Hong Kong-listed Fantasia returned to the international bond markets for the first time in just over a year on Tuesday, raising $400 million through the sale of a five-year non-call three bond.
"It was a pretty smooth deal given its relatively small in size," said one syndicate banker. "The new print was a investor-friendly one."
This was not that surprising given the secondary market backdrop of widening spread levels, but the deal nevertheless showed how far Chinese property companies have returned to favour with international investors over the past year.
Last June Fantasia raised $200 million from a three year-deal that carried an 11.5% coupon.
That pricing level has now come down by almost one third and explains its G3 bond market return after a sojourn in the domestic debt markets where increasing costs means it is now paying 9.5% for three-year funds.
This year, its international deal attracted a $1.2 billion final order book with pricing initially pitched in the mid 7% area. This was then tightened to the mid 7.375% area.
Final pricing of the October 2021 Reg S bond was fixed at par to yield 7.375%, according to a term sheet seen by FinanceAsia.
Distribution stats show that 88 accounts participated of which 90% were from Asia and 10% from Europe. By investor type funds took 56%, banks 28%, corporates 8%, private banks 8%.
The obvious comparables are its outstanding bonds – the 11.5% 2018 bond and the 10.625% January 2019 bond (callable 2017).
These were trading on bid prices of 108% and 106.75% on Tuesday, equivalent to a yield-to-worst of 6.368% and 5.598%, respectively.
The new deal has offered a 100bp pick up over the June 2018 bond for a roughly one-year maturity extension compared to a 77bp pick up for a one-and-a-half year pick up between the January 2017 call date and June 2018 maturity.
The Reg S deal was launched following the Shenzhen-based property developer’s August announcement it had acquired a property management firm from Wanda Commercial Properties in an undisclosed term.
However, mainland media China Business News said the acquisition was worth about Rmb1.2 billion ($180 million), citing unnamed sources familiar with the transaction.
Joint bookrunners were: Guotai Junan International, ABC International, Bank of America Merrill Lynch and Citic CLSA Securities.
