Unicom Hong Kong, at HK$13.24 each,
for a maximum subscription amount of
HK$88bn, equivalent to Rmb74bn.
Unicom Hong Kong will use the proceeds
to upgrade its 4G network and invest in 5G
capabilities, among other things.
CICC was the sole bookrunner.
CHINA SOUTHERN AIRLINES has obtained
approval from the State-owned Assets
Supervision and Administration
Commission to raise up to US$1.90bn
from private placements of A-shares and
H-shares.
The carrier aims to raise up to Rmb9.5bn
from up to 1.8bn A-shares at a floor price
to be set on the first day of issuance.
Controlling shareholder China Southern
Air Holding (CSAH) has agreed to subscribe
to at least 31% of the placement shares
through an asset swap and cash.
China Southern will also raise up to
HK$3.70bn from the sale of up to 601m
H-shares at HK$6.156 each to a wholly
owned unit of CSAH.
UBS Securities is working on the
transaction.
Shareholders will review the proposal on
Wednesday.
› COSCO SHIPPING PLANS PLACEMENT
COSCO SHIPPING HOLDINGS has secured board
approval for a proposed private placement
of not more than 2.04bn A-shares to raise
up to Rmb12.9bn.
The Chinese company plans to set the
floor price for the shares on the first day of
issuance. Indirect controlling shareholder
China COSCO Shipping Corp has agreed to
subscribe to 50% of the shares.
Proceeds will be used to build new ships.
The placement still needs approvals from
shareholders and regulators.
COSCO SHIPPING ENERGY TRANSPORTATION has
also obtained board approval for a proposed
private placement of not more than 806m
A-shares to raise up to Rmb5.4bn. The
shipping company, mainly engaged in
shipping oil products and liquefied natural
gas, will set a floor price on the first day of
issuance.
Indirect controlling shareholder China
COSCO Shipping Corp has agreed to subscribe
to up to Rmb4.2bn of the placement shares.
Proceeds will be used to purchase new ships.
Guotai Junan Securities is working on the
transaction.The placement is still pending approvals
from shareholders and regulators.
SDIC ESSENCE, parent company of Essence
Securities, has raised Rmb8bn from a
private placement of 533m shares to eight
investors at a price of Rmb15.01, a discount
of 7.2% to the pre-deal spot.
Controlling shareholder State
Development and Investment Corp took up
10% of the placement shares. Mutual funds
and private funds were other main buyers.
Zhongtai Securities and Guotai Junan
Securities were joint bookrunners. Proceeds
will be used to increase capital of Essence
Securities.› KIDSLAND OPENS IPO BOOKSKIDSLAND INTERNATIONAL has started
bookbuilding for its Hong Kong IPO of up to
HK$440m. The books are covered.
The toy retailer is selling 200m primary
shares, or 25% of the enlarged company
capital, at an indicative price range of
HK$1.50–$2.20 each. The range represents a
2018 P/E of 8.8–12.9.
Books closed last Friday with pricing
slated for the same day.Vanke gets long-term funds at lower cost
Bonds Property developer returns to US dollar market after end of shareholder tussleCHINA VANKE (Baa1/BBB+/BBB+) last Thursday
printed US$1bn of US dollar notes on its first
foray to the international bond market after
its shareholder and management power
tussle was settled.
The Reg S trade was also the Chinese real-
estate company’s first issue of 10-year dollar
bonds, underscoring its ability to lock-up
long-term funding at low cost and helping to
extend its debt maturity.
“The window was very good just shortly
after the FOMC leaving rates unchanged
and US Treasuries were trading at a very low
rate when we priced the deal, allowing the
company to lock up low funding cost,” said a
syndicate banker on the deal.
Moreover, bullish sentiment towards
Chinese credits after China’s US$2bn
sovereign US dollar bond issue on October
26 further encouraged investors to pour
money into the rare investment-grade issuer
from the property sector, the banker pointed
out.
The company, listed in Hong Kong and
Shenzhen, priced the 3.975% 10-year notes
at 99.722 to yield 4.009%, translating to a
spread of 165bp wide of Treasuries, the tight
end of final guidance of 165bp–170bp andwell inside the initial 200bp area.
In contrast, Vanke priced US$600m 3.95%
three-year bonds in December last year at
4%, or a 237bp spread over Treasuries at the
time, indicating a sharp fall in the cost of
funds in the latest offering.
Few Chinese property developers are able
to print long-tenor bonds. Only a few names,
such as China Overseas Land & Investment,
China Resources Land, Soho China and
Country Garden Holdings, have issued US
dollar bonds with maturities of 10 years or
longer.
“Demand was very strong as it is a solid IG
name in the market with a leading position in
China’s property market,” the banker said.
Final orders stood at over US$4.3bn from
174 accounts. Geographically, Asia took 83%
of the notes and EMEA got 17%. In terms of
investor types, 62% were asset managers, a
combined 20% were insurers and sovereign
wealth funds, 15% were banks and 3% were
private banks.
Moody’s and S&P revised Vanke’s rating
outlook earlier this year after the company’s
year-long shareholder and management
power tussle ended with Shenzhen Metro
Group emerging as a white knight and thelargest investor.
Moody’s in March and S&P in June revised
to stable from negative the outlooks on their
respective Baa1 and BBB+ ratings.
Vanke’s newly priced notes have expected
ratings of Baa2/BBB/BBB+. They traded
around 5bp tighter than reoffer late Friday
morning.
The notes were issued in the name of
subsidiary Vanke Real Estate (Hong Kong),
rated BBB+ (S&P), with parent Vanke
providing a keepwell deed and equity interest
purchase undertaking.
Proceeds will be used for general
corporate purposes.
S&P has said it does not expect the new
issuance to have a significant impact on
Vanke’s financial leverage because it is
mainly for refinancing. However, S&P expects
Vanke’s debt-to-Ebitda ratio to rise to around
3.0x by the end of 2017, given the company’s
aggressive land acquisitions and investments
outside of property development.
BOC International, UBS, CICC, China
Merchants Securities (HK), Deutsche Bank and
HSBC were joint bookrunners and joint lead
managers on the transaction.
CAROL CHAN