On November 24, Yuexiu Property announced that HK$ 2.3 billion 15-year bonds will be purposefully issued to specific investors, with annual coupon rate of 6.1%. The financing will provide low-cost large amounts of development funds for the Company, further optimize the financing structure and broaden the financing channels, to effectively support the future development of the company.
The successful issuance of the directional bonds has a positive meaning for the development of Yuexiu Property, setting a new benchmark in the bond financing in the real estate industry. First, the coupon rate of the bond is relatively low, compared with the same term bonds of the same type recently issued by other companies in the real estate industry; second, the long-term 15-year bonds have longer term than the current bank loans and bonds issued by Yuexiu Property, which helps to optimize the time structure of debt portfolio and arrange financing plan; third, the directional bonds further broaden financing channels and increase long-term stable source of funding for Yuexiu Property.
In recent years, the financing of Yuexiu Property has continued to achieve new breakthroughs, with continuous improvement in overall financial situation, obtaining investment grade rating by the three international rating agencies- Moody, Fitch and Standard & Poor, and setting up a benchmark position in the industry. Through rational use of lower cost of financing from overseas market, by the end of June 2014, the Company has adjusted its proportion of domestic and foreign borrowing to 45%: 55%; with an average financing cost of 5.2%. In the first half of 2014, the Company achieved financing of RMB 8.6 billion, of which RMB 6 billion was refinancing, allowing the proportion of borrowings due next year to the total loans to reduce from 35% last year to about 15%. After successful issuance of the directional bonds, the Company's financing structure will be further improved, and the financial situation will be more robust.
Since 2014, Yuexiu Property has also achieved satisfactory sales performance. From January to October in 2014, the Company has accumulated contract sales (including sales of joint venture projects) worth about RMB 17.813 billion, with an increase of 33%, accounting for about 81% of the targeted RMB 22 billion in 2014. The Company is confident to reach the full-year goal of contract sales in 2014.
Yuexiu Property Management said: "The successful issuance of 15-year bonds is another innovation in our financing, which established standards for long-term financing, and also further highlighted the benchmark position of Yuexiu Property in financing of the industry. The Company will continue to innovate according to changes in macroscopic environment, and provide low-cost financing in the most appropriate way, to ensure financial security and needs for the development of the Company. Meanwhile, the Company also aims to increase capital efficiency and create better returns for shareholders.”