Modern Land has priced a $150 million five-year note with a callable option in the third year, offering investors an attractive yield pickup amid investor fatigue for China property names, according to a term sheet seen by FinanceAsia.
The B2/B rated Reg S registered transaction was executed within 10 hours and is well-timed given that 10-year US Treasury yields have hit a three-month low to 2.48%, according to a source close to the deal.
The joint syndicates’ strategy to announce initial price guidance at about 14% generated healthy demand from investors, adds the source. The deal ended up pricing at 14%.
“[The deal received] strong anchor orders of over $100 million following a debut and extensive roadshow,” said the source. “Recent credit ratings by Moody’s and Fitch further boosted investors’ appetite.”
Modern Land’s bond received an order book of $185 million from more than 30 accounts. Asian investors subscribed to a bulk of the bonds - 97.5% - and the rest went to European investors.
Private banks purchased 81% of the paper, followed by financial institutions with 10% and asset and fund managers at 9%.
The deal, which has a reoffer price of 99.561, traded up to 102.25 in secondary markets, indicating continued strong demand for Chinese real estate credits.
Bank of China International, Citi, Industrial and Commercial Bank of China (ICBC) Asia and Morgan Stanley were joint bookrunners of the deal.
