Tsinghua Unigroup’s dollar bonds have recovered ~30% in over a month with Bloomberg reporting that traders believe a state rescue might be coming. Even with the rally, their bonds are still trading at distressed levels in the 40s. Its peer Peking University Founder Group (PUFG) saw a debt-restructuring plan agreed in late May and that is believed to have increased confidence in Unigroup’s distressed assets. The plan for PUFG, would see it receive billions of dollars from strategic investors including a state-owned property developer, as per Bloomberg, with haircuts of ~70% on some of its creditors. Analysts say that Unigroup’s asset quality is better than PUFG’s and therefore its recovery should be better. Besides, Unigroup is one of the few domestic semiconductor makers that China could count on if the US shuts supply channels of some chipmakers. Overall, the pace of progress remains to be seen and hence investors should remain cautious according to Li Kai of Shengao Investment, who expects a 35% recovery ratio of Tsinghua’s bonds.
Unigroup’s 6.5% 2028s and 4.75% 2021s are currently trading at 41.8 cents on the dollar each.