SGD New Issue Review : Yanlord 3Y 6.5%

April 28 (Bloomberg) — Price guidance in “6.5% area”: exchange filing.
• Format: Reg S, according to a person familiar with the matter
• Expected Issue Ratings: Ba3 / BB- (Moody’s/S&P), person said, asking not to be identified because the terms aren’t set
• Use of Proceeds: Refinancing of the 2010 revolving credit facility, the 2011 credit facility and the shareholder loan, according to the person
• Timing: Expected as early as today’s business, person said

3 year interest rate 1.045% which gives this bond a 5.455% premium for 3 years.

There are a handful of Yanlord USD bonds out there which make good comparables.

Yanlord 10.3525% 03/2018 callable 03/2015 at 105.31. Current price 107.95 yield 7.185%.Yanlord 9.5% 05/2017  callable 05/2014 at 104.75. Current price 104.50 yield 7.05%, assuming no call till 2016 at 100.

Market Cap SGD 2.26 bio. Financial leverage 3.4 times but sitting on cash pile of CNY 7 bio as of Dec 13.
The company has SGD 1.668 bio worth of debt due in the next 5 years and the purpose of this issue is, in part, to repay a shareholder loan as well.

According to news reports, Yanlord marketed a US 400 mio 3 year loan at a premium of 4.5% just last week. The loan is likely to be secured on assets.

I would not say that Yanlord is a Tier 1 Chinese property name and I dug up some of the BB rated Chinese HY property names because I am not an expert on them and they do tend to trade on very technical grounds.

Franshion 4.7% 10/2017 BBB-/Ba1 5.38%
Gemdale 7.125% 11/2017 BB-/Ba3 7.06%
Soho China 5.75% 11/2017 BB+/Ba1 5.67%
Agile 8.875% 04/2017 BB-/Ba2 7%
Central China 6.5% 06/2018 BB-/Ba3 8.45%
Evergrande 8.75% 10/2018 BB-/B2 10.45%

Most of them are trading wide on at least a 1 cent spread and buyers are coming from 1 sector which is the private banks with real money still keen on selling.

Thus my word of caution to the enthusiastic private bank buyers here, running on cloud 9 after the last few successful issues on the street.

This is what the Yanlord 9.5% 05/2017 price chart looks like since its issuance in 2010. Holy Moly, 61 cents ?


On another note, we have a host of USD bonds today again ….. San Miguel perp, CLP perp, Lenovo, Stategrid ….