largest A-share CB, surpassing the Rmb40bn
issue of China Citic Bank in February and the
Rmb40bn print from Bank of China in 2010.
SPDB’s proposed CB had already won
approvals from the Shanghai bureau of
the State-owned Assets Supervision and
Administration Commission and the
China Banking and Insurance Regulatory
Commission. It still needs written approval
from the CSRC.
The bank will use the proceeds to
replenish core Tier 1 capital.
The company’s A-shares closed up 1.4% at
Rmb11.38 on August 19.
Citic Securities and Guotai Junan Securities
are the joint sponsors on the deal.
› ZHEJIANG HAILIANG CLEARS CB HEARING
Shenzhen-listed ZHEJIANG HAILIANG has cleared
a hearing at the China Securities Regulatory
Commission for a proposed Rmb3.15bn six-
year convertible bond offering.
The copper products manufacturer will
use the proceeds for six copper production
projects in Shanghai, Chongqing, Zhejiang
province, the US and Thailand, and to repay
loans.
The company’s shares closed down 1.8%
at Rmb10.17 on August 12.
The CB still needs written approval from
the CSRC. GF Securities is the sponsor.HONG KONG
DEBT CAPITAL MARKETS
› CATHAY PACIFIC SETS UP US$2BN MTNCATHAY PACIFIC AIRWAYS has established
a US$2bn MTN programme via HSBC,
according to a Hong Kong stock exchange
filing on August 14.
The programme, which allows CathayPacific MTN Financing (HK) to issue debt
to professional investors for the next
12 months, will be unconditionally and
irrevocably guaranteed by Cathay Pacific
Airways.
The programme is listed on the Stock
Exchange of Hong Kong.SYNDICATED LOANS
› YOUYUAN LOAN IN SPOTLIGHTLenders to a US$135.5m-equivalent 3.5-year
term loan for YOUYUAN INTERNATIONAL HOLDINGS
are nervously awaiting an announcement
from the company following a trading halt
in its shares last week.
The Hong Kong-listed paper
manufacturer suspended trading of its
shares last Monday morning after the share
price plummeted 86% to HK$0.26 (US$0.03)
from its opening of HK$1.89.
In a stock exchange filing lastTVB produces high-yield drama
Bonds Hong Kong broadcaster’s expanded bond portfolio sees defaultsHong Kong’s TELEVISION BROADCASTS (TVB) is
ruing its decision to increase its investments
in high-yield bonds, after two issuers in its
portfolio defaulted.
TVB’s portfolio of fixed income securities
held to maturity rose to HK$2.463bn
(US$314m) at the end of 2018, from
HK$775m a year earlier, after it cancelled
a planned HK$4.3bn share buyback and
instead invested part of that amount in
bonds. The weighted average yield to
maturity was 5.67% and there were bonds
from 45 issuers in the portfolio, up from 18 a
year earlier.
In April 2018, TVB subscribed to US$23m
of 9.5% convertible bonds due 2020 issued
by SMI HOLDINGS GROUP, and the following
month bought a further US$83m of 7.5%
two-year CBs from the same issuer. Both
bonds have the option to extend the maturity
by a year.
Chinese cinema operator SMI defaulted
after its Hong Kong-listed shares were
suspended in September 2018, and is
weighing up a debt restructuring plan that
could involve converting debt into equity and
selling new shares.
TVB also holds US$12m of bonds issued
by energy and resources trader CHINA ENERGY
RESERVE AND CHEMICALS GROUP, which defaulted
in May last year. TVB said it believes that
the issuer “has both the intention and abilityto settle the outstanding balances in an
extended schedule”.
In TVB’s financial results for the first half of
2019, published on August 21, it recognised a
HK$206m total impairment for the SMI 9.5%
CB and CERCG bonds, plus a HK$330m fair
value loss for the SMI 7.5% CBs.
TVB’s auditor, PwC, said it had been
unable to obtain enough information from
SMI to judge the appropriate value of the
bonds.
SMI’s 7.5% CBs were secured against the
share capital of wholly owned subsidiary SMI
International Cinemas, which holds a 41.34%
stake in Chinese cinema operator Chengdu
Runyun Culture Broadcasting. In May this
year, it emerged that SMI International
appeared to have pledged part or all of its
stake in Chengdu Runyun for another loan in
August 2018.
TVB said that Ernst & Young had also
discovered that 19 direct subsidiaries of
Chengdu Runyan had also pledged their
shares to lenders.OMG YOUR HONOUR
On August 12, TVB applied to the Hong
Kong High Court for a winding-up petition
against SMI, which will be heard no earlier
than November 4. HSBC had earlier filed
a winding-up petition against SMI, but
withdrew after reaching a settlement.SMI had planned to hold a creditor
meeting in May this year, but cancelled it,
saying that it could not coordinate a time to
suit all parties.
TVB itself sold US$500m of unrated
five-year bonds in 2016. Proceeds were
earmarked for expanding the group’s
digital media business and other capital
expenditures, as well as for strategic
investments and general corporate purposes.
“It is unclear if TVB will be able to
consistently generate profits from its
investments to repay the USD Notes, as it
recognised losses on these investments,”
wrote Lucror Analytics. “We are also sceptical
on TVB’s ability to issue new notes for
refinancing purposes.”
TVB also warned in its H1 results that
income from its Hong Kong businesses, such
as advertising, could be adversely affected
by local political unrest and the continuing
US-China trade war. Some Hong Kong
protesters have denounced the broadcaster
as too pro-Beijing and called for a boycott of
brands advertising on its channels. At least
one company, the Japanese maker of sports
drink Pocari Sweat, pulled advertising from
TVB last month.
TVB’s bonds were bid at a cash price of
97.9 on Friday, implying a yield of 4.7%,
according to Refinitiv data.
DANIEL STANTON