BNP Paribas, Deutsche Bank, JP Morgan, Standard Chartered and UBS set initial guidance at 7.125% for a three year deal on Wednesday morning before tightening to 6.875%.
Bookrunners looked to the issuers existing bonds as comparables as well as Road King Infrastructure Finance’s Rmb2.2bn ($358m) 6% 2016s which priced in 2013 and were trading at 6.04% as well as Yanlord Land’s Rmb2bn ($322) 5.375% 2016s – also three years – which were trading at 6.15%.
The Chinese property company will use the bond to repay existing indebtedness with near term maturities and the remainder to fund the capital expenditures related to the group’s real estate or equipment.
The issuer has four outstanding international bonds due to mature in 2015 so a substantial part of the proceeds raised will be used to refinance existing debt. The remainder of the proceeds of the new deal will be used to fund the capital expenditure related to the group’s real estate and equipment.
The new bond will be issued by Shui On Development, a holding company of Shui On Land which will also guarantee any new issue.