New | China Bluestar to pay more interest for US$1b bond relaunch

China National Bluestar has relaunched its US$1 billion debut offshore bond at sweeter terms for investors, after disclosure failings forced it to cancel the original deal earlier this week.

Bluestar, a unit of China National Chemical Corp (ChemChina), sold US$500 million three-year and US$500 million five-year bonds at 250 basis points and 270 basis points respectively, after a four-hour bookbuilding process on Thursday.

At final pricing, it offered spreads 30 to 35 basis points wider and yields 36 to 50 basis points higher than it had agreed a week earlier, paying a hefty penalty for the disclosure issues that derailed its original deal.

The three-year is priced to yield 3.538 per cent and the five-year at 4.375 per cent. That compares with yields of 3.176 per cent and 3.879 per cent when Bluestar first priced the deal a week earlier.

The higher yields will cost Bluestar an extra US$17.8 million in interest payments over the life of the bonds.

"All things considered, we liked the bond [at least from a short-term trading perspective] the first time around and we like it even more now, even accounting for the increasingly nervous market tone," said Mark Reade, a credit analyst at Mizuho.

Bluestar declared the original trade null and void before the June 3 settlement date due to concerns over the keepwell deed in the preliminary offering circular. Keepwell clauses have become a common feature in offshore bonds from the mainland, where onshore assets cannot be pledged overseas.