Franshion copies perpetual deal pioneered by Sino-Ocean

Hong Kong-listed Franshion Properties China has raised $500 million from an issue of perpetual subordinated convertible securities that were structured almost exactly like a similar perpetual deal sold by fellow Chinese real estate developer Sino-Ocean Land Holdings in mid-July.

Indeed, sources said the mandate to the arranging banks was to achieve the same accounting treatment as Sino-Ocean did on its $900 million offering, in other words to have the securities treated as equity on the balance sheet from day one. From an accounting perspective, convertible bonds are otherwise treated as debt until conversion. After that they become equity.

For Franshion, which has a market cap of about $2.4 billion, this means a substantial increase in...