January 23, 2019 / 7:45 AM / 7 months ago

CORRECTED-China's Evergrande sells $3 bln in bonds, yields top 10 pct

(Corrects to show yields, not coupons, were higher)

* China’s developers face $100 bln in maturing debt this year

* Evergrande has high debt pile

By Julia Fioretti

HONG KONG, Jan 23 (Reuters) - China Evergrande Group , one of China’s most indebted property developers, sold $3 billion in dollar bonds on Wednesday in one of the largest deals so far this year.

Evergrande is China’s second-largest property developer by sales and has been under pressure to raise funds to cut its large debt pile, which stood at 671.1 billion yuan ($98.88 billion) as of June 2018, according to CreditSights.

The company sold $1.1 billion in bonds maturing in 2020, $875 million in bonds maturing in 2021 and $1.025 billion in notes due in 2022, according to a term sheet seen by Reuters.

The sale was a reopening of $2.1 billion in existing bonds.

The yields on the new bonds were a lot higher as the bonds were sold below par. The 2020 bonds had a yield of 8.25 percent, an increase of 125 basis points (bps), the 2021 bonds had a yield of 9.5 percent, an increase of 325 bps, and the 2022 bonds had a yield of 10.5 percent, an increase of 225 bps, the term sheet showed.

China’s property developers have been very active in the bond markets in the past few weeks, seeking to take advantage of better market conditions just as they face almost $100 billion in maturing debt both onshore and offshore this year, according to Refinitiv data.

Investors shied away from junk-rated debt last year as a steep sell-off in markets made deals hard to complete and forced some companies to offer to pay double-digit yields for two-year paper.

Evergrande itself repriced the market in late October when it sold $1.8 billion of bonds with coupons as high as 13.75 percent.

The order book for the latest sale reached $4 billion, according to a banker on the deal.

But investors now see value in China’s junk bonds given the higher yields.

“We are upbeat about low-rated, high-yield and short-term duration bonds which benefit from looser liquidity and when private enterprises’ financing difficulties are eased,” said Freddy Wong, fixed income chief investment officer in China and portfolio manager at Fidelity International.

CEB International, China CITIC Bank International, Credit Suisse and UBS were joint global coordinators for Evergrande’s bond sale. ($1 = 6.7867 Chinese yuan renminbi) (Reporting by Julia Fioretti; Editing by Kim Coghill)

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