CIFI secures US$156.5m loan in offshore deal

PUBLISHED : Wednesday, 10 July, 2013, 12:00am
UPDATED : Wednesday, 10 July, 2013, 4:38am

Mainland developer CIFI Holdings has announced a US$156.5 million three-year syndicated loan to strengthen its war chest for future expansion as credit on the mainland tightens.

The developer, which listed in Hong Kong in November, said yesterday the loan facility would broaden its offshore platform and lower overall financing costs.

The proceeds would also help the company's future development, CIFI chairman and chief executive Lin Zhong said.

CIFI said the syndicated loan was a dual-currency term facility of two tranches: a United States dollar tranche of US$75 million and a Hong Kong dollar tranche of HK$636 million.

The loan is priced at an interest rate of 5.65 per cent a year above the London interbank offered rate or the Hong Kong interbank offered rate.

Alfred Lau, a property analyst at Bocom International, said the "overall credit environment is likely to worsen" and developers preferred to borrow in advance to prepare for business development and the acquisition of land. Lau said offshore loans also provided developers with more flexibility and lower financing costs.

"Developers can borrow construction loans domestically, but the money borrowed is only allowed to be used for construction," he said. "They are not allowed to use it for land acquisitions."

Lau said he believed CIFI would use the syndicated loan to buy land. The cost of construction loans on the mainland was about 7 per cent, which was more expensive than the offshore loan, he said.

A CIFI spokesman said the company hoped that onshore loans with high financing costs would gradually be replaced with long-term offshore loans.