Shanghai Zendai Property plans to launch US$150m global bond issue

PUBLISHED : Tuesday, 22 May, 2007, 12:00am
UPDATED : Tuesday, 22 May, 2007, 12:00am

Shanghai Zendai Property, which last month said it planned to spend one billion yuan to acquire land this year, was seeking to raise US$150 million through a five-year, fixed-rate bond sale, sources said.

The deal would be its first global bond offering, they said.

The bonds were expected to be rated at B2 by Moody's, five steps below investment grade and one step higher at B-plus by Standard & Poor's, the sources said, citing an e-mail sent to investors. Official announcements of the ratings have not been made by the agencies.

Shanghai Zendai, which is 47 per cent-owned by its chairman and Zendai Group founder Dai Zhikaing, will meet investors in Hong Kong tomorrow and Singapore later in the week before moving to Europe on May 29. The sale, which follows similar offerings by other mainland property firms tapping the high-yield bond market, was being arranged by Merrill Lynch, the sources said.

'The rating is too low and the company has fallen to the single-B credit rating category that we try to avoid in high yield holdings,' said a portfolio manager of a European bank. 'What concerns me is that the company more or less depends on one man in its management.'

Investors would have to have faith in the chairman if they invested in the group's companies, he said.

Shanghai Zendai raised HK$252 million in November last year through a share placement, about nine months after raising HK$150 million by selling a three-year convertible bond.

The firm posted a 14 per cent increase in profit last year to HK$230.48 million as turnover dipped 2.09 per cent to HK$1.4 billion.

Its land bank in Shanghai, where it developed the well-received Mandarin Palace residential project, would be sufficient for development over the next three to four years, the company said last year.

Zendai has several projects under development and planning in northeast Jilin province and in Jiangsu province and its Wu Dao Kou Financial Centre in Shanghai Pudong will start renting this month.

The company's shares, which have gained 39 per cent this year, closed up 6.49 per cent at 41 HK cents on Friday, before being suspended from trading yesterday pending 'an announcement regarding the proposed issue of senior notes'.