China Aircraft Leasing, controlled by state-owned conglomerate China Everbright Group, returned to the international bond markets for the second time in less than four months, raising $300 million from a five-year unrated bond on Monday.
The Reg S deal underscores the Hong Kong-listed company's desire to extend its maturity profile and comes after it sold its first-ever dollar bonds in April, when it raised $300 million in a three-year format.
The latest deal takes advantage of favorable market conditions as a result of a search for yield and an increasing appetite for risky assets.
China Aircraft Leasing was able to expand its investor base by geography and investment style, according to bankers familiar with the transaction.
Thanks to strong support from Chinese and European investors, the group built a peak order book of $1.3 billion, with allocation evenly split between total return investors, private banking accounts, banks and asset managers, they said.
"The April issue was primarily driven by Chinese investors but the latest offering was able to expand its investor base and reach into Europe and other institutional client base," said a syndicate banker close to the transaction.
The final order book closed at $1.2 billion from 92 accounts. By geography the book split 82% Hong Kong/China, 10% Singapore and 8% others. By investor type funds took 43%, banks 28%, retail 22% and corporates 8%.
Initial guidance was set at 5.25% area before tightening to 5bp each side of 4.95%. Final pricing of the August 2021 deal was fixed on par to yield 4.9%, according to a term sheet seen by FinanceAsia.
"Prior to the release of final price guidance, many investors expected the deal to price at around 5% area," said the person. "The final pricing suggests the group's ability to price inside comparable credits."
The direct comparable was the company's existing 5.9% $300 million May 2019 bonds, which were trading on a yield of 4.42%.
Besides that, China Energy Reserve and Chemicals Group's 6.125% $400 million January 2019 and Tsinghua University's 6% $450 million notes, which were trading at 5.01% and 4.15% respectively.
This meant that the new print was priced inside its comparables, even though syndicate bankers said the fair value should be at around the 5% level.
In a statement to the Hong Kong stock exchange, the group said it plans to use the new proceeds to fund new aircraft acquisitions, financing an aircraft disassembly plant, and business expansion in aircraft and related businesses.
Joint global coordinators were China Everbright Bank Hong Kong branch and DBS.
