Shangri-La brings five-year CB with zero coupon

The Hong Kong-based hotel operator raises $500 million with support from a few anchor orders, but aggressive terms send the CB lower in the grey market.
The rooms at Shangri-La's World Summit Wing hotel in the 330-metre tall China World Tower offer spectacular views of Beijing
The rooms at Shangri-La's World Summit Wing hotel in the 330-metre tall China World Tower offer spectacular views of Beijing

Shangri-La Asia, the Hong Kong-based hotel group owned by Malaysia’s Kuok family, yesterday raised $500 million from a convertible bond that it will use to repay bank loans maturing this year and for capital expenditure. Like the $500 million CB issued by Agile Property Holdings on Wednesday, the deal looked aggressive, but while the Agile offering was well received by investors, they approached Shangri-La with a lot more caution.

Specifically, the combination of a five-year maturity with no put and a zero coupon looked punchy, as did the 35% conversion premium. However, what primarily spooked investors and caused the bonds to dip below par in the grey market shortly after...

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