Mainland developer CIFI Holdings bucks high coupon trend on US$400 million bond
- CIFI Holdings pays coupon of 7.625pc compared to 13.75pc for China Evergrande Group
- Analysts say rates are reasonable, but warn of growing risks
Hong Kong-listed CIFI Holdings (Group) on Tuesday became the latest mainland developer to issue bonds as they face surging refinance demand as more than US$37 billion worth of debt matures next year.
Bond defaults among Chinese developers is on the rise, with Xinhua reporting in November that at least four companies have defaulted on their payments this year, including Wuzhou International Holdings, a developer based in Wuxi, which in June failed to repay bonds in both the mainland and offshore markets.
Chinese developers have been facing a severe cash crunch since the government started a crackdown on shadow financing in 2016.
Moody’s Investors Service said in a report on November 30 that it expects Chinese property developers to see higher average funding costs and that property sales will decline by around 5 per cent by value next year compared to 2018.
CIFI Holdings, which develops properties in China’s first, second and third tier cities, will pay a coupon of 7.625 per cent on its US$400 million bond – the lowest among Chinese issuers in recent months, the company said in a statement.
In October, China Evergrande Group, the mainland’s most indebted developer, raised about US$1.5 billion in three tranches, paying 13.75 per cent coupon on its five-year bond – the highest interest rate the group has ever paid on a dollar debenture, according to Bloomberg.