China Convertible Bonds Are Having Busiest Month Since 2018

(Bloomberg) -- Chinese companies listed overseas are raising the most since December 2018 through convertible bonds as low interest rates and volatile markets make them attractive.

Zhongsheng Group Holdings Ltd. was the latest to tap the market, selling HK$4.56 billion ($588 million) in zero-coupon convertibles in the largest deal by an overseas-listed Chinese issuer this month, according to data compiled by Bloomberg. Earlier, property-management company Country Garden Services Holdings Co. raised $500 million after it priced its zero-coupon convertible bond at the end of April. Those bring May’s total to $1.68 billion, the first time monthly issuance has topped $1 billion since September.

As the coronavirus pandemic has roiled markets worldwide, causing companies to put off fundraising plans such as initial public offerings, bankers have started to look to convertible bonds for deal flow. Those are attractive in times of market volatility because of the option to convert the debt into company shares at a fixed price.

The embedded option also allows issuers to offer lower coupons, which can be particularly beneficial to high-growth, loss-making companies. Chinese tech firms sold convertibles at a record pace last year as they looked for more sources of funding.

Sales of such products by overseas-listed Chinese firms slowed to a trickle in February and March as the market slump made the conversion option less appealing. They then picked up again in April with equity indexes recovering somewhat.

UPCOMING LISTINGS:

• Dada Nexus Ltd.
  • Nasdaq exchange
  • Size about $500m
  • Filed May 12
  • Goldman Sachs, Bank of America, Jefferies
• Yeahka Ltd.
  • Hong Kong stock exchange
  • Pre-marketing from May 11
  • CLSA, Nomura, ABC International
• Central China New Life Ltd.
  • Hong Kong stock exchange
  • Size $265m
  • Trading May 15
  • BNP Paribas, Morgan Stanley
• Peijia Medical Technology Co.
  • Hong Kong stock exchange
  • Size $302m
  • Trading May 15
  • Morgan Stanley, Huatai
• Kintor Pharmaceutical Ltd.
  • Hong Kong stock exchange
  • Size up to $240m
  • Pricing May 15, listing May 22
  • Huatai, UBS, CICC
• Ebang International Holdings Inc.
  • New York
  • Size $100m
  • Filed April 25
  • AMTD, Loop Capital Markets

More ECM situations we are following:

• Dada Nexus Ltd., an operator of crowd-sourced delivery platforms in China backed by JD.com Inc., has filed for what could be the second-largest U.S. initial public offering by a Chinese company since an accounting scandal at Luckin Coffee Inc. cast a shadow over such deals.
• Jonas Troeber has joined JPMorgan Chase & Co. as head of syndicate, Australia and New Zealand, according to an internal memo seen by Bloomberg.

See also:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
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