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Dalian Wanda Commercial Properties successfully issues $600m in US bonds

Nov 15,2013

Dalian Wanda Commercial Properties Company's first successful issuance of US dollar bonds was welcomed by the investment community, which were oversubscribed by 4.6 times the available amount.

The 600 million US dollars' worth of five-year dollar bonds, with a coupon rate of 4.875% is much lower than bonds previously issued by several HK-based private real estate companies. The bonds were issued by Wanda Properties Overseas Limited, Dalian Wanda Commercial Property's foreign subsidiary. This isn't just Dalian Wanda Commercial Property's first issuance of foreign bonds, but it is also the first time a Chinese real estate company has issued dollar bonds in the international market.

The bonds were issued through Wanda Properties Overseas and guaranteed by its wholly-owned subsidiary Wanda Commercial Properties (Hong Kong) Company. In place of a guarantee, Dalian Wanda Commercial Properties Company has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that Wanda Hong Kong and Wanda Properties have sufficient assets and liquidity to meet their respective obligations for the senior notes.
The offering was announced in the morning of November 14 with an initial price thought of 387.5bp area. The order book was well-anchored before the launch and the bookbuilding process was able to generate strong momentum to achieve its size and pricing objective following an extensive four-day roadshow across Hong Kong, Singapore and London earlier in November.
Backed by solid demand from a wide range of quality accounts, the book attracted demand of US$1.8 billion by 2pm, Hong Kong time, and reached US$2.4 billion before London open due to continuous participation from the European accounts.
The company subsequently revised the final price guidance to 375bp in the afternoon, eventually printing the transaction at the same spread. The final demand amounted to US$2.75 billion from 220 accounts with 80% of the bonds sold in Asia and 20% in Europe. By type of investors, fund managers accounted for 69%, public sector 12%, insurance companies 7%, banks 5%, private banks 5% and corporates 2%.
Dalian Wanda initially planned to price the deal last week, but decided to postpone it due to weak demand and increased market volatility. Proceeds from the transaction will be used for investing in projects in China and overseas, as well as for general corporate purposes.
Bank of America Merrill Lynch, Barclays, Goldman Sachs, HSBC and UBS were the joint global coordinators and bookrunners for the transaction.
The three largest credit rating agencies Standard & Poor, Moody's and Fitch gave investment-grade ratings to Dalian Wanda Commercial Properties Co Ltd and its bond issue. Standard & Poor, Moody's and Fitch respectively assigned credit ratings of BBB+, Baa2, and BBB+ as well as a "positive outlook" for the company.

These ratings make Wanda Commercial Properties one of the highest rated domestic real estate companies as well as the only private, non-listed recipient of this rating in China.

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