Glassmaker to raise US$120m from bond
China Glass Holdings, the mainland's second-largest flat glass maker, is raising US$120 million by selling its first global bond to refinance debt.
The five-year notes have been rated B-plus or four notches below investment grade by Standard & Poor's, and a similar B1 by Moody's Investors Service.
Standard Chartered Bank is arranging the deal.
Hong Kong-listed China Glass is tapping a bond market that is still awash with liquidity despite higher volatility in recent weeks amid sharp rises in the United States Treasury bond yields.
'It's rare for a Chinese manufacturer to sell US dollar bonds,' said a fund manager with a Japanese finance firm.
China Glass has been making acquisitions since last year, expanding its production lines to 14 as of the first quarter this year from five last year.
The company produced nine million weight cases of flat glass last year, up 43 per cent from a year ago amid rising demand.
'Our view is that top-quality float glass is in shortage given the rising demand and slowdown in new supply,' said Citi analyst Charles Cheung.
The yield on the proposed bonds of China Glass has not been set, but analysts say investors may ask for higher than the 8 per cent to 9.5 per cent offered by issues with a similar rating.
'Investors can ask for risk premiums of up to 50 basis points for Chinese issuers' just based on corporate governance issues, said Warut Promboon, a credit analyst at ING Wholesale Banking.
For first-time issuers, there should be a further 20 to 30 basis points premium, he said.
The company last year saw its underlying profit drop 65 per cent to 5.62 million yuan.
Shares of China Glass, which have gained 55 per cent so far this year, closed unchanged at HK$3.95 yesterday.
