Guangzhou R&F Properties, a leading Chinese developer, raised $265 million last week from a US dollar five-year non-call three bond deal, returning to the international capital markets for the first time in almost three years.
The Ba3/B+/BB rated homebuilder joined a end-of-year fundraising rush, turning to the market a day after KWG Property issued a $250 million bond and Modern Land sold a $150 million deal.
The Hong Kong-listed company went out with a price guidance at 5.95%, eventually pricing the callable note at 99.146% with a coupon of 5.75%. The bond traded up on its debut on Tuesday, being quoted at a mid-price of 99.875% to yield 5.78%.
A source familiar with the deal said the bond received anchor orders before it was officially launched, allowing smaller accounts to place their orders over a typically quiet holiday season.
“Besides onshore Chinese money, there was good participation from Hong Kong, Singapore and Europe,” a person commented. “The modest size of the debt offering allowed the issuer to keep a relationship with its offshore investors.”
R&F will call two bonds worth a combined $1.6 billion later this month. The property developer has told investors it will redeem its $1 billion 8.5% January 2019 bond and $600 million 8.75% January 2020 bond. But the company took advantage of low interest rates to return to investors, albeit at a smaller size.
“Although most property developers had reduced their offshore exposure, R&F still wants to keep a benchmark in the dollar market because it is a long-term financing channel,” the person added.
By investor type, funds represented 50% of the entire book, while ultra-high-net-worth investors took 38% and private-banking clients 12%, according to people familiar with the deal.
The new deal is callable at 102.875% on January 13, 2020 and January 31, 2021 and thereafter at 101.4375%.
The proceeds of the bond will be used to finance overseas projects under China’s “One Belt One Road” strategy and for general corporate purposes. The issuer has overseas projects in Malaysia, Korea and Australia.
Goldman Sachs, CMB International, Deutsche Bank and Haitong International were the joint bookrunners.
