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IFR-Ballarpur perpetuals adrift after S&P negative outlook
July 16, 2012 / 10:29 AM / 5 years ago

IFR-Ballarpur perpetuals adrift after S&P negative outlook

HONG KONG, July 16 (IFR) - Indian papermaker Ballarpur Industries bonds continue to drift after a downgrade in its outlook by S&P which came on the heels of a 300bp spike in yields on its perpetuals since the start of the year.

Its unrated USD200m bonds, were sold last year at a yield of 9.75% and are currently yielding around 16% on the bid side, according to Thomson Reuters data. On a price basis they are at 81/84 cents on the dollar, continuing to slide since their debut below par in August.

“They were already stretched and this was reflected in the bonds which have actually gone up in recent days,” said a trader at an Asian bank referring to the lows of mid-70s struck in May.

“This is a retail driven bond, institutions haven’t been involved in this at all so it will not be that active.”

The bonds plunged in mid-January just ahead of its December quarter earnings which showed a 72% plunge in net profit. The company is now considering internal restructuring of its assets.

Late on Friday, S&P said it had revised BILT’s outlook to negative from stable, blaming the stretched debt and cash flow metrics relative to the company’s BB- rating.

“We expect the improvement in BILT’s profitability to be slower than we anticipated. This is because a delay in the company’s pulp capacity expansion in Malaysia and India has deferred cost-saving benefits,” the agency said.

“We expect BILT’s revenue to stagnate over next two years because the company has no new paper capacity coming up,” it said while calling its liquidity “less than adequate”.

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