(Yicai Global) Oct. 16 -- Chinese property developer Country Garden has issued two lots of discounted senior notes worth USD1 billion to pay off overseas liabilities that are to expire within one year, according to a filing with the Hong Kong stock exchange today.
This is the fourth US dollar bond issuance by the Foshan, southeastern Guangdong province-based firm so far this year and brings the total amount leveraged to USD3.5 billion.
Country Garden yesterday issued USD500 million in one batch of notes valid until 2025 at an interest rate of 3.125 percent, and another USD500 million in a second batch due to expire in 2030 at an interest rate of 3.875 percent, according to the filing. They are valued at 99.904 percent and 99.745 percent of the principal amount respectively.
In January, the developer raised USD1 billion by selling two sets of bonds due to expire in 2027 and 2030 with interest rates of 5.125 percent and 5.625 percent respectively. Five months later it raised another USD544 million through selling senior notes valid until 2025 with a 5.4 percent interest rate. By July it was running out of cash again and sold a further two lots of USD500 million of debt due to run out in 2026 and 2030 with interest rates of 4.2 percent and 4.8 percent respectively.
Today’s issuance is at a lower interest rate than the last two batches in July as the fundraising cost of the firm’s US dollar notes has been on the decline.
Country Garden is struggling to meet new financing rules recently set by China’s regulators requesting property developers to find ways to reduce their debt levels and mitigate risk.
In August, the Ministry of Housing and Urban-Rural Development and the People’s Bank of China drew up ‘three red lines’ to control the scale of debt in the real estate sector, namely, a 70 percent upper limit of debt-to-asset ratio after excluding advance receipts, a 100 percent upper limit for net debt ratio and a one-to-one down limit ratio for cash against short-term debts.
Country Garden falls far short of the first standard with a debt-to-asset ratio of 81.6 percent as of June 30, according to its financial report.
As a result of these new guidelines, the amount of borrowing by 40 top property developers slumped by over 50 percent last month to CNY40.2 billion (USD6 billion).
Editor: Kim Taylor