Sunac to sell up to US$1 billion of bonds to refinance debt from its shopping spree for assets

Sunac China, one of the country’s biggest asset buyers in the past year, is planning to sell up to US$1 billion in dollar-denominated bonds to raise funds to refinance its debt, after a six-month, 100 billion yuan (US$14.9 billion) shopping spree for theme parks, a video streaming company and a carmaker.

The developer has been allocated the note sale quota from the National Development & Reform Commission (NDRC), with the price offered by Sunac at between 7.5 per cent and 8.5 per cent, investors familiar with the issuance told the South China Morning Post.

The bond sale follows a HK$4 billion shares placement last week to help the Tianjin-based developer pare its debt ratio and better manage its cash flow. The company had to withdraw a 10 billion yuan corporate bond sale in June for refinancing its borrowings, after failing to receive regulatory approvals.

The real estate developer, founded by Shanxi tycoon Sun Hongbin in 2003, has found itself under the Chinese regulator’s spotlight after it took on debt in its 43.8 billion yuan purchase of 13 theme parks and tourism-related projects from magnate Wang Jianlin’s Dalian Wanda Group.

“Yield between 7.5 per cent to 8.5 per cent is quite expensive, but there are not many options for Sunac, ” said RHB-OSK Securities’ property analyst Toni Ho, who recommends investors “sell” Sunac’s stock.