Despite the high conversion premium, the bonds still draw a strong response In a further sign of the strong demand for mainland-related equities, carmaker Brilliance China Automotive Holdings has priced its US$170 million five-year convertible bond offer at a conversion premium of 37.31 per cent - the highest for a Hong Kong issue of its kind. Sources said the issue, launched after the Hong Kong market closed on Tuesday, received subscriptions totalling about US$1.5 billion, even though the book was open for only two hours. This would make it 7.5 times covered when including the overallotment option to issue a further $30 million worth of bonds. Given the strong demand and the fact that the bonds were trading above par in the secondary market yesterday, the overallotment option probably would be exercised in full, the sources said. The bonds were once quoted at 101-101.5 per cent late in Asian trading. Brilliance China, which makes and sells minibuses, sedans and car components, is the latest in a string of Hong Kong-listed companies with a China link that have been raising funds through convertible bonds over the past few months, taking advantage of heavy gains in their share prices. Earlier this week, Citic International Financial Holdings, which controls Citic Ka Wah Bank, raised US$150 million through a five-year bond with a 26.5 per cent conversion premium. 'There is a huge demand for all Chinese issues at the moment and I think we are going to see a lot more of these come to the market,' a source said. The conversion price on Brilliance China's zero-coupon bonds was set at HK$4.60 per share, compared with Tuesday's closing price of $3.35, according to a company announcement. The share price dropped 15 cents to $3.20 yesterday on news of the bond issue, partly in response to the possible dilution of the share capital. The carmaker estimated net proceeds from the issue at about US$164 million, excluding the overallotment option, which will be used as working capital. The bonds were issued by its wholly owned subsidiary Gainfair Finance and fully guaranteed by Brilliance China itself. Citigroup Global Markets acted as the sole bookrunner.