Developer Country Garden raises US$1bil to refinance convertible bonds

HONG KONG: Country Garden Holdings Co, China’s biggest developer by sales, raised HK$7.83bil (US$1bil) in a convertible bond sale as it takes on higher-cost funding to push out repayments.

The Foshan-based company priced its sale of five-year convertible bonds with a 4.5% coupon, according to terms for the deal obtained by Bloomberg.

The securities carry a 30% conversion premium. The funds will be used to help fund a concurrent repurchase of zero-coupon con- vertible bonds due in January, the terms show.

Any remaining proceeds will be used to refinance offshore debt, according to the terms. JPMorgan Chase & Co and Goldman Sachs Group Inc arranged the sale.

Shares of Country Garden, backed by billionaire Yang Huiyan, have fallen 32% in Hong Kong trading this year.

The decline makes it the worst-performing member of the Hang Seng Properties Index, which has dropped 9.5% over the period. Its stock was suspended from trading yesterday morning in Hong Kong, with no reason immediately given.

Some Chinese developers have started offering discounts as another way to bring money in the door by offloading apartments faster.

A Hong Kong residential project by Country Garden and Wang On Properties Ltd will offer as much as 12% discount to some qualified buyers, Apple Daily reported yesterday, without citing a source. The developers’ employees will be given an additional 5% discount for the project, which is located in Ma On Shan in Hong Kong’s New Territories, according to the report.

Chinese developers sold a record US$5.3bil of convertible bonds in January when many of their shares were trading close to all-time highs.

Country Garden raised HK$23.5bil in a share placement and a convertible bond sale that month.