Tewoo remits 6 April coupons; aims to keep bonds current while working on revising other debt

04 April 2019

Tewoo remits 6 April coupons; aims to keep bonds current while working on revising other debt

 

04 April 2019 | 09:28 BST

 

Tewoo Group has remitted funds offshore to cover the 6 April coupons on its USD 300m, 4.625% due-2020s and USD 200m, 5.5% due-2022s, said a company source and a buysider briefed by the company.

 

The Tianjin local government-owned commodities trader is focused on avoiding a default on its public notes while trying to win revisions to its bank and non-standard borrowings, said two of its domestic bank creditor sources.

 

One of a number of Tianjin government-owned entities experiencing severe stress, Tewoo has been in maturity extension talks with major onshore bank lenders for more than a month with limited progress, said the two domestic bank sources. Management is also pressing for an interest rate cut, said one of the sources and an offshore credit investor source.

 

To that end, it held a meeting on 1 April with 40 bank and non-standard product creditors, which was attended by local government officials, they said.

 

Tewoo’s six tranches of USD notes with a total USD 2.05bn outstanding came under severe price pressure yesterday (3 April) following a Bloomberg report that the SOE is seeking maturity extensions from major creditors to help it deal with a liquidity crunch. Its USD bonds slumped 10-15 points yesterday, said a second buysider.

 

Tewoo’s USD 300m, 4.5% due-December 2019s were indicated this afternoon at 90.5/91.5; its due-2020s were indicated at 88/90; and its due-2022s were indicated at 80/83, said a third buysider.

 

Domestic banks have yet to form a creditor committee, said the two bank creditor sources and a third domestic bank creditor. The committee group is expected to be set up by end-April, said the first bank creditor.

 

Bank are limited in what they can get to try to bolster their outstanding loans because the company has limited unencumbered assets, said the second bank creditor source.

 

As reported, provincial government-owned Tianjin Real Estate Group won a last-minute reprieve from holders of CNY 7.7bn of its 5.5% due-2021s that originally had to be redeemed on 18 March because of an exercised put option. Encouraged by the government, the holders agreed to waive the put or defer it.

 

In the most high profile Tianjin SOE distress, Bohai Steel serviced paid the coupons and redeemed its offshore public bonds in 2017 even as it was trying to reach a settlement over CNY 280bn domestic debt before eventually being entered into a PRC bankruptcy process in August 2018.

 

by Gladdy Chu and Daisy Wu