So many conspiracies...8 Aug 2019 15:24
The facts are there, literally as the team hit the US, which is the primary market for these bonds, the Chinese play a blinder in the trade war and break the gentlemens agreement on RMB/USD rate. Trump tweets China have started currency manipulation which sends the stock market into crisis mode believing an all out trade and currency war is about to cause economic catastrophe.
The finance team know it's pointless continuing to negotiate a HY bond in light of the recent events, news would leak that the roadshow was cancelled and this would have caused at least the same market reaction if not worse. Legally it is considered market sensitive information and must be officially released hence the brief and slightly rushed RNS.
China decides it has made its point and pulls back into line, Republicans put pressure on Trump to ease off on the trade war which is really hurting Trumps rural voters in the central states, possibly losing voters leading up to a 2020 election.
There is an agreement deadline at the end of this month before new tariffs are imposed by the US on pretty much every Chinese export to the US. This cannot happen, the Chinese have made their position clear, it would end in all out currency/trade war and the global economy would plunge into recession. Not good leading into an election year, but still possible.
The position is now binary in its outcome, it seems as though CF is 'banking' on a short to medium term resolution of the China/US standoff by the end of this month. If this happens, as I think it will, markets will respond very positively and the HY bonds will be sold. As far as the roadshow goes, I am sure the work is continuing behind closed doors but there is no point trying to sell them this month as nobody will buy while the economy walks a knife edge.
As for contingency, if there is no agreement this month then nothing is safe except cash, gold and CHF. Most US economists are reporting mostly good fundamentals indicating this is not a wider correction yet, we should have a year or 2.
AIMHO! Just a case of bad timing... Lets hope this gets sorted quickly next month but anything can happen so always best to be prepared....
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