021 and $300mn 15% 2021 due in December. However, Moody’s expects Fantasia to continue its focus on on generating internal cash to repay its maturing debts and fund its operations over the next 12-18 months. Fantasia’s interest coverage (EBIT/Interest) is set to stay weak at 1.1x over the next 12-18 months, unchanged from what it was ending June 2021. Meanwhile, the Caa1 senior unsecured rating is one notch lower than the group rating due to structural subordination, akin to many other developers’ bonds. Fantasia was downgraded earlier this month by Fitch to B from B+.

Separately, Fantasia’s non-executive director Liao resigned from his position due to personal reasons.

Fantasia’s dollar bonds fell with its 6.95% 2021s falling 3.2 points to 57.28 and its 10.875% 2024s falling 4.1 to 35.38.

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