Fosun International, founded by Chinese billionaire Guo Guangchang, returned to the dollar bond market in style this week.
The company raised $800 million after becoming the first Asian issuer to test the waters after the Federal Reserve's 25bp interest rate hike on Wednesday, a widely anticipated move. But Fosun was also riding on the back of its own good news.
Moody's, the ratings agency, changed its outlook on Fosun from stable to positive in December, citing the group’s plan to sell two major assets — a 50% stake in a property project in Shanghai and a 100% stake in a Ironshore, a US-based insurer purchased by Fosun for $2.3 billion in 2015. The two deals could collectively raise as much as Rmb26 billion ($3.76 billion) for the Hong Kong-listed company.
Fosun generated more than $3.7 billion of demand for its bond at the peak level, an amount that barely shifted by the times the books were closed. The final demand was $3.5 billion from 263 accounts.
The sticky order book was due to large pent-up demand from investors in the region seeking to put their money to work, according to two fixed income bankers. It allowed the company to increase the size of the deal from a mooted "benchmark" size, typically taken to mean anywhere between $300 million and $500 million for high-yield borrowers.
The company, rated Ba3/BB by Moody’s /S&P, pitched the five non-call three-year bond at "the 5.5% area" on Thursday morning, before narrowing the Reg S deal to 5.25% the number. Final pricing of the March 2022 bond was fixed at par to yield 5.25%, according to a term sheet seen by FinanceAsia.
The closest comparable was its outstanding 5.5% $590 million August 2023 note, which was trading at a yield of 5.1% prior to the new deal being launch.
The new bond traded up in the secondary market on Friday morning. It was quoted at a cash price of 100.125/100.65, according to market data.
The majority of the bond was allocated to Asian accounts, leaving the remaining 5% for investors in Europe, the Middle East and Africa. By investor type, fund managers took 49% of the bond, banks got 28% and private banks were allocated the remaining 13%.
The group plans to use the proceeds to refinance some existing debt, for overseas mergers and acquisitions, and for working capital.
Credit Suisse was the global coordinator of the latest offering, while AMTD, Fosun Hani Securities, Haitong International and Huarong Financial were bookrunners.
