Coal news and updates

Winsway Coking Coal will make bond coupon payment

Reuters reported that Chinese coking coal company Winsway will make the coupon payment on its USD 309 million bonds maturing 2016 which falls due on Tuesday.

The 8.5% bonds due 2016 trade at around 50 cents on the dollar, a level considered stressed, amid concerns about tumbling commodity prices.

Ms Laura Shi investor relations director of Winsway said that "Our cash flow from operation this year is HKD 3.2 billion so there is no problem with paying HKD 200 million in interest costs.”

The company had issued USD 500 million in bonds in 2011 with a coupon of 8.5% of which USD 309 million is still outstanding following a bond buyback by the issuer.

These bonds have been depressed and have traded around 50 cents on the dollar following a plunge triggered by the slide in global coal prices, resulting in two successive years of losses since 2012.

A Hong Kong based distressed debt analyst said that "If the bond is trading at these levels, bondholders will pay close attention to coupon payments."

He said that "The current yield is pretty high and if you buy the bond you take on principle risk. You might get 2 to 3 coupons but what if you don't get back your principle? while adding that the buyback conducted by the company in October last year had instilled some confidence in bond investors.

Source: Reuters