- Fosun International successfully issued additional US dollar bonds, attracting international capital investors to eagerly subscribe
- Release Time: Dec 08, 2020
Adopt a strategy of lowering cost and early redemption to maintain healthy debt ratio
On December 1, Fosun International (00656. HK) successfully issued an additional USD 300,000,000 in bonds that reach maturity in 2025 and redeemed bonds that reach maturity in early 2021 and 2022 with the amount to control the existing debt ratio and further optimize the debt duration. After a series of bond defaults by the AAA-level state-owned enterprises, the US dollar bonds issued by Fosun were oversubscribed by nearly 9 times with further lowered the issuance cost, which is by no means an easy task. Meanwhile, this is also Fosun International's third bond issuance this year, and the three issuances at negative premium in the secondary market indicates Fosun is highly recognized by capital market.
The market recognizes the company's credit, so the bond issuance cost is increasingly lower
According to some sources, more than 160 investors actively participated in the subscription of additional US dollar bonds; a volume of USD 2.7 billion were traded at the peak time. The final rate of return of Fosun was set at 5.40%, 50 basis points lower than the initial price. In less than two months after the bond was issued in October, the cost dropped by 55 basis points and 145 basis points lower when compared with the distribution cost in July. The over-subscription ratio also fully exemplifies the market's recognition of and confidence in Fosun's fundamentals and bond products. While issuing the additional bonds, Fosun also announced that it will redeem two stock bonds in advance, and the maximum limit of the callable capital exceeds the amount of this issuance. According to some investors who know the company well, the approach was consistent with how Fosun always actively controls its debt ratio, reduces the stress of paying off debts, and optimizes debt for improving investors' confidence in Fosun's capital security and liquidity. The investors eagerly subscribing also proves that the capital market is more confident than those rating agencies with a pessimistic view of the company.