ASIA-PACIFIC
CHINA
HONG YANG OFFERS DOUBLE-DIGIT YIELDSingle-B rated Chinese homebuilder HONG
YANG GROUP timed a new issue well, coming
out before a horrible week unfolded for
global equity and credit indices as
coronavirus fears gripped markets.
Hong Yang (B/B+) raised US$275m from a
9.875% 2.5-year bond on Monday priced at
10.875%, inside initial guidance of 11.25% area.
4HEûDEALûRECEIVEDûlNALûORDERSûOFû
US$1.75bn.
“It was a very good outcome against the
macroeconomic backdrop of the
coronavirus outbreak, with the issuance
being slightly upsized from the planned
US$250m,” said a banker on the deal.
Subsidiary Hong Seng is the issuer of the
senior unsecured notes, while Hong Yang
Group is the parent guarantor and Hong
Kong-listed Redsun Properties Group is the
subsidiary guarantor.
The deal priced at a premium of about
150bp over the bonds of Redsun Properties,
according to the banker.
Nomura saw fair value at mid-10%,
considering Redsun Properties’ 2022s due in
April and October were trading at 8.80% and
9.30%, respectively.
The fat yield, however, came as credit
MARKETSûBENElTûFROMûAMPLEûLIQUIDITYûINûAû
low-rate environment.
“It really depends on each individual
name. It seems like Chinese property names
are trading at 5% to 12% in secondaries,” said
a banker away from the deal.
Not all investors are participating in such
transactions, with bigger asset managers
being more selective.“This kind of relatively small deal – they
tend to be almost like a private placement,”
said an investor.
Fitch expects Hong Yang Group’s
Ebitda margin to narrow but remain
healthy at 20%–23% this year as its high-
margin Nanjing projects will provide
support over the next 12 months. Fitch
upgraded the group’s rating from B in
October.GEELY BOND BUCKS CHINA SALES SLUMPCarmaker ZHEJIANG GEELY HOLDING GROUP
overcame volatile market conditions and a
weak outlook for Chinese vehicle sales to
PRINTûAû53MûlVE
YEARûBONDûONû
Thursday.
The deal drew orders in excess of
53BNûAHEADûOFûTHEûRELEASEûOFûlNALû
guidance.
The 3.00% 2025 bonds were priced at
99.526 to yield 3.103%, or Treasuries plus
200bp, inside initial guidance of the 215bp
area.
Geely’s US$300m 2023 bonds were quoted
at a G-spread of 160bp, while other private
sector industrial credits also provided
pricing references.
Semiconductor Manufacturing
International Corp, rated Baa3 (Moody’s),
had 2025 bonds quoted at G plus 162bp and
chemical company Shanghai Huayi (Group),
rated Baa3/BBB/BBB–, had 2024 bonds seen
at G plus 151bp.
Chinese vehicle manufacturers are facing
challenging times. Sales have fallen for the
past two years and are expected to suffer as
a result of the coronavirus, as potential
buyers defer purchases and production is
disrupted.
Retail shipments of passenger cars
dropped 21.5% year on year in January, and
PLUNGEDûûINûTHEûlRSTûûDAYSûOFû&EBRUARY û
according to the China Passenger Cars
Association.However, Geely has recently
outperformed the sector. Its global vehicle
sales rose 1% in 2019 to 2.18m, even as
Chinese passenger vehicle retail shipments
shrank 7.4%, according to the CPCA.
'EELYûBENElTSûFROMûITSûOWNERSHIPûOFû
Swedish carmaker Volvo, which grew global
sales 9.8% in 2019.YIDA PINS HOPES ON BOND SWAPYIDA CHINA HOLDINGS said that it may need to
restructure its debt if an exchange offer for
its US$300m 6.95% bonds due April 19 is
unsuccessful.
Holders who tender their bonds will
receive US$80 in cash per US$1,000 in
principal amount and US$920 in new bonds
due 2022.
The new bonds will pay 10% annual
INTERESTûFORûTHEûlRSTûSIXûMONTHSûANDûûAû
year thereafter.
The property developer will not go ahead
with the exchange unless at least US$225m,
or 75%, in principal of the 2020s are
tendered and accepted.
In response to the exchange offer, S&P cut
Yida’s company rating to CC from CCC– and
its bonds to C from CC. The outlook is
NEGATIVE ûREmECTINGûTHEûLIKELIHOODûTHATûITû
could downgrade the rating to selective
default once the transaction is completed.
Fitch downgraded the company and its
bonds to C from CCC. Moody’s rates the
company Caa1 and has not yet responded to
the proposal.
Admiralty Harbour is dealer manager for
the exchange offer, which ends on March 9.
Yida is also seeking consent from
bondholders to waive their claims under the
old notes.
If the exchange offer is not completed,
Yida said it may hire Admiralty Harbour as
lNANCIALûADVISERûTOûIMPLEMENTûANû
alternative debt restructuring, as the
company’s resources may not be enough to
redeem the bonds.
Yida’s 61.2% shareholder, Jiayou
(International) Investment, is facing a cash
crunch because of asset freeze orders
imposed on CHINA MINSHENG INVESTMENT GROUP.
China Minsheng holds a 67.26% stake in
China Minsheng Jiaye Investment, which
indirectly owns Jiayou.
Asset freeze orders were imposed on
China Minsheng in February and March
2019, including a freeze on its position in
Minsheng Jiaye for three years. The freeze
AFFECTEDû#HINAû-INSHENGSûACCESSûTOûlNANCEû
and led to Rmb4.277bn (US$608m) of loans
becoming immediately payable.
Yida said it expects to be able to repay the
new notes if the exchange offer goes
through. It is also looking for strategic
investors and new business partners.46 International Financing Review February 29 2020ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Asia-Pacific
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L41 HSBC 60 6,015.24 7.4
2 Standard Chartered 40 4,262.87 5.2
3 Credit Suisse 39 4,211.06 5.2
4 Citigroup 32 3,969.50 4.9
5 UBS 30 3,695.41 4.5
6 Bank of China 36 2,852.05 3.5
7 Deutsche Bank 27 2,763.50 3.4
8 DBS Group 29 2,670.55 3.3
9 Credit Agricole 24 2,653.52 3.3
10 BofA 14 2,574.13 3.2
Total 160 81,257.46ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L11 Citigroup 56 11,983.11 7.2
2 JP Morgan 54 11,201.36 6.7
3 Standard Chartered 53 10,208.73 6.1
4 HSBC 72 8,378.83 5.0
5 Deutsche Bank 37 8,215.69 4.9
6 BNP Paribas 34 7,565.37 4.5
7 BofA 32 7,121.31 4.3
8 Goldman Sachs 30 6,448.88 3.9
9 Credit Suisse 46 6,312.13 3.8
10 Morgan Stanley 25 6,199.46 3.7
Total 257 167,146.798 IFR Emerging 2322 p 45 - 54 .indd 46 28 / 02 / 2020 18 : 17 : 15