China property developer Country Garden sells HK$3.9b convertible bond

[HONG KONG] Country Garden Holdings Co, China's largest developer by sales, raised HK$3.9 billion (S$674.4 million) in a convertible bond sale amid a spreading crisis in the real estate sector.

The Foshan-based company sold the bond due 2026 with a 4.95 per cent coupon, according to a Hong Kong exchange filing Friday (Jan 21). The proceeds will be used to refinance offshore debt that will become due within a year.

Shares and bonds of Country Garden were hammered last week on fears that a reportedly failed fundraising effort may be a harbinger of waning confidence.

Country Garden had been one of the few remaining big, better-quality private developers largely unscathed by the liquidity crunch, as peers such as Shimao Group Holdings saw dramatic reversals in their credit ratings.

Country's Garden's dollar bonds rose on Friday morning while its stock opened lower. Its 3.3 per cent dollar note due 2031 climbed 2.6 US cents to 80.8 cents, set for the highest in more than 2 weeks, Bloomberg-compiled prices showed as of 9.28 am in Hong Kong. The shares fell as much as 5 per cent following a 3-day, 19 per cent jump from their lowest level since 2017.

Country Garden set the initial conversion price at HK$8.10 per share, representing a premium of 16 per cent to its Thursday close. Its shares dropped last week following an IFR report that the firm failed to win sufficient investor support for a possible convertible bond deal.

The developer also said its 7.125 per cent note due Jan 27 will be repaid at maturity with internal resources. Including that, it has US$1.1 billion of dollar bonds due this year, compared with about US$29 billion of available cash as of last June, according to data compiled by Bloomberg.

BLOOMBERG