JP Morgan and HSBC have priced a shortened $300 million seven-year Reg S only issue for mainland property developer China Overseas Land & Investments after it shelved a longer tenured deal in May.
At that point, the group marketed a $300 million to $400 million 10-year deal at 180bp over mid swaps. However, the deal was postponed after garnerning just $200 million in orders in the face of widening spreads pushed out following the downgrade of Ford And General Motors to junk status.
In order to attract the Chinese banks, which had been reluctant to commit in May, the revised deal was cut to seven years to offset the overall sensitivity of the notes to interest rate changes. The new deal has an issue price of 99.404% and coupon of 5.75% to yield at 181bp over seven-year Treasuries, or 150bp over mid-swaps. Fees are 30bp.
The notes, rated Baa3 by Moody's and BBB- by S&P, attracted an order book amounting to $440 million and had concentrated distribution to just 41 accounts. Distribution was taken up primarily by Asia, which accounted for about 86% of the book with the remaining 14% coming from Europe. Onshore China was said to have accounted for 40% of the book.
COLI is a Hong Kong based property developer controlled by the state owned China State Construction Engineering Corporation and is one of the largest property developers in China.
Proceeds from the deal will be used to fund expansion as well as refinancing existing debt.