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MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  China Evergrande Group    3333   KYG2119W1069


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China Evergrande : tops Asia borrowers with fresh dollar bond tap, raises $6.6 billion so far

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04/15/2019 | 04:42am EDT
An exterior view of China Evergrande Centre in Hong Kong

HONG KONG (Reuters) - China Evergrande Group became Asia's biggest bond market borrower so far this year after a $1 billion tap of its latest issue took the mainland property developers' total sales so far to $6.6 billion.

China's third largest developer said on Monday it had sold $200 million (£152.7 million) in three-year notes, and an additional $400 million each in four- and five-year bonds.

The notes carry coupons of between 9.5 and 10.5 percent, and have the same terms and conditions as $2 billion of bonds Evergrande sold last week.

Evergrande has now tapped bond markets for a total of $6.6 billion this year, according to data from Refinitiv, including those issued through subsidiary Hengda Real Estate Group.

Its latest sale took it past Chinese gaming giant Tencent, which sold $6 billion of bonds earlier this month.

Sales of Asian junk bonds have had a blistering start to the year on expectations for lower interest rates and as a market rally has stoked risk appetite.

Evergrande will use the proceeds to refinance existing indebtedness and for capital expenditure, it added.

Fitch said in a release the developer expected to spend 20 billion yuan on non-property businesses, including the research, development and production of electric vehicles. This compares to the 16 billion yuan in non-property capex in 2018.

"The key concern is the company has been issuing more bonds since there’s been an easing in liquidity, both onshore and offshore, and part of the proceeds are not used for refinancing," said S&P analyst Matthew Chow.

"We need to see whether its overall spending appetite including doing more financing via other means such as trust loans also increases. There could be a risk that the situation could be different from what we expected earlier, but we believe that it is still in the hands of the company."

Evergrande has one of the highest debt ratios in the industry, but has pledged to cut its net gearing ratio - a leverage measure which compares its net debt against the book value of its equity - to about 70 percent by June 2020 from 240 percent in June 2017.

Though the ratio was lowered to 152 percent at the end of last year, its total borrowings slightly rebounded from the end of June. Chief Financial Officer Pan Darong attributed the rise to investments in new energy vehicles, but added he expected the debt ratio would decline to an industry average soon.

Credit Suisse was sole lead manager for Monday's bond sale.

(Reporting by Clare Jim and Julia Fioretti; Editing by Kim Coghill)

Stocks mentioned in the article
ChangeLast1st jan.
CHINA EVERGRANDE GROUP 0.45% 22.45 End-of-day quote.-5.07%
VALUE8 -0.36% 5.48 Delayed Quote.16.03%
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Financials (CNY)
Sales 2019 560 B
EBIT 2019 164 B
Net income 2019 54 007 M
Debt 2019 409 B
Yield 2019 10,9%
P/E ratio 2019 4,92
P/E ratio 2020 4,44
EV / Sales 2019 1,19x
EV / Sales 2020 1,07x
Capitalization 258 B
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Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 29,2  CNY
Spread / Average Target 48%
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Hai Jun Xia Vice Chairman & Chief Executive Officer
Shou Ming Shi President
Ka Yan Hui Chairman
Da Rong Pan Chief Financial Officer & Executive Director
Dong Feng Chen Head-Information
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