COUNTRY REPORT CHINAOf the notes, 74% went to Asia, 24% to
Europe, and 2% to offshore US. In terms of
investor types, 82% were fund managers, 9%
were banks, 7% were insurers and sovereign
wealth funds, and 2% were private banks.
BOC International, Deutsche Bank, HSBC,
JP Morgan and UBS were joint global
coordinators. They were also joint lead
managers and joint bookrunners with ANZ,
CICC, Industrial Bank’s Hong Kong branch,
Mizuho Securities and MUFG.
› KAISA PLACEMENT RAISES US$619M
KAISA GROUP HOLDINGS privately placed
US$619m of bonds at the end of trading last
Thursday to increase the outstanding sizes
of its 2020s, 2021s, 2022s and 2024s.
The Chinese property developer raised
US$30m to form a single series of notes
on consolidation with the US$430m
7.25% 2020 senior notes, US$100m to
be combined with the US$225m 7.875%
2021s, US$215m to add to the US$1.04m
8.5% 2022s and US$274m to go with the
US$2.85bn 9.375% 2024s.
The 2020s, 2021s and 2022s were placed
at 99.50 and the 2024s at par.
Proceeds will be used to refinance
existing debt, as well as finance existing
and new property projects, and for general
corporate purposes.
The company may adjust its plans in
response to changing market conditions
and, as such, reallocate the use of the
proceeds.
BOC International was sole placing agent.› SUNAC OUT TO AMEND 2019 TERMSSUNAC CHINA HOLDINGS is seeking approval
from holders to amend certain terms of its
US$400m 8.75% notes due 2019 to make
them consistent with the terms of the
paper it printed earlier this year.
Holders of the 2019s, issued in 2014, will
receive US$2.50 per US$1,000 in principal
amount if they agreed to the changes.
Morgan Stanley is consent solicitation
agent for the offer, which ends on
November 10.
The amendments include lowering the
fixed charge coverage ratio to 2.00x from
2.75x, and expanding the definition of the keycomponents behind the calculation, according
to S&P. Sunac says the proposed terms are
more suitable to its business operations.
S&P views the amendments as credit
negative to the holders, since, overall,
they will loosen the covenants and reduce
investor protection.
However, both S&P and Moody’s say
the proposed changes will not have an
immediate impact on Sunac’s credit profile
and will not affect their ratings on the
Hong Kong-listed company.
“In our view, the amendments will
give the China-based property developer
more leeway to increase debt, and
greater flexibility to expand into non-core
businesses and pursue growth through joint
ventures or other similar arrangements.
The credit impact will ultimately depend
on the company’s project execution and its
willingness to control leverage,” S&P said.
S&P has a B+ rating with negative
outlook on Sunac and a B rating on the
company’s outstanding bonds. Moody’s
has a B2 rating with negative outlook on
Sunac and a B3 rating on the company’s
outstanding bonds.Huarong dual-currency issue a big draw
Bonds Distressed-debt manager draws orders of US$13.5bn for four US dollar tranches and one Singapore dollar pieceCHINA HUARONG ASSET MANAGEMENT (A3/A–/A)
has drawn final orders of over US$13.55bn for
its US$3.4bn of dual-currency bonds, priced
last Tuesday.
The state-owned distressed-debt
manager sold four US dollar tranches and
one Singapore dollar piece, increasing the
combined size of the trade from an initial
target of US$3.2bn.
On the US dollars portion, US$600m of
five-year floating-rate notes priced at three-
month Libor plus 115bp, off initial guidance
of 155bp area; US$1.1bn of 4.25% 10-year
fixed-rate bonds priced at Treasuries plus
190bp, off initial guidance of 220bp area; and
US$700m of 30-year fixed-rate paper priced
at 4.95%, off initial guidance of 5.25% area.
Huarong also sold US$700m of perpetual
non-call five securities at 4.00%, off initial
guidance of 4.30% area.
The offering included S$400m (US$294m)
of eight-year Singapore dollar bonds at
3.80%, versus initial guidance of 4.00% area.
The five-year floater attracted orders of over
US$3.25bn from more than 105 investors. Asia
bought 90% of the notes and EMEA took 10%.
In terms of investor types, 68% were banks,
26% were funds, 2% were insurers and a
combined 4% were private banks and others.The 10-year fixed tranche drew orders of
over US$4bn from more than 175 accounts.
Asian accounts bought 79% and EMEA 21%.
Among investors, 51% were funds, 42% were
banks, 3% were insurers and the remainder
were private banks and others.
The book for the 30-year tranche was over
US$2bn featuring more than 115 accounts,
with 80% from Asia and 20% from EMEA.
Going on investor types, 50% were funds,
29% were insurers, 19% were banks and 2%
were private banks and others.
The perpetual notes had orders of over
US$3.75bn from more than 175 accounts.
Asian accounts bought 88% and EMEA 12%.
Funds took 59%, banks took 27%, private
banks and other investors took a combined
13%, and insurers took 1%.
For the eight-year Singapore dollar issue,
total orders were over S$750m from 56
accounts. Of the notes, 99% went to Asia and
1% to Europe. In terms of investor types, 46%
were banks, 31% were funds and insurers and
23% were private banks and others.
The Reg S issue was Huarong’s second
dual-currency bond of the year. It printed a
similarly sized dual-currency issue in April.
The senior US dollar and Singapore
dollar notes have expected ratings ofBaa1/A (Moody’s/Fitch), while the US dollar
perpetual securities are Baa1/A– (Moody’s/
Fitch).
Huarong Finance 2017 is the issuer with
China Huarong International Holdings as
guarantor. Both companies are indirect
wholly owned subsidiaries of Huarong.
The notes have the benefit of a keepwell
deed and a deed of equity interest purchase,
investment and liquidity support undertaking
from Huarong.
ANZ, Bank of China, Bank of
Communications, Citic CLSA Securities, DBS
Bank, Goldman Sachs, Huarong Financial,
ICBC, Morgan Stanley and Standard Chartered
Bank were joint global coordinators.
The JGCs were also joint bookrunners and
joint lead managers with ABC International,
BOC International, CCB International, China
Citic Bank International, China International
Capital Corp, China Minsheng Banking Corp’s
Hong Kong branch, CMB International,
Commonwealth Bank of Australia, First
Abu Dhabi Bank, HSBC, Industrial Bank’s
Hong Kong branch, Nomura, OCBC Bank,
Shanghai Pudong Development Bank’s Hong
Kong branch, SPDB International and United
Overseas Bank.
CAROL CHAN