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

Chinese developer KWG Group was downgraded to B- from B by Fitch  primarily due to its continuing decrease in contracted sales. This is expected to add further pressure on KWG’s operating cash flows and liquidity buffer. KWG’s contracted sales fell by 64% YoY and 5.3% MoM in May 2022 to RMB 4.1bn ($610mn) and is expected to fall by 25-30%. KWG’s management said that it had RMB 11bn ($1.6bn) of cash at the holdco level at end-April 2022, but it is insufficient to cover RMB 12.08bn ($1.8bn) in capital-market maturities in the rest of 2022. Fitch also adds that KWG continues to be in negotiations to obtain secured loans against its Hong Kong project and other assets in China worth RMB 35bn ($5.2bn). This funding is set to be able to cover most of its near-term maturities if successful, but, KWG faces execution risk as one of its JV partners is in distress.

KWG’s dollar bonds were trading weaker with its 6.3% 2026s down 0.5 points to 24.74.

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