CWT bondholders face uncertain redemptions


SINGAPORE, April 17 (IFR) - Investors in Singapore face an anxious wait on the fate of S$200m (US$147.8m) of bonds issued by warehousing facilities provider CWT, following a default on bank loans by its Hong Kong-listed parent CWT International (CWTI).

The HK$1.4bn (US$178.4m) loans are secured against assets that include CWTI's stake in Singapore-based CWT, as well as investment properties in the US and the UK and golf courses in China.

Unidentified lenders have warned they would enforce the security and take possession of all charged assets if the HNA Group unit did not repay the loans by Wednesday morning, according to a CWTI announcement. No update has been given on whether the loans were repaid.

Although the default on the loans has triggered cross defaults on other bank loans owed by CWTI, it is unclear if it has triggered cross defaults on the Singapore dollar bonds. Analysts believe that it has not as the default has occurred at the parent level, and not at the Singapore subsidiary level.

Bankers are confident that CWT, which still has a healthy credit profile, will redeem the maturing 2019s tomorrow. The Singaporean unit's assets include a logistic facility with a market value of S$438m as of September 9 2017, analysts said.

Statements released today by Mapletree Logistics, Cache Logistics Trust and AIMS APAC REIT Management, the landlords of some properties rented by CWT, indicate that CWT has not defaulted on any rental payments.

However, the fluid situation at the group level "may complicate and drag out this redemption process," said Ezien Hoo, a credit analyst at OCBC.

CWTI, owned by embattled Chinese conglomerate HNA Group, has been struggling with its finances since HNA bought CWT in December 2017 for US$1bn, partly funded by US$561m of debt. Since then, it has sold off CWT assets to raise funds to pay off the part of the debt. It sold five warehouses to Mapletree Logistics for an estimated S$778.3m last year, proceeds of which were used to pay off rental guarantees payable to Mapletree and to pay off a portion of the acquisition debt. CWT Singapore also sold off its stakes in Cache Logistics Trust's property manager, REIT manager and the REIT itself.

Despite the asset disposals, CWTI's end-December finances still looked shaky. As at end-December, it had cash balances of HK$1.7bn against short-term debt of HK$7.9bn.

However, OCBC's Hoo sees an upside for CWT in the developing situation. "Assuming the lenders take possession of CWT SG, CWT SG having a new parent is not a bad thing for Singapore bondholders," said Hoo in a credit note.

"While we do not have the identity of the lender, in our view, they are likelier to be financially driven and hence incentivised to keep CWT SG's value as intact as possible."

This article appears in: Politics , Fundamental Analysis , Stocks , Bonds

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