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China Cinda reduces funding cost with new bonds
Chito Santiago 1 May 2015

China Cinda Asset Management Company, one of China’s four major asset management companies, tapped the US dollar bond market in another major fund raising exercise, pricing on April 16 a dual tranche issue totaling US$3 billion.

The Reg S/144A deal consisted of a five-year tranche amounting to US$1.3 billion and a 10-year issue amounting to US$1.7 billion. The five-year notes were priced at 99.688% with a coupon of 3.125% and a spread of 190bp over the US treasuries, while the 10-year bonds were priced at 99.710% with a coupon of 4.25% and a spread of 240bp over the US treasuries. Both tranches were 25bp inside of their respective price guidance of 215bp and 265bp.

The latest deal was twice the amount of the inaugural bond offering of US$1.5 billion that China Cinda priced in May 2014. That transaction also comprised of two tranches of five years amounting to US$1 billion and 10 years amounting to US$500 million. The coupons were likewise comparatively cheaper as the previous five-year bonds had coupon of 4.00% and 5.625% for the 10-years.

Issued through China Cinda Finance (2015), the transaction was guaranteed by China Cinda (Hong Kong) Holdings Company and supported by a keepwell deed and an equity interest purchase undertaking provided by the parent company China Cinda Asset Management Company.

The deal generated a combined order book of US$13.3 billion, with the five-year tranche garnering US$7.1 billion from 330 accounts. In terms of geographic distribution, 70% of the bonds were sold in the US, 20% in Europe and 10% in Asia. By type of investors, banks took 46%, fund managers 33%, insurance companies and pension funds 6%, corporates 5% and others 10%.

The 10-year bonds attracted demand in excess of US$6.2 billion, also from 330 investors with 75% of the paper distributed in Asia, 15% in Europe and 10% in the US. Banks were likewise the biggest buyers with 42%, followed by fund managers with 34%, insurance companies and pension funds 9%, corporates 7% and others 8%.

The transaction, drawn from China Cinda’s US$3 billion medium-term note programme, includes a change of control put clause at 101% and the proceeds will be used for working capital investment and other general corporate purposes.

BOC International, Bank of America Merrill Lynch, CCB International, Cinda International Capital, CITIC Securities International and Credit Suisse acted as the joint global coordinators for the transaction, as well as joint bookrunners and lead managers along with ABC International, Bank of China (Hong Kong), China Merchants Securities (Hong Kong), DBS, Deutsche Bank, Haitong International, ICBC (Asia), Morgan Stanley, Standard Chartered, UBS and Wing Lung Bank.

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