US-listed Xinyuan Real Estate on Wednesday became the first Chinese property developer to enter the dollar high-yield market in the past several months with a $300 million three-year bond.
The Reg S sale comes two days after Hong Kong-listed Fantasia Property completed a retap of its Rmb600 million May 2019 note, raising proceeds of Rmb1 billion in the offshore renminbi market.
Xinyuan, headquartered in the city of Zhengzhou, completed its $245 million initial public offering in 2007 and is the first real estate developer from China to be listed on the New York Stock Exchange.
Despite low-key publicity, the company garnered more than $1.8 billion of orders, mostly from asset managers, institutional funds and private banking accounts, according to a person familiar with the deal.
"The current market condition has allowed high-yield issuers to raise funds at favorable terms," the person commented, highlighting that a flood of onshore money from China has predominately distorted the pricing of both investment grade and high-yield markets.
The person added that fair value of the deal should be well above final pricing, citing concerns over liquidity risk and its credit profile. "It is impossible to gauge what the fair value is in an issuer-friendly market," he said.
Initial guidance of the August 2019 note was set at high 8% area, before tightening to 12.5bp either side of 8.25%. Final pricing of the Singapore-listed note was fixed on par to yield 8.125%, according to a term sheet seen by FinanceAsia.
The closest comparables were its outstanding 13.25% May 2018 and 13% June 2019 notes, which were trading on a yield to call of 7.35% and 8.35%, respectively. The company plans to use the proceeds to refinance its 2018 bond, which is callable in September 2016.
Meanwhile, its 2019 bond is currently trading above its call price and the bond can be redeemed at a cash price of 106.5 in June 2017.
The final order book closed at $1.7 billion from 125 accounts. By region, Asia took 93% and Europe 7%. By investor type, fund managers/asset managers accounted for 82%, private banks 15% and banks/insurance/others 3%.
Joint global coordinators were Bank of America Merrill Lynch and Deutsche Bank, while Barclays and CCBI were joint bookrunners.
The story has been updated from first publication with final stats.
