Country Garden Buys Back Debt to Issue USD1 Billion in Convertible Bonds
Zhang Yushuo
DATE:  Nov 23 2018
/ SOURCE:  yicai
Country Garden Buys Back Debt to Issue USD1 Billion in Convertible Bonds Country Garden Buys Back Debt to Issue USD1 Billion in Convertible Bonds

(Yicai Global) Nov. 23 -- A wholly-owned unit of Chinese developer Country Garden has bought back bonds with principal of HKD6 billion (USD773 million), the parent announced yesterday. The company will issue HKD7.8 billion in convertible bonds backed by collateral at 4.5 percent interest to rebuy HKD15.2 billion in bonds set to mature in January.

The Foshan, Guangdong province-based firm still has HKD9.2 billion bond principal to repay -- about 60 percent of the total -- after it cancelled the bonds it repurchased.

Country Garden planned to issue HKD15.6 billion in one-year bonds which can be converted into stocks at an initial conversion price of HKD20.556 (USD2.63) per share, the firm announced Jan. 16. It reduced the conversion price to HKD18.29 per share in September.

Country Garden plans to issue the new bonds for its further development and fund balance, because sufficient cash flow will give the realty firm the thicker financial cushion needed since China's real estate market has entered an era of correction, per market analyses.

Financing channels have dried up for real estate firms even as financing costs have mounted since the start of this year. Country Garden is no exception.

The company's asset-liability ratio is 84.7 percent, with accounts received in advance excluded from its assets. Its net liability ratio is 59 percent, which is lower than the 70 percent in 11 straight years since its listing, according to a research report by Shenzhen-based Guosen Securities, which says Country Garden's average financing cost is 5.8 percent and its short-term solvency guarantee multiple is 1.3.

Country Garden [HK:2007] resumed trading at 1.00 p.m. yesterday and closed at HKD9.34 per share, down 3.51 percent.

Editor: Ben Armour

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Keywords:   Country Garden,Property