Chinese property giant Evergrande Group is paying as much as 12% in its latest overseas bond issuance to raise $2 billion for debt repayment.
Hong Kong-listed Evergrande said in a filing that it would issue $1 billion of dollar-dominated three-year bonds with an 11.5% yield and $1 billion of four-year bond at 12%. Funds from the offering will be mainly used to repay debt and supplement operating capital, Evergrande said.
The company’s costs for bond borrowing are rising. A company financial report showed that in the first half of 2019, Evergrande’s average bond cost was 8.62%, up 0.7 of a percentage point from the same period a year ago.
Evergrande is under pressure from its debt overhang amid a cooling market and heavy investments in electric cars. At the end of June 2019, the company’s debt-to-assets ratio was 152%, higher than that of most industry counterparts. The company had outstanding debts of 813.2 billion yuan ($118 billion) as of June 30, with 37.5 billion yuan to be repaid in one year.
Evergrande Chairman Hui Ka Yan and President Xi Hai will each buy $50 million of the offering, the company said. Eight investment banks including Credit Suisse Group AG, BofA Securities and CITIC Bank International also agreed to subscribe to the bonds.
Evergrande’s last bond issuance was in April 2019, when the company sold $1.85 billion of notes at rates between 9.5% and 10.5%.
Contact reporter Han Wei (firstname.lastname@example.org)