Chinese property developer Sinic Holdings (Group) on January 18 priced a US$250 million senior fixed-rate green bond, joining other Chinese property companies to access this market this year and demonstrating its commitment to environmental, social and governance (ESG) issues.
The Reg S 364-day bond was priced at 99.417% with a coupon of 8.50% and a re-offer yield of 9.125%. This was 37.5 basis points tighter than the initial price guidance in the 9.50% area.
Taking advantage of a constructive market backdrop, Sinic launched the deal on the back of strong investor confidence with high-quality institutional accounts from the ESG angle. The offering immediately gained traction among the investors with the order book exceeding US$1 billion at 10am, Hong Kong time, growing to over US$1.50 billion by 11.30am.
The deal was eventually eight times covered with the final order book amounting to over US$2 billion from 110 accounts. In terms of geographic distribution, 92% of the bond was distributed in Asia-Pacific and 8% in Europe, the Middle East and Africa. By type of investors, asset and fund managers, and hedge funds accounted for 83% of the paper, private banks and corporates 12%, insurance companies 4% and financial institutions 1%.
Guotai Junan International, Barclays, BNP Paribas, BOC International, CMB International, Credit Suisse, Haitong International and UBS were the joint global coordinators for the transaction, as well as joint bookrunners and lead managers along with AMTD, CCB International, China CITIC International Bank, China International Capital Corporation, CMBC Capital, HeungKong Financial, HSBC and Vision Capital International Holdings. Barclays and BNP Paribas acted as the joint green structuring advisers.
The proceeds from the bond issuance will be used in accordance with the company’s green, social and sustainability financing framework. The company announced in December 2020 the launch of the framework, which sets out the governance mechanism under which Sinic intends to issue green, social and sustainability bonds, loans and other debt-like instruments.
The framework identifies various eligible categories of green and social projects, including, but not limited to, green buildings, energy efficiency, pollution prevention and control, and affordable housing. Sinic has also established a sustainable finance working group, which will oversee project selection and ensure robust monitoring and governance.
Sustainalytics, an independent rating institute, has provided a second-party opinion to verify compliance of the framework with the Green Bond Principles 2018, Social Bond Principles 2020, and Sustainability Bond Guidelines 2018 of the International Capital Market Association.
Commenting on the framework, Sinic chairman and executive director Zhang Yuanlin says the framework enhances the company’s commitment to sustainable development and aligns its financing strategy with global best practices for ESG debt issuance.