April 2, 2014 / 11:57 AM / in 4 years

CORRECTED-RPG bonds gain massively on IPO news

(Clarifies RPG ownership structure, )

By Robert Smith

LONDON, April 2 (IFR) - RPG Byty’s high-yield bond prices spiked massively in the secondary market this morning, after the Czech property firm announced that it is targeting an IPO through a holding company.

Under the listing plans, RPG Byty’s shareholder, RPG Property, will become fully owned by a Dutch holdco called Domus BV. Domus then intends to apply for an official listing on the Euronext Amsterdam, targeting an IPO in the second quarter of 2014, subject to market conditions.

RPG’s outstanding bond, a EUR400m 7NC3 it priced at par to yield 6.75% in April 2013, jumped more than four points in cash terms this morning, from a bid of 102 to 106.40, according to Tradeweb.

Any investors that bought the bonds at the lows could have realised a paper profit of more than 14 points. The bonds were bid as low as 92.25 in June last year, hit in part by the sell-off across high-yield and emerging markets credit after the Federal Reserve’s announcement of QE tapering.

The bonds have been bid above par throughout 2014, however, weathering the more recent sell-off across emerging market credit.

RPG Byty is the Czech Republic’s largest privately owned residential real estate company. Its property portfolio is entirely in one region, Moravia-Silesia.

RPG’s bonds have in the past also been hit by negative sentiment around New World Resources (NWR), whose unsecured bonds are trading at less than 16% of par value after a turbulent year.

The connection is due in part to the fact that the BXR Group holds a majority interest in RPG as well as NWR. Zdenek Bakala and his family are BXR’s largest shareholder, they have a 50%stake in the group. The mining industry is also one of the largest employers in Moravia-Silesia, with an NWR subsidiary the main mining company in that region.

RPG has been keen to downplay its link to NWR in the past, however. On an investor call in June last year, for example, RPG’s COO Pavel Klimes addressed investor concerns on this matter, stating that only around 8% of its tenants are linked to NWR and the mining industry.

Reporting by Robert Smith; Editing by Philip Wright

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