Top stories
More Chinese Developers Sell High-Yield Dim Sum Bonds
USINFO | 2013-12-30 14:45
HONG KONG—Two Chinese developers are selling benchmark-sized high-yield dim sum bonds with three-year maturities, riding on investors’ keen appetite for assets denominated in the Chinese currency with increased appreciation prospect, as well as global thirst for yields amid low interest rates around the world.
Powerlong Real Estate Holdings Ltd.1238.HK -1.89% , a mid-sized real estate company which focuses on projects in second- and third-tier cities, plans to sell an unrated offshore yuan-denominated bond at a yield of about 9.5%, according to term sheets seen by The Wall Street Journal Monday. The proceeds will be used to refinance its existing debt.
Bank of America BAC -2.08% Merrill Lynch Deutsche Bank DBK.XE +0.27%HSBC HSBA.LN +0.32% and the Royal Bank of Scotland RBS.LN +0.53% are joint bookrunners of the bond, the term sheet said.
Fantasia Holdings Group Co.1777.HK -0.80% , a Shenzhen-based mid-sized developer, plans to sell a yuan bond outside China at a yield of about 8%, according to the second term sheet, which added that the proceeds will be used to refinance some of its existing debt, fund its existing and new property development projects and for general corporate purposes.
Investors are looking for higher returns as yields of U.S. dollar bonds in the emerging markets are getting lower, said Todd Schubert Bank of Singapore’s head of fixed-income research. “The Chinese property bonds in the yuan space offer investors with the opportunity to earn higher returns” by buying riskier bonds and exposing themselves to the appreciating currency.
Deutsche Bank’s credit analyst Jacphanie Cheung said, “Most Chinese real estate players have already sold U.S. dollar bonds, and they have started diversifying their investor base by switching to tap yuan funds in the past month.” She added that this trend will continue in the coming months.
The bond, with provisional ratings of B2 and B-plus by Moody's MCO +0.13%and Standard & Poor’s respectively, is being arranged by Bank of America Merrill Lynch, Citi, HSBC and China Merchants Securities, the term sheet said.
Benchmark-sized dim sum bonds are typically valued at half-a-billion-yuan ($81.5 million). Both bonds are expected to be sold Monday, the term sheets said.
Correction: Todd Schubert is Bank of Singapore’s head of fixed-income research. An earlier version of this post misspelled his last name.
Powerlong Real Estate Holdings Ltd.1238.HK -1.89% , a mid-sized real estate company which focuses on projects in second- and third-tier cities, plans to sell an unrated offshore yuan-denominated bond at a yield of about 9.5%, according to term sheets seen by The Wall Street Journal Monday. The proceeds will be used to refinance its existing debt.
Bank of America BAC -2.08% Merrill Lynch Deutsche Bank DBK.XE +0.27%HSBC HSBA.LN +0.32% and the Royal Bank of Scotland RBS.LN +0.53% are joint bookrunners of the bond, the term sheet said.
Fantasia Holdings Group Co.1777.HK -0.80% , a Shenzhen-based mid-sized developer, plans to sell a yuan bond outside China at a yield of about 8%, according to the second term sheet, which added that the proceeds will be used to refinance some of its existing debt, fund its existing and new property development projects and for general corporate purposes.
Investors are looking for higher returns as yields of U.S. dollar bonds in the emerging markets are getting lower, said Todd Schubert Bank of Singapore’s head of fixed-income research. “The Chinese property bonds in the yuan space offer investors with the opportunity to earn higher returns” by buying riskier bonds and exposing themselves to the appreciating currency.
Deutsche Bank’s credit analyst Jacphanie Cheung said, “Most Chinese real estate players have already sold U.S. dollar bonds, and they have started diversifying their investor base by switching to tap yuan funds in the past month.” She added that this trend will continue in the coming months.
The bond, with provisional ratings of B2 and B-plus by Moody's MCO +0.13%and Standard & Poor’s respectively, is being arranged by Bank of America Merrill Lynch, Citi, HSBC and China Merchants Securities, the term sheet said.
Benchmark-sized dim sum bonds are typically valued at half-a-billion-yuan ($81.5 million). Both bonds are expected to be sold Monday, the term sheets said.
Correction: Todd Schubert is Bank of Singapore’s head of fixed-income research. An earlier version of this post misspelled his last name.
