Country Garden Raises $1 Billion to Refinance Convertibles

(Bloomberg) -- Country Garden Holdings Co., China’s biggest developer by sales, raised HK$7.83 billion ($1 billion) 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 percent coupon, according to a Hong Kong exchange filing Thursday. The securities carry a 30 percent conversion premium. The proceeds will be used to help fund a concurrent repurchase of zero-coupon convertible bonds due in January, the filing shows.

Any remaining proceeds will be used to refinance offshore debt, the filing shows. JPMorgan Chase & Co. and Goldman Sachs Group Inc. were joint global coordinators, while HSBC Holdings Plc was a joint lead manager.

Shares of Country Garden, backed by billionaire Yang Huiyan, fell as much as 5.3 percent after trading resumed in Hong Kong Thursday. The developer has declined 34 percent this year, making it the worst-performing member of the Hang Seng Properties Index, which has dropped 9.4 percent over the period.

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 percent discount to some qualified buyers, Apple Daily reported Thursday, without citing a source.

The developers’ staff will be given an additional 5 percent 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 $5.3 billion of convertible bonds in January when many of their shares were trading close to all-time highs. Country Garden raised HK$23.5 billion in a share placement and a convertible bond sale that month.

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