Morgan Stanley Promotes Shorting Strategy on German Manufacturer Bonds Amid Energy Cost Surge

Morgan Stanley's credit trading division is actively promoting a short-selling strategy on bonds issued by Connors Global, a German titanium dioxide manufacturer. According to Jin10, the company has been struggling, and the surge in energy costs due to the Iran war has exacerbated its challenges. Insiders reveal that since last month, the trading desk has been advising investors to short the company's €426 million (approximately $494 million) notes, which are due in March 2029. Despite a significant drop in bond prices, traders have recently reiterated this strategy. Even before the Middle East unrest drove up energy prices, the chemical industry, known for its high energy consumption, was already grappling with weak demand and high input costs. This situation has made chemical companies prime targets for short-sellers. In a report released on Monday, Connors highlighted that the high cost of titanium dioxide, used in products like paints and plastics, coupled with low selling prices, resulted in a fourth-quarter loss of $82.8 million, widening the annual loss to $110.9 million. Since mid-February, Connors' stock price has fallen by about 16% to $5.60, although it remains higher than at the start of the year.