Chinese luxury auto dealers China ZhengTong Auto Services Holdings Ltd. (1728) and Baoxin Auto Group Ltd. (1293) plan to sell their first U.S. dollar-denominated bonds this week, according to people familiar with the issuance plans.
Both companies are marketing five-year bonds to yield in the high 11 percent area, two people with knowledge of the respective deals said, asking not to be identified because the details are private. ZhengTong Auto, which sells BMW and Jaguar cars, plans to offer as much as $300 million of notes, one of the people said.
Volkswagen AG’s Lamborghini, Bayerische Motoren Werke AG’s Rolls Royce Plc and Bentley Motors Ltd. already say their biggest market is China, home to about 500,000 millionaires with $2.7 trillion in wealth, according to estimates by Cap Gemini SA and Bank of America Corp. Chinese showrooms accounted for 10 out of 12 of Porsche’s best performing dealerships globally, the company said April 22.
ZhengTong Auto will use some of the proceeds to refinance two loans it borrowed in December to acquire Top Globe Ltd., according to a statement to the Hong Kong stock exchange on April 26. Both loans mature this year, the company said. The remaining money will be used for general corporate purposes and working capital, it said in the statement.
Sarah Zhang, a Beijing-based investor relations manager at ZhengTong Auto, did not immediately respond to two calls to her office and one to her mobile today.
ZhengTong Auto has a HK$1.218 billion ($157 million) loan outstanding from Bank of Communications Co. that matures in August and 1 billion yuan ($158 million) of debt borrowed from Easy Honour Ltd. that is due in December this year, the company said in the statement .
JPMorgan Chase & Co. is arranging ZhengTong Auto’s sale with CCB International Capital Ltd. as lead manager, according to the statement. Morgan Stanley and UBS AG are managing Baoxin Auto’s bond, according to a May 2 statement to the Hong Kong stock exchange.
Saprina Leung, a Hong Kong-based spokesman at Porda Havas International Finance Communications Group, an external public relations firm for Baoxin Auto, was not immediately able to comment beyond the statement when contacted by phone today.
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