Bright Food Considers Dollar Bond as Weetabix Loan Payment LoomsRachel Evans and Kristine Aquino
Bright Food Group Co. is considering selling U.S. dollar-denominated bonds ahead of an October deadline to repay financing for its acquisition of Weetabix Ltd.
Bright Food, which is based in Shanghai and has operations from sugar to dairy and wine, plans to meet investors in Asia and Europe from tomorrow, according to a person familiar with the matter, who asked not to be identified because the details are private. The company is due to repay a $300 million loan in October, part of $850 million borrowed last year to buy 60 percent of British cereal maker Weetabix, data compiled by Bloomberg show. Korea National Oil Corp. and Yuexiu Real Estate Investment Trust are also marketing five-year debt in the U.S. currency, separate people said.
Chinese and Hong Kong issuers sold $18.8 billion of dollar bonds to refinance debt this year, more than six times similar issuance for the same period of 2012, the data show. Cnooc Ltd., China’s largest offshore energy explorer, raised $4 billion last week to refinance part of a $6 billion short-term bank loan used to acquire Canada’s Nexen Inc., data compiled by Bloomberg show.
“An offshore bond gives companies the opportunity to seek alternative financing sources, longer tenors and a potentially wider investor base,” said Raymond Chia, the Singapore-based deputy head of credit research for Asia fixed-income at Schroder Investment Management Ltd., which managed $344.5 billion as of Dec. 31. “So long as the interest rate environment remains accommodative, we’ll continue to see companies come to the bond market.”
Bright Food is scheduled to meet investors in Hong Kong tomorrow, in Singapore on May 9 and in London on May 10, the person with knowledge of the matter said.
The company also signed a $550 million term loan to fund its acquisition of Weetabix, data compiled by Bloomberg show. That facility matures in October 2015 and pays a margin of 230 basis points more than the London interbank offered rate, the data show.
Korea National Oil, which is owned by the government, is marketing five-year bonds at about 165 basis points more than similar-maturity Treasuries, according to a person familiar with the matter.
Yuexiu REIT plans to sell five-year notes at a spread of about 260 basis points, a separate person said.
Tokyo Metropolitan Government meanwhile hired three banks to arrange meetings with investors in Europe and the Middle East from May 20 to discuss a possible dollar bond sale, a person with knowledge of that matter said.
The cost of insuring Japanese corporate bonds from non-payment is on track to close at the lowest level since May 2008, according to traders of credit default swaps.
The Markit iTraxx Japan index dropped 6 basis points to 80 basis points as of 9:15 a.m. in Tokyo, according to Deutsche Bank AG prices. The decline is the biggest since April 5, according to data provider CMA. Japanese markets were closed May 3 through May 6 for public holidays.
Chinese developer Lai Fung Holdings Ltd. is seeking bondholder consent to amend or remove restrictive covenants governing its dollar bonds due 2014 to give it more flexibility to pursue business opportunities, it said in a filing with the Hong Kong stock exchange. Investors that approve the move before 5 p.m. in London on May 17 will receive $2.50 for every $1,000 of principal, according to the statement.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 101 as of 8:17 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The benchmark has fallen 6.5 basis points this month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index slipped 0.5 of a basis point to 97.5 as of 10:15 a.m. in Sydney, according to Westpac Banking Corp. prices. The measure is on course for its lowest close since Nov. 5, 2010, according to CMA.
Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.