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leading tech companies that
are backed by renowned
shareholders. However,
investors are still conservative
over some less-attractive floats,
and it’s not like they will buy
everything on the street,” said
another banker away from theChina Literature deal.
The responses to the two
upcoming tech floats will shed
more light on the depth of therecovery in the Hong Kong IPO
market.
San Francisco and Singapore-
headquartered gaming
hardware and software
maker RAZER is currently on
the road with an IPO of up
to HK$4.25bn. The books are
already multiple times covered.
Chinese online car financing
marketplace YIXIN GROUP, in
which Tencent owns 24.3%,
will launch an US$867m float
on Monday. The company,
which also counts Baidu
and JD Financial among its
shareholders, expects a strong
response for the offering
and decided not to have a
cornerstone tranche.
The China Literature
float comprises about 151m
shares (90% primary and 10%
secondary), or 16.7% of the
enlarged company capital.
Trading is scheduled to start on
November 8.
Bank of America Merrill Lynch,
Credit Suisse and Morgan Stanley
were the joint sponsors.
The three banks were also
joint global coordinators and
joint bookrunners with CICC
and JP Morgan. The other
joint bookrunners were BOC
International, China Securities
International, China Renaissance,
China Merchants Securities, CMB
International and HSBC. capital market has been
disrupted since chairman Wang
Wenliang, who holds a 70.3%
stake in the company, was
disqualified as a legislator for
alleged election fraud.
“Dandong Port did not take
the market by surprise. Since
the chairman’s disgrace last
year, the market knew that it
would be only a matter of time
before Dandong Port defaulted
on bonds,” said a Beijing-based
investor with a securities
house, who did not hold any of
Dandong Port’s notes.
In September 2016, the
National People’s Congress
invalidated the election of
about half of the legislators
in Liaoning province, saying
they obtained their positions
through bribery, the state news
agency Xinhua reported.
Wang Wenliang was one of
the 45 NPC delegates removed
from their posts, Xinhua said.
Dandong Port issued a total
of Rmb13.9bn in the mainland
bond market in 2015, but that
figure dropped to Rmb4.71bn
in 2016. It has not returned
to the market since issuing a
Rmb550m 8.50% five-year non-
put three in November 2016.
“Its over-reliance on bond
financing during a bull market
and restricted access to funding
channels when the market
turned sour provided thecatalyst for Dandong’s failure
to service the debt,” said CICC
analysts in a note.
Speculation of a bailout for
Dandong Port had mounted
before the default, given that
the redemption date came so
close to the Communist Party’s
19th National Congress. Some
had asked if the underwriters
on the deal, Citic Securities and
China Citic Bank, would buy
back the notes to protect their
reputation.
“I think the scale of
Dandong’s debt was beyond the
capacity of the underwriters.
They could have covered it this
time, but they wouldn’t be able
to absorb the total outstandingbonds of Rmb6.95bn,” said a
credit analyst.
The government of Dandong
and local banks were said
to have stepped in last year
and earlier this year to help
arrange funding for the
company, a major taxpayer in
the locality.
Lianhe Credit Rating
downgraded the notes and the
issuer to C from AA on October
30 – the equivalent of an 18-
notch move. Dandong’s 8.50%
2021s listed on the Shanghai
Stock Exchange were bid at
13 in cash price on Friday,
indicating a yield of 208%,
according to Thomson Reuters
data. For daily news stories
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