[Hong Kong Economic Daily] The Notes Issued by Evergrande Have Low Interest Rate

[Report from our correspondent] Evergrande (3333) has implemented the bond issuance and raised capital of over HKD 10 billion. The Company announced the issuance of two senior notes valued at RMB and settled at USD. Among them, the issuance amount of 3-year notes is 5.55 billion yuan (RMB, the same below), with the annual interest rate of 7.5%, and the principal amount of 5-year notes is 3.7 billion yuan, with the annual interest rate of 9.25%.

Hui Ka Yan, Chairman of Evergrande, previously forecasted that the issuance of notes was to exchange low interest for high interest, long term for short term, and live money for dead money. According to the announcement, the net raised capital is USD 1.38 billion (about HKD 10.76 billion) in total, among which, at least 45% will be used to repay the domestic bank loans and replenish the capital reserve, and the remaining will be used as the capital of new projects and for general purposes.

At the beginning of last year, Evergrande also earned over 10 billion yuan, with the interest rate then up to 13%. And this year, SCE (01966) issued the 5-year synthetic bonds, with the interest rate of 10.5%. By contrast, the cost of the bond issuance of Evergrande is reasonable. According to analysts from the investment banks in Europe, from another point of view, the decrease in the interest rate of the notes of Evergrande reflects the increase in the acceptance degree of investors on the Company.

[hq1]

[hq2]