After Chinese property sector battered, Seazen tests market with dollar bond issue

Rivai H Tukimen

HONG KONG, May 30 (Reuters) – Seazen Group Ltd (1030.HK) is planning to issue a U.S. dollar bond, a term sheet showed, becoming one of the few Chinese property developers this year to test investor appetite for a sector in the throes of a debt crisis.

There has been little corporate bond activity from Chinese real estate developers after much of the industry became gripped by a liquidity squeeze last year.

The credit crunch, triggered by tighter debt cap rules, has pushed some developers such as China Evergrande Group (3333.HK) into default, rattling investor confidence in the sector which accounts for about a quarter of the country’s total economic output.

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Shanghai-based Seazen will issue a 364-day green bond with an expected yield of 7.95%, according to a term sheet seen by Reuters.

The company said in a filing on Monday it will guarantee green notes that its unit New Metro Global Ltd has proposed issuing but gave no details. Seazen did not immediately respond to a request for comment.

State-backed Greentown China Holdings Ltd (3900.HK) and Sino-Ocean Group Holding Ltd (3377.HK) sold dollar bonds this year that were accompanied by credit standby letters. Greentown also issued notes worth $150 million that were combined with a 2020 issue.

Seazen intends to use the proceeds to refinance mid-to-long-term offshore debt due within one year as well as for green projects, according to the term sheet which also showed Haitong International as the sole adviser.

Seazen has $400 million worth of notes maturing in June and another $400 million combined due in August and September, Refinitiv data showed.

Citing weakening sales, a lower liquidity buffer and constrained funding access, Moody’s this month cut its corporate family rating for Seazen debt to Ba2 from Ba1, and its backed senior unsecured rating on bonds issued by New Metro Global to Ba3 from Ba2. It put all on review for further downgrade.

Seazen’s shares fell 0.6% on Monday, while the Hang Seng Mainland Properties Index (.HSMPI) was mostly flat.

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Reporting by Scott Murdoch; Writing by Clare Jim; Editing by Christopher Cushing and Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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