Road King Infrastructure Finance has priced Rmb2.2 billion ($360 million) of senior Reg-S notes, the largest-size issue in the currency from the issuer.
The three-year notes pay a 6% coupon, the tight end of guidance due to huge demand from investors. Guidance was initially set in the area of 6.375% at deal launch, and then narrowed to 6%-6.125%. The maturity date has been set to December 3, 2016.
One source mentioned that the closest comparable to Road King’s notes are Yanlord Land’s Rmb2 billion 5-year bonds issued in May. Yanlord is rated BB by both Moody’s and S&P, whereas Road King is rated B1 by Moody’s and BB- by Standard and Poor’s.
The bonds were traded at a fair value of about 6.125%, indicating Road King’s price of 6% does not have a new issue premium.
Road King secured orders of Rmb10 billion, or more than 4.5 times the deal size, from 140 accounts. Fund managers bought 54% of the bonds, private banks took 22%, banks 15% and others 9%. By geography, Asian and European investors took 94% and 6%, respectively.
The bond is the first high-yield issue since May in the CNH market, sparking the interest of investors that are required to hold high-yield debt in their portfolios.
Road King Infrastructure, parent of the issuer and guarantor of the bonds, is primarily a toll-road operator, but with links into the China property sector.
“The issuer is riding on the constructing tone of the CNH market, and has made the right decision to come to the market to [access] a window,” said the first source.
The CNH market is set for more issuers before the Christmas holiday, sources said. The Hong Kong subsidiary of Vanke, China’s largest developer, is in the market with its proposed 5-year investment grade Rmb bonds.
Guidance is in the area of 4.7% and pricing is slated for Wednesday. The issuer has ratings of Baa2 (Moody’s) / BBB+ (S&P) /BBB+ (Fitch).
DBS, HSBC and JP Morgan were joint global coordinators on the Road King deal, with Citic Securities International as joint lead manager. Proceeds will be used to refinance existing debt. HSBC is working on the Vanke transaction.
