Jan 11, 2019 (China Knowledge) - Dollar-denominated bonds issued by Chinese property firms this week has been met with healthy demand as market sentiment improves following the easing of trade tensions between the world’s two largest economies.
Road King Infrastructure, a Hong Kong listed developer with annual sales revenue of USD 5.53 billion had its 2.25-year bonds over subscribed by 10 times. The company received USD 4.1 billion in orders for issuance of USD 400 million worth of notes from Asian asset managers and banks. The bond had a final coupon of 7.75%.
Similarly, Powerlong Real Estate Holdings, another Hong Kong listed developer saw USD 380 million worth of orders on USD 200 million worth of its 2-year bonds.
The results this week come in contrast to just 2 months ago when Chinese property tycoon Hui Ka Yan of China Evergrande Group had to buy half of the U.S.-dollar bonds issued by his company, despite the bonds having a coupon of 13.75%.
Chinese property developers have issued a flurry of new bonds since the start of the year as investors’ sentiments have improved from last year. With many developers facing bond maturities this year, these new bonds will help them to cope with their repayment obligations.
Lowered bank reserve requirement ratios in China, expectations of the upcoming trade deal between U.S. and China and a possible slowdown of Federal rate hikes this year have all contributed to boosting investors’ sentiments.
Furthermore, China’s National Development and Reform Commission has also moved back the deadline for Chinese firms to issue bonds from their 2018 quota to June 30th this year, allowing for more bond issuance for refinancing.
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