Chinese conglomerate Fosun International has been forced to make a tactical withdrawal after volatile markets made it impossible to deliver the kind of size or pricing it was looking for. Plans for a US$500 million seven-year offering were effectively scratched within hours of pricing yesterday (October 13).
Leads Citigroup and Morgan Stanley had expected to price the deal last week at an indicative pricing range of 8.50% to 9%, but delayed as the Asian high-yield and emerging markets continued to struggle.
With the market not returning to a level the leads and issuer were comfortable with, the decision was made to pull back the offering despite having been downsized earlier in the week to $325 million.
The deal would have been difficult in normal market conditions given the uncertainty that surrounds the mainland property market. Because of its high policy and regulatory risks, international investors are not terribly at ease with the Chinese property market. Moreover, investors have concerns regarding Fosun's overall transparency.
The deal is said to have attracted about $550 million in orders prior to opening the deal to investors in the US.
The deal, which was rated Ba3/BB- could be re-launched in early 2006.
