Chinese developer Poly mulls US$1.7 billion convertible bond sale
Asian borrowers are increasingly turning to convertibles, already common in the US and Europe, after a recent rebound in Chinese equities
POLY Developments and Holdings, China’s biggest builder by contracted sales this year, is considering raising as much as US$1.7 billion via a convertible bond sale, according to people familiar with the matter.
The development comes as state-owned Poly has yet to conduct a private placement of shares for which it announced a plan in December 2022. The convertible debt that can become equity would be an alternative funding option to that plan and would also be a private placement, the people said, asking not to be identified.
Asian borrowers are increasingly turning to convertibles, already common in the US and Europe, after a recent rebound in Chinese equities. Firms raised a record of more than US$9 billion via the securities in May, with the bulk coming from Alibaba Group Holding, JD.com and Lenovo Group.
An offering from a property giant would represent a rare deal from the Chinese real estate industry, just as it shows guarded signs of starting to move past a years-long crisis with the help of policy support.
Representatives of Shanghai-listed Poly have been soliciting investor interest in recent weeks for the bond offering, the people said.
The developer didn’t reply to an emailed request for comment, while calls to its investor relations went unanswered.
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The annual coupon could be about 3 per cent to 3.5 per cent for the six-year security, the people added. The amount Poly aims to raise is 10 billion yuan (S$1.86 billion) to 12 billion yuan, they said. The plan isn’t final and terms may change, the people added.
The builder sold a 2 billion yuan bond with a 2.52 per cent coupon last week.
Worries in China over residential values, unfinished apartments and job security have been deterring buyers, prolonging a property slowdown that is dragging on the world’s second-largest economy.
But policymakers are accelerating efforts to revive demand for homes and address a glut in supply. Big cities in China have also rolled out major easing for homebuyers to lift demand, leading to a recent rally in shares and bonds of property firms. BLOOMBERG
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