One of China’s largest property developers Country Garden (COGARD), rated Baa3/BBB-/BB+ pulled its 10Y dollar bond issuance on Wednesday whilst proceeding with a $500mn tap of its 3.125% 2025s at 3.097%. COGARD had initially marketed the 10Y tranche at a final guidance of T+250bp, 25bp inside initial guidance of T+275bp area. From the company’s standpoint, COGARD’s spokesperson said “We could have issued the new bond, however it might have had a negative impact on the secondary market. The prices of existing bonds might also have moved if we put pressure on the vulnerable market, which would affect our long-time investors… We will wait for a proper window and issue the remaining quota.” IFR cited an investor saying that while the final guidance was fair, investors were concerned with the rise in US Treasury yields and hence wanted a bigger yield premium to take duration risk. Another banker said that “It was just a matter of pricing, not demand…If we had gone ahead with the original plan, this would have repriced the issuer’s whole curve. For a few hundred millions of proceeds, not billions, that was not rational.” The week saw several Chinese issuers come to the primary markets including many real estate developers like Fosun, Agile, Yanlord Land etc.
COGARD’s USD 3.3% 2031s are lower by 1 cent to 94.1 since they pulled the new 10Y.