Jaguar Bond Risk Falls Most on Record as China Sales Revive
A logo sits on a finished Jaguar F-Type automobile at Tata Motors Ltd.’s Jaguar assembly plant in Castle Bromwich, U.K. (Photographer: Simon Dawson/Bloomberg)

Jaguar Bond Risk Falls Most on Record as China Sales Revive

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(Bloomberg) -- Sentiment toward Jaguar Land Rover Automotive Plc is improving at an unprecedented pace, after stabilization in its China business helped the premium British carmaker’s parent report a narrower loss than expected.

So say the debt markets, where credit-default swaps insuring against default at the company dropped a record 268 basis points in October to 538. The cost to buy protection against Jaguar bond non-payment had been as high as 943 basis points in February.

Jaguar Bond Risk Falls Most on Record as China Sales Revive

Jaguar’s retail sales in China grew at double digits for the three months through September as new product launches boosted sales. The number had plunged by double digits for 12 months in a row before the revival.

The carmaker’s turnaround could have legs as China sales continue to rise, and as the company tightens its belt further, according to a note from Nomura Holdings Inc.

Jaguar Bond Risk Falls Most on Record as China Sales Revive

Read Jaguar’s Debt Outperforms; Will Results Be Gone in 60 Seconds?

After solid second-quarter results, Jaguar may consider an unsecured issue to refinance a bond maturing this month, Joel Levington, director for credit research at Bloomberg Intelligence, wrote in a note.

Moody’s Investors Service, S&P Global Ratings and Fitch Ratings all still have a negative credit outlook for Jaguar due to risks including uncertainty around Brexit and the U.S. threat of tariffs on car imports from Europe. With the bulk of its manufacturing in the U.K., Jaguar is the most exposed among automakers to a disorderly Brexit, according to Fitch.

Meanwhile, Jaguar’s Indian owner Tata Motors reported a narrower-than-expected loss helped by the stabilizing sales in China. The company lost 2.2 billion rupees ($31 million) in the three months ended September against a loss of 16.4 billion rupees projected by analysts on average.

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