Chinese developers issue $6 billion in offshore dollar bonds in July

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HONG KONG: Chinese property developers sold 33% more offshore dollar bonds in July than a year earlier, as the debt-laden industry seized a window of robust investor demand ahead of increasing market uncertainty to raise capital.

The total issuance by 16 developers for the month rose to $6 billion, the highest since January, Refinitiv data showed, and the strong pace is continuing into August.

Total volume so far this year, however, was still 40% behind the same period last year, as activities in March and April were almost muted due to the coronavirus epidemic.

So far this week, at least three developers have sold senior notes, and four others proposed on Wednesday new issuance, including mid-tier Seazen Group and Henan-based Central China Real Estate. Yuzhou Group is marketing up to $300 million of six-year green bonds, IFR reported.

“The companies have been hungry for too long,” said a chief financial officer of an issuer last week, who declined to be named because he was not authorised to speak to the media. “We saw huge demand in high-yield real estates two weeks ago and it’s a good window.”

“2020 is a year of volatility and we don’t know how the market will be like in September and October so it’s best to issue when we can.”

The CFO added that many peers chose to tap the offshore bond market also because onshore rates now are not as attractive as a few months ago.

The high-yield emerging markets, which Chinese property companies dominate, have continued to improve since the end of April, according to credit researcher Lucror Analytics, with major indices gaining up to 6.25% in the last three months.

Rating agency Moody’s said it expected Chinese developers would strive to issue new notes in the second half to refinance their $45.4 billion of maturities in the next 12 months, including puttable bonds.

Source: Press Trust of India