(Bloomberg) — At 9:54 a.m., the first trade hit the tape for Enviva Inc., a little-known company from Bethesda, Maryland that makes wood pellets. The price? 38 cents on the dollar, down from the previous night’s 64 cents. The rout continued throughout the day, plunging as low as 31 cents.
Debt investors are no longer willing to tolerate bad news, with many more affected companies, including Dish Network Corp. and WideOpenWest, suffering steep declines in their bonds following poor earnings reports.
What’s causing the dramatic declines in bond prices? Some market watchers attribute it to the fact that banks can’t hold as much risk on their balance sheets, leading them to offer steeper discounts to attract buyers for the bonds. However, these declining prices can also attract distressed buyers, increasing demand for these risky bonds and loans.
Not all hope is lost, though. Some companies are seeing a reversal in their bond prices after initially plummeting, indicating that the market can rebound. Yet, as corporate borrowers continue to reveal their earnings, we can expect to see more market movement, according to John McClain, portfolio manager at Brandywine Global Investment Management.
The week brought a flurry of activity in the private debt market, highlighting the increasing importance of these debt markets for various deals and acquisitions taking place across a wide range of industries.
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Media executive Byron Allen is considering a bid for several TV stations from E.W. Scripps Co. and seeking funding from the private debt market to fund the potential deal.
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HPS Investment Partners is poised to provide a roughly €750 million ($802 million) direct loan package for the acquisition of EasyPark AB.
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Banks are looking to syndicate over a €1 billion ($1.1 billion) debt package to finance Cinven’s buyout of Synlab AG by the end of the year.
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Investment banks and private lending firms are working on plans to provide up to €3 billion ($3.3 billion) of debt to back a potential buyout of Techem GmbH.
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Dalian Wanda is facing challenges as backers of the company’s commercial unit rejected a proposal to delay the repayment of over $4 billion in investments.
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Subprime auto bonds remain big business for Wall Street, despite a high default rate among underlying borrowers.
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Investment-grade bonds have seen three weeks of inflows, according to Bank of America Corp., citing EPFR Global data.
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High demand for the latest additional tier 1 bonds is a positive sign for banks with a record $30 billion of calls next year.
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Manulife Investment Management is acquiring most of billionaire Michael Hintze’s CQS to expand its specialized fixed-income investment strategies.
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Kennedy Lewis Investment Management is exploring strategic options, including a potential outright sale, with around $14 billion under management.
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After a federal law to curb surprise medical bills in the US led to some of the year’s largest bankruptcies, investors are keeping a close eye on potential pain in corporate-debt piles.
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Lenders to bankrupt firms are increasingly demanding a controversial contract clause that supports their investments in exchange for a chance at the company’s survival.
More movement is also happening in the job market, with a number of senior appointments made in BNP Paribas SA’s Americas banking business and other key hirings and recruitment.
With assistance from Claire Boston and Taryana Odayar.
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