Sunac, Logan, Kaisa notes hold gains; Evergrande, AMC, PBF, Talen up; Exela lower

By Cristal Cody

Tupelo, Miss., Jan. 20 – Chinese distressed property developer bonds held onto gains on Thursday.

Sunac China Holdings Ltd.’s dollar notes were mostly stronger again after soaring over 20 points in the previous session.

China Evergrande Group’s 8¾% senior notes due 2025 (C//C) improved 1 5/8 points over the day.

Chinese property developer Logan Group Co. Ltd.’s 5¼% senior notes due 2023 (Ba3//BB) were not active after last trading Wednesday up about 13¼ points at 84½ bid, a source said.

Kaisa Group Holdings Ltd.’s notes also were quiet on Thursday after seeing slight improvements in the prior day.

Bonds in the space had soared on Wednesday following reports China will draft new rules to ease funding access for property developers.

The sector is expected to see strong defaults in 2022 following numerous defaults late in 2021 from issuers that included China Evergrande, Kaisa, Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

AMC Entertainment Holdings, Inc.’s notes were among the most heavily traded distressed issues with $15 million of volume seen on Thursday as supply remains light in January.

AMC’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) rose 5/8 point.

In other distressed secondary action, Exela Technologies, Inc.’s 11½% first priority senior secured notes due 2026 (Caa3/CCC-) that were offered in December in exchange for its 10% senior secured first-lien notes due 2023 were down about ¾ point.

Ligado Networks LLC’s secured notes quieted over the day after moving about ¾ point to 1½ points lower on Wednesday.

Market tone stayed soft on Thursday as stock indices tumbled a third day with fourth-quarter earnings releases in focus this week.

The iShares iBoxx High Yield Corporate Bond ETF closed off 16 cents at $85.43.

February and March crude oil prices were marginally down by 6 cents.

West Texas Intermediate crude oil benchmark futures for February deliveries settled the day at $86.90 a barrel.

In distressed energy bonds, PBF Energy Inc.’s 7¼% senior notes due 2025 (Caa1/B/B-) traded over 2¼ points better on over $5.25 million of secondary activity.

Talen Energy Supply LLC’s notes were about ¼ point to over 1¼ points higher.

Sunac mostly up

Sunac’s paper traded mostly stronger on Thursday after climbing over 20 points in the previous session, a source said.

Sunac’s 6½% notes due 2023 (B1/BB-/BB-) were last active on Wednesday at 62 bid, up 21½ points on the day.

Meanwhile, the company’s 6½% notes due 2025 (B1/BB-/BB-) caught up to the rally and jumped 23 points on Thursday to 64 bid on $1.5 million of volume.

The Tianjin, China-based property developer’s 7½% notes due 2024 (B1/BB-/BB-) also picked up 1 point over the session to head out at 65 bid after gaining 23½ points the previous day.

Fitch Ratings on Wednesday downgraded Sunac and estimated the company has $600 million of offshore senior bonds due in June and $600 million more due in August, in addition to its onshore debt.

Evergrande rises

Evergrande’s 8¾% senior notes due 2025 (C//C) improved 1 5/8 points to 12½ bid on $1.8 million of secondary action on Thursday, a source said.

The company’s bonds have plummeted about 70 points since the back half of 2021 as the company missed payments on bonds.

Fitch and S&P Global Ratings dropped the Shenzhen, China-based real estate developer to default status in December following the end of grace periods on missed coupon payments.

Kaisa not active

Kaisa’s paper quieted in secondary trading over the session, according to a market source.

The 9 3/8% senior notes due 2024 (C//C) went out the prior day at 20¼ bid, up about 1¼ points on the week.

Kaisa’s 11½% senior notes due 2023 (C//C) also were quiet after trading on Wednesday at 20½ bid, down from the 21¼ bid area in the prior week.

The Shenzhen, China-based real estate developer reported in December that it defaulted on its 6½% notes due Dec. 7, 2021, 11.95% notes due 2023, 11.7% notes due 2025 and 11.65% notes due 2026.

AMC paper gains

AMC’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) rose 5/8 point to 96¼ bid and yielding over 11% by the afternoon, a source said.

The issue attracted $15 million of secondary volume as the most actively traded distressed issue seen over the session.

The Leawood, Kan.-based movie theater owner’s bonds have been heavily traded this month after the chief executive officer announced intentions to possibly refinance debt in 2022.

PBF notes higher

PBF’s 7¼% senior notes due 2025 (Caa1/B/B-) improved over 2¼ points to better than 81¾ bid on Thursday with $5.25 million of notes traded, a source said.

The Parsippany, N.J.-based petroleum refiner’s bonds have been active since Morgan Stanley raised the company’s stock price objective to $20 from $17 on Jan. 12.

Talen improves

Talen’s paper saw stronger trading action on Thursday and this week after a muted start to the year, a source said.

Talen’s 10½% senior notes due 2026 (Caa1/CCC/CCC) traded over 1¼ points better to under 50½ bid by the close.

The notes were unchanged on Tuesday and Wednesday.

The Woodlands, Tex., and Allentown, Pa.-based company’s 6 5/8% senior secured notes due 2028 (B1/B+/B) were quoted on Thursday at 91¼ bid, up ¼ point on the day and nearly 3 points better so far in the year.

Fitch Ratings downgraded the company a week ago following the closing of Talen’s $848 million first-lien financing.

Exela bonds soften

Exela Technologies’ 11½% first priority senior secured notes due 2026 (Caa3/CCC-) were seen about ¾ point lower in thin trading at the 66½ bid area on Thursday, a source said.

The notes ended the prior week about 2¾ points softer.

The issue had rallied to as high as 76 3/8 bid in the first session of 2022 but has since given back gains.

In December, the Irving, Tex.-based software and services company completed a distressed debt exchange of its 10% senior secured first-lien notes due 2023 (Caa3/CCC-) for the new 11½% first priority senior secured notes due 2026.

Ligado notes quiet

Ligado Networks’ notes were quiet in trading on Thursday after moving lower on Wednesday, a source said.

Ligado’s 15½% senior secured first-lien notes due 2023 (Caa1) were last seen at 79½ bid, down ¾ point from the prior day.

Ligado’s 17½% senior secured second-lien notes due 2024 (Ca) traded last on Wednesday at 46 bid, down 1½ points from where the issue was last seen on Jan. 11.

The Reston, Va.-based satellite communications company’s bonds traded in the 75 to high 90s bid range in 2021.

Distressed returns up

Distressed index returns saw gains on Wednesday.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return improved to 0.12% from minus 0.34% on Tuesday and minus 0.41% on Friday ahead of the holiday weekend.

Month- and year-to-date index returns were better from the prior day at 0.95%, compared to 0.83% on Tuesday and 1.17% on Friday.

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