If even a bond linked to Blackstone defaults, something is wrong…
Blackstone defaulted on a $562 million bond backed by Finnish owner Sponda Oy, which it acquired in 2018, a fact Blackstone says has been exacerbated by Russia's war on Ukraine.
According to a source, the global investment firm has paid off nearly all of its debt on the bonds, with around $300 million remaining.
Blackstone had asked bondholders for an extension to allow time to liquidate assets in Sponda Oy's portfolio of shops and offices to pay down the debt – which Blackstone bought for $1.9 billion in 2018 – but with the wars in course which disturbed market conditions and sales, bondholders voted against the company's request which, at this point, acted unilaterally and defaulted the bond. Of course it is strange to see a company with a capitalization of 103 billion USD defaulting by 300 million, but, evidently, there is a limit to everything and Blackstone believed that intervening directly in the refinancing was more expensive than defaulting.
Mountstreet, the loan manager, said the debt will be transferred to a special manager, while Blackstone hopes the value of Sponda Oy's businesses and offices can help them prevail.
“This debt relates to a small portion of Sponda's portfolio,” Blackstone said in a statement. “We are disappointed that the servicer has not made our proposal, which reflects our best efforts and which we believe will ensure the best outcome for bondholders. We continue to have full confidence in Sponda's core portfolio and its management team, whose priority remains the delivery of high quality retail and office businesses."
Sponda Oy's portfolio comprises approximately 3.6 million square meters of office and commercial properties spread across Finland. But the war in Ukraine, coupled with the continued ramifications for offices of the COVID disruptions, have made it more difficult for Blackstone to pay off its property debt.
Finland's potential NATO membership, which became more likely on Thursday morning, was seen as a decisive factor in the evolution of the conflict with Russia, as the country's proximity to St. Petersburg gives the alliance a tactical advantage in the event of a conflict generalized.
Fitch downgraded the notes in early December, emphasizing the "macroeconomic outlook." The downgrade made it difficult to find lenders willing to help Blackstone refinance in the face of "illiquid assets", with the debt maturity date fast approaching February.
The recent trend of Scandinavian investors resorting to short-term debt has alarmed observers about its vulnerability to rising interest rates, also exacerbated by the war in Ukraine.
Blackstone stock posted a quick 3 percentage point decline Thursday morning but quickly recouped some of the gain it made since hitting a 52-week low of about $72 a share in the final days of December 2022.
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The article If even a bond linked to Blackstone defaults, something doesn't work… it comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/se-perfino-un-bond-legato-a-blackstone-va-in-default-qualcosa-non-funziona/ on Mon, 20 Mar 2023 12:06:13 +0000.