Jaguar Land Rover warns China virus could disrupt supply chain

Bloomberg

Jaguar Land Rover announced that its supply chains outside China could be impacted by the coronavirus outbreak in an updated presentation to investors.
The luxury carmaker wrote that it expects the virus to affect its fourth quarter but that it’s too early to quantify. Though the company issued an update to add that if disruption continues, supply chains outside China could also be impacted.
Parent company Tata Motors Ltd extended a shutdown of its unit Jaguar Land Rover’s plant at Changshu in China due to the coronavirus outbreak. A spokeswoman for Jaguar did not immediately respond to a request for comment.
“It feels a lot like the market is in ‘wait and see’ mode. Any issuer with a hint of Chinese exposure is being asked about coronavirus on earnings calls,” said Steven Hunter, CEO and founder of high-yield analytics firm 9Fin Ltd. “Management responses have all been pretty similar – there will be an impact, but no one knows how material it will be.”
So far the worries over the cornoavirus have had little impact on Jaguar’s sterling, euro and US dollar denominated bonds, which are trading near a year-long high.
They were largely unchanged on Monday morning, according to CBBT data, after initially suffering some small losses at the end of January.
Travel, automotive and aviation companies or those with significant exposure to Chinese markets have faced pressure this year due to the outbreak. Bonds from shipping firm CMA CGM, travel retailer Dufry, hotel chain Accor and air cargo handler WFS have all suffered in recent weeks.
Still, the high-yield market more generally has withstood the growing concern with the Markit iTraxx Crossover Index, a key measure of risk for the debt of Europe’s most fragile companies still hovering at near all time lows.
“So far in 2020 we’ve had Iran firing missiles at the US, Brexit and now a global pandemic,” Hunter said. “A few years ago these kind of events would have closed the primary market for weeks if not months, now not only do they get shrugged off but we hit record issuance levels in January.”