(Bloomberg) -- One of China's largest bad-debt managers, China Orient Asset Management International Holding Ltd., sold a dollar note for the first time in more than three years, amid a slow start to the ex-Japan Asia dollar-bond market and broader pessimism on Chinese securities.
A unit of China Orient sold a 3-year, $550 million dollar bond at a 5.5% coupon rate, according to a person familiar with the matter. Proceeds of the note, which is guaranteed by China Orient, will be used for refinancing, said the person, who asked not to be identified because they're not authorized to speak about it. The last time the company tapped the dollar-bond market was when it sold $750 million of dual-tranche bonds in 2020.
The sale came after Moody's cut China Orient's long-term issuer rating by two notches last week, to Baa2 from A3. Earlier this month, Fitch Ratings cut ratings on China's four bad-debt managers by one notch, citing concerns over their financial situation and expectations of weaker government support.
“International investors are being more selective on Chinese companies. But for big names like the asset management companies that are close to the central government, they would still be open to invest,” said David Yim, head of debt capital markets, Greater China & North Asia, at Standard Chartered.
Standard Chartered acted as one of the joint global coordinators, joint book runners and joint lead managers for the deal.
Yim said that other Chinese asset management companies would take note of the bond sale as a sign of good investor demand, despite the recent ratings downgrade.
“Banks may rush to do more dollar bond deals ahead of the Chinese New Year holiday,” Yim said.
China's dollar-bond market has suffered its worst start to the year in 2024, hit by a combination of elevated US interest rates, weaker economic conditions and cheaper local funding.
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