China Resources Enterprise launches CB

China Resources Enterprise becomes the latest entrant to the sizzling Asian CB market.
China Resources Enterprise has sold a $220 million convertible bond through lead manager Morgan Stanley. The bought deal has a zero coupon and a five-year maturity. The conversion premium is 18.11%, which gives a 3.98% yield-to-maturity.

The issuer has agreed to a three-year call but thereafter the bond is subject to a130% hurdle. This implies that the bond would have a credit spread assumption of 230bp over the relevant Treasury. Investors have been further tempted by a dividend yield of 1.2%, The issue has a theoretical value of 101.2% and a bond floor 82.7%. Standard Poors - the credit rating agency - has assigned the issue a rating of BBB-.

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