China Mengniu Dairy, China’s biggest maker of liquid milk, closed its $500 million debut bond on Thursday night, offering investors exposure to a private sector Chinese company.
The group, which listed in Hong Kong in 2004, has three strategic investors – state-owned China National Cereals, Oils and Foodstuffs Corporation (Cofco); Danone and Arla, but it is considered a private sector company.
Chinese bond issuance has risen sharply this year but much of it has been dominated by state-run companies, so China Mengniu offered some diversification.
The deal attracted an order book of $3.25 billion from 230 investors. The initial guidance for the five-year bond was at the area of Treasuries plus 250bp and the final guidance was Treasuries plus 225bp-235bp, with the bonds printing at the tight end. In the secondary market, the bonds tightened 10bp to Treasuries plus 215bp, amid a strong market.
The issue is expected to be rated A- by S&P and Baa1 by Moody’s. Comparables for the deal included Cofco, Tingyi and Want Want.
Fund managers were allocated 63%, insurance 16%, banks 11%, public sector 8% and private banks 2%. By geography, 77% went to Asia and the rest to Europe.
Standard Chartered, Deutsche Bank and HSBC were joint global coordinators and bookrunners. Barclays was also a bookrunner.
The company has been acquisitive of late. In 2012, it acquired 27.9% of China Modern Dairy and, in August 2013, it bought 89% of Yashili International, an infant milk formula maker, and has since sold down its stake to 76%.
Meanwhile, China Construction Bank (Asia) has mandated Bank of America Merrill Lynch and HSBC to arrange fixed-income investor meetings that start on Monday.
