Billionaire Hui Wing Mau might be able to use the $300 million in new cash to buy up more projects in China.
Shanghai-based Shimao Property is heading to the international bond markets for the second time this year, as the real estate developer seeks to improve its liquidity and finance both existing and new projects during China’s property downturn.
In this latest debt sale, the Hong Kong-listed real estate company is planning to offer $300 million in seven-year senior notes paying 8.375 percent, to be listed on the Singapore exchange.
Despite ongoing controversy regarding the finances of Chinese developer Kaisa Group, Shimao’s debt has received strong reviews from credit rating agencies and is expected to enjoy high demand.
Shimao Adds $1.1 Billion in Debt This Year
HSBC, Standard Chartered Bank, Goldman Sachs and UBS are jointly coordinating the bond sale for Shimao, which last year ranked ninth nationally in China in terms of contracted sales. The debt issue was announced by Shimao via a statement to the Hong Kong stock exchange dated March 10th.
If successful, this latest debt offering will bring new bond sales by the property developer controlled by Fujian-born billionaire Hui Wing Mau to $1.1 billion this year, after the company successfully priced $800 million in senior notes during early February.
With China’s real estate market still mired in a slump that began in early 2014, many analysts predict that this year will provide good opportunities for larger developers, with better access to financing, to buy up projects from distressed competitors.
Just last month Tianjin-based Sunac negotiated an agreement to acquire a majority stake in Kaisa Group, after the Shenzhen developer was unable to meet its debt obligations.
Senior Notes Rated Just Below Investment Grade
Despite the headwinds facing China’s economy in 2015, credit agency Fitch Ratings has assigned the proposed bond issue a rating of BB+(EXP), putting the notes at just below investment grade.
In a statement, Fitch said that it was rating the bonds at the same level as Shimao’s senior unsecured rating, and cited a number of factors supporting the debt issue, including the developer’s focus on China’s wealthy Yangtze River Delta region.
The ratings agency also pointed to Shimao’s focus on first-time home buyers and upgraded housing stock, as well as its stable margins and prudent financial strategy.
Leave a Reply