Hong Kong-listed Far East Consortium made its debut in the dollar bond markets on Wednesday with an unrated $300 million issue.
A transaction by the hotels, property investment and car park group has been a long time coming.
It first tried and failed to access the market in 2012 at a time when Chinese property credits were out of favour and turned to the dim sum market a few months later to raise Rmb1 billion ($150 million) instead.
That deal matured earlier this year and was re-paid after the group took out a HK$1.35 billion ($174 million) syndicated loan in February.
Its new deal follows shortly after a $350 million unrated issue by Regal Hotels in mid-July, which provided its main comparable. This 3.875% July 2021 deal was trading on a mid-yield of 3.83% on Wednesday, compared to 3.95% at launch.
Syndicate bankers argued that Far East Consortium is a better credit and deserved to price through Regal.
Indicative pricing for its five-year Reg S deal was pitched at 4% before final pricing was fixed at par on a coupon and yield of 3.7%.
The order book stood at $1.2 billion when guidance was revised, a lower level than the $1.5 billion Regal achieved when markets were not quite so hot. The final order book closed at the $890 million level with participation from 70 accounts.
By geography, 81% went to Asia and 19% to Europe. By investor type fund managers took 57%, private banks 23% and banks 20%.
Other comparables from Hong Kong's unrated firmament include: Shun Tak's 5.7% March 2020 bond, which was yielding 3.49% on Wednesday; New World Development's 4.45% April 2021 bond at 2.95%; and Kerry Properties 5.875% April 2021 bond at 3.08%.
The only other bond that Far East Consortium has outstanding is a Rmb800 million 6% 2018 issue in the name of Dorsett Hospitality, the formerly Hong Kong-listed hotel group it took private last October.
Far East Consortium's desire for dollars is being driven by its growing international footprint. The group has been rapidly expanding overseas in an effort to follow the "Chinese wallet" of middle class tourists travelling overseas.
Recent developments include the establishment of a joint venture with jewellery group Chow Tai Fook and Star Entertainment to develop casinos in Sydney and along Australia's Gold Coast. The group also recently won a property project called Queen's Wharf in Brisbane.
According to its online investor presentation, Far East Consortium has residential property developments in Hong Kong, China, Singapore, Australia, Malaysia and the UK, plus a project pipeline amounting to HK$38.9 billion in gross development value.
It also has retail and office projects in Hong Kong, China, Australia and Singapore amounting to HK$3.3 billion in value, plus 20 hotels across Asia, with a further 12 in the pipeline with a value of HK$18 billion.
Its global portfolio means its debt profile is also geographically mixed with a split of 49% Hong Kong dollars, 18% Singapore dollars, 11% Australian dollars, 9% renminbi, 7% US dollars, 3% Sterling and 3% Malaysian dollars.
At the end of March, net debt amounted to HK$7.923 billion compared to HK$6.332 billion at the same point in 2015. This represented a net gearing ratio of 37.7% compared to 29.8% the previous year.
Ebitda amounted to HK$1.523 billion in the quarter to March.
The group also flagged the growing contribution from recurrent revenue, which now amounts to 50% of the total. Of this, 33% comes from its hotel arm.
Joint global co-ordinators for its bond deal were Barclays, Credit Suisse, DBS, Deutsche Bank and HSBC. Joint bookrunners were AMTD, Guotai Junan International, Haitong International and OCBC.