China Overseas to issue bond worth US$500m

China Overseas to issue bond worth US$500m

Fulton Mak

Tuesday, April 17, 2007


China Overseas Land and Investment (0688), the Hong Kong-listed flagship of the mainland government's construction ministry, plans to issue a US$500 million (HK$3.9 billion) convertible bond, market sources said.
The zero-coupon exchangeable bonds are due in 2014 and may be exchanged for existing China Overseas Land shares held by its parent - China Overseas Holdings - at an initial price of HK$15.40 to HK$15.93 a share.

The price represents a 45 percent to 50 percent premium over HK$10.62, the closing price of its shares last Friday, before the suspension of trading Monday.

China Overseas Holdings currently holds 3.66 billion shares of China Overseas Land, representing 51.93 percent of the issued share capital, according to data from the Hong Kong stock exchange.

The effective annual yield on the bonds will be 3.8 percent to 4.3 percent, sources said.

Deutsche Bank, JPMorgan Chase, Citigroup and China International Capital Corp Securities, which is 34 percent owned by Morgan Stanley, are handling the deal.

China Overseas Land plans to spend 7 billion yuan (HK$7.08 billion) to acquire 300 million square meters of land for its land bank this year, and invest 11.5 billion yuan to 12 billion yuan in other ongoing projects, the company's chairman and chief executive Kong Qingping said last month.

In July 2005, China Overseas Land - the largest Hong Kong-listed Chinese developer by market capitalization - sold US$300 million in seven-year bonds.

Rapid urbanization and the mainland's booming economy underpinned the robust growth of the Chinese property sector, which in turn encouraged numerous Chinese property developers to enter the capital market to fund their development.

So far this year, Guangdong-based developer Hong Long Holdings (1383) and China Properties Group (1838) raised a total of more than HK$2 billion in their initial public offerings in Hong Kong.

Meanwhile, listing candidate Country Garden Holdings received an overwhelming response from the public as it froze HK$322.5 billion of capital, compared with the HK$1.29 billion it aims to raise in the retail tranche.

The developer is scheduled for its trading debut Friday.

More fund-raising offerings by Chinese developers are in the pipeline, including SOHO China and Guangzhou-based Hengda Real Estate.

In addition, Shanghai Forte Land (2337) has said it aims to sell Shanghai- listed A shares to fund its development.