Country Garden Holdings yesterday became the first Chinese company to tap the junk-bond market since the outbreak of the financial crisis, raising US$300 million from a five-year, high-yield bond issue, according to investors and fund managers.
The developer hired JP Morgan as sole book runner on the transaction, which opened for investors on Tuesday and closed yesterday.
The order book amounted to US$800 million, helping to tighten the price of the bond at a yield of 11.75 per cent, the low end of the indicative yield price that went as high as 12 per cent, people close to the transaction said.
Guangzhou-based Country Garden had set up a number of one-on-one interviews with more than 60 potential clients since last week to secure enough orders for the bond issuance and received a modest response from professional investors.
'Hedge funds and money investors are the biggest buyers with around a 45 per cent contribution, while insurance companies, private clients and commercial banks took on the remainder,' according to a person familiar with the bond issuance.
'The deal was completed within two days, compared to the usual practice of at least one to two weeks, reflecting that investor interest has been returning to good quality issuers,' the source added.
Apart from Country Garden, developer Henderson Land Development was also said to soon be tapping the international bond market for at least US$500 million. However, its bonds are likely to be investment grade.