Tuesday, March 11, 2014

Suntech Bonds Hit New Low of 7 Cents

Small trade, but still.


John said...

Bonds at 7 cents on the dollar while common stock STPFQ is selling at 42 cents a share. Someone must think that the Cayman Courts will give priority to the common stock over debt!!

And that the BK Court in SDNY exercising chapter 15 supervision will go along.


Anonymous said...

There's too much dumb money entering capital markets because of the negative real yield on cash.

Also, it seems like smart money has no concern for principal risk because of the abundance of capital and cheap money/financing.

It seems like an opportune environment to short maturing junk bonds.

The $STPFQ bonds are a good case study: they would have yielded +75% if you shorted over the past year.

Where can we find a calendar of approaching default dates which are on the horizon or shall we create one?

CP said...

Interesting observation.

How easy is it to borrow these bonds to short?

Anonymous said...

The cost to borrow bonds are comparable to equity on average: https://mitsloan.mit.edu/finance/pdf/Asquith-20101018.pdf .

Certainly, some circumstances may make both both securities hard to borrow.

Most of the bond databases have search filters oriented in the opposite direction but operation twists makes me think that holding a short-long bond portfolio would be smart.

CP said...

I like your premise.

What bonds would be good shorts right now?

Anonymous said...

3/14: Shunfeng Photovoltaics has announced a second delay to its acquisition of Wuxi Suntech.

In a statement to the Hong Kong Stock Exchange the company said it would look to release more details on the deal on or before 21 March. Previous deadlines of 20 February and 13 March have already passed.

The delayed document will include more details on the transaction, the restructuring plan that would follow, financial information on Wuxi Suntech and a date for the shareholder vote that will confirm the deal.

CP said...


CP said...

It was stated in the 20 February
Announcement that a circular (the “
Circular”) containing, among other
matters, further details of (i) the Agreement and the transactions contemplated thereunder; (ii) the
Restructuring Plan; (iii) financial and other information of the Group and Wuxi Suntech; (iv) pro forma financial information on the enlarged Group upon Comple
tion; and (v) the notice of the
EGM, is expected to be despatched to Shareholders on or before
13 March 2014.

As additional time is required for the Company to finalise the content of the Circular, the
Company expects that the despatch of the Circular will be postponed from 13 March 2014 to a date on or before 21 March 2014.


Anonymous said...


Anonymous said...

Is there any hope of getting anything back from the Chinese? Or is this just for show and to run up professional fees?

Anonymous said...

Solyndra Residual Trust filed an objection to the proceeding to convert the chapter 7 case to chapter 15 in New York: http://www.lexisnexis.com/legalnewsroom/energy/b/newsheadlines/archive/2014/03/18/solyndra-fights-suntech-39-s-bid-for-ch-15-protection.aspx.

The judge might not allow for the conversion to take place.

It's surprising the equity is maintaining a > $50m market cap.

Anonymous said...

Have not seen any news out of Shunfeng..

Anonymous said...

Shunfeng plans to ignore the other courts and complete their acquisition of STPFQ's only real assets.....

"Following two delays, Shunfeng Photovoltaic International Ltd. (Changzhou, China) has released details of its proposed acquisition of Wuxi Suntech (Wuxi, China) for USD 480 million to shareholders. Shareholders will now vote on the acquisition on April 7th, 2014.

In a circular, Shunfeng attempts to distance Wuxi Suntech from troubled subsidiary Suntech Singapore, stating that the company disposed of all of its shares in Suntech Singapore in February 2014. Liquidators of another Suntech subsidiary, Power Solar System Co. Ltd. (PSS, Wuxi, China) have secured a USD 264 million judgment against Suntech Singapore and are investigating a potential transfer of equity to Wuxi Suntech.

Shunfeng does plan to retain Suntech Power Japan Corp. (Fukuoka, Japan), which hold substantial assets and is also under investigation by PSS liquidators.

Shunfeng had previously admitted that PSS Liquidator John Ayres' investigation into the alleged transfers of equity between subsidiaries may impact the acquisition. However, Shunfeng had maintained that it would move forward regardless.

Anonymous said...

I imagine the third party which owns Singapore Suntech now is a shell company in Burma. Suntech Holdings will need a lot of luck to recover anything. The only recovery potential would be by reaching some sort of settlement on the outstanding issues with the Wuxi Suntech administrator.

Anonymous said...

When does the Judge decide on the chapter 15 status?

When will the JPL's finally liquidate this? How much more can they squeeze out in fees.

Anonymous said...

Shunfeng shareholders approve Wuxi Suntech acquisition: