China property player raises US$300 million in US dollar bond issue

WANDA Properties Global (WPG), a unit of China’s largest commercial property developer Wanda Group, has raised US$300 million in a US dollar bond issue.

This was the company’s second such issue in a month, coming in after mid-January’s US$400 million sale of a two-year bond. A term sheet and company presentation seen by Reuters showed that the latest three-year bond was finalised with a yield of 12.375 per cent and a coupon of 11 per cent.

The term sheet said that the proceeds would be used to refinance WPG’s existing debt.

The positive results were a rare bit of good news for China’s high-yield bond market as it struggles to emerge from a bruising debt crisis. Investors have been staying away from the sector over the last year, as many debt-laden developers defaulted and extended payments.

Wanda Commercial Management Group (WCMG), the property services arm of Wanda Group and parent of the issuer, said the new transaction was encouraged by the 3.5 times oversubscription in the last issue, and the outstanding performance of that two-year bond trading in the secondary market.

The term sheet showed that the final order book exceeded US$830 million, with 87 per cent of orders coming from Asia, and a majority from asset and fund managers.

SEE ALSO

Springtime in China: what will the reunion with investors bring?

China developers flag worst earnings in years on historic slump

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

WCMG said that the final pricing of the sale this week was tightened by 12.5 basis points after receiving overwhelming orders from investors, including long-term investors and European investors. It did not provide any figures.

The recent transactions could mark a turnaround for China’s high-yield bond market. But market participants expect that only developers with strong balance sheets will be able to tap the US dollar debt market; Wanda could be a special case because of its commercial property business and asset-light nature. REUTERS