Nan Fung prompts perp pile up

Hong Kong property developer's deal sees sector re-price. Is this the end of the road for fixed-for-life perpetuals?

A $500 million fixed-for-life perpetual by Nan Fung International Holdings dropped sharply after it began trading on Tuesday in a sign investors may be starting to question the wisdom of structures, which leave them heavily exposed to duration risk  

The Hong Kong property developer’s senior perpetual non-call three-year offering was priced at par on a coupon of 5 5%, but immediately dropped one point when it opened for trading

In turn, it also dragged down other recent senior fixed-for-life perpetuals by Cheung Kong Properties and Sun Hung Kai (SHK), which are both nearly a point-and-a-half below their mid-May issue prices

Nan Fung's distribution statistics illustrate why the market...

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