Li & Fung, a Hong Kong-listed trading company, plans to raise as much as US$500 million in its first global bond sale to fund business development and acquisitions, according to market sources.
The company planned to raise between US$300 million and US$500 million from the sale of 10-year bonds, the sources said yesterday.
Citigroup and HSBC are arranging the sale.
'It's cheaper for the company to issue US dollar international bond than borrow locally,' an analyst said. 'It's a kind of refinancing basically to repay some higher priced and short-term maturity debt.'
Li & Fung is in the last of its second three-year plan with a target of US$10 billion in turnover.
Its turnover was HK$68.01 billion last year.
To meet the target, it bought KarstadtQuelle International Services, Oxford Womenswear Group and Rosetti Handbags and Accessories last year.
The latest deal was Tommy Hilfiger's global sourcing operations for US$248 million earlier this year.
The company spent more than US$280 million last year on acquisitions and about US$200 million in 2005, according a Standard & Poor's report.
Analysts said the company would continue its acquisitions strategy, prompting it to seek more financing in the capital markets.
Li & Fung will meet investors in Singapore on Monday, Hong Kong on Tuesday and London on Wednesday, according to an e-mail sent to investors.
The pricing will be set after the roadshows.
S&P rated the new bonds and the company at A-minus, while Moody's Investor Service gave an A3 rating to the company.
'The market has become positive stable as it has been quiet for several months with almost no issues,' said an investment manager for a Japanese fund.
By the end of last year, Li & Fung had short-term bank loans of HK$3 billion, which it expects to refinance with long-term borrowings going forward, Moody's said in a report on Wednesday.
Shares in Li & Fung rose 1 per cent to close at HK$25.30 yesterday.