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Signa Development bonds slump on Vienna insolvency filing

Pitchbook
·2 min read

Signa Development Selection bonds due 2026 were bid at just 6.5 on Nov. 29, after the parent company of the Austrian property group’s development arm filed for insolvency with the commercial court in Vienna.

In a statement on Nov. 29, Signa Holding said it filed an application to “enter reorganization proceedings under self-administration” and has applied for a reorganization plan aiming to “to continue business operations within the framework of self-administration and the sustainable restructuring of the company.”

Signa, Austria’s largest privately owned real estate group, said investments in its European retail operations “did not yield the anticipated success,” adding that “external factors” have had a negative impact on the entire real estate sector “in recent months.”

“Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring process could not be sufficiently secured,” Signa Holding said in a statement.

Emergency funding talks
Signa’s filing for insolvency under self-administration follows unsuccessful emergency funding talks with investors including Saudi Arabia’s PIF and hedge funds Attestor Capital and Elliott Investment Management, according to reports.

The €300 million of 5.50% 2026 green bonds backing the conglomerate are issued via Signa Development Selection, which is the largest company in Signa’s real estate division  with a gross asset value of €20.4 billion, according to its website.

The notes, which date from 2021, collapsed into the high-20s earlier this month after Signa revealed a serious liquidity shortfall in its third-quarter earnings and said it was seeking advice on restructuring debt. The bonds then slumped to around 14 cents this week after Swiss lender Julius Baer on Nov. 27 revealed a CHF70 million write-down on its private debt book on three loans to different entities in an unnamed European conglomerate, widely reported to be Signa.

Rated CCC/CCC, Signa's development arm operates a “buy-develop-sell” strategy, focused on projects in the DACH region and northern Italy, away from prime inner-city areas.

Featured image by Sylvain Sonnet/GettyImages

 



This article originally appeared on PitchBook News