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Fosun Showing Willingness to Sell Non-Core Assets of Up to $14bn to Repay Bonds: BI
July 10, 2023
Fosun Group has shown strong willingness and an ability to sell non-core assets of up to $14bn to repay its onshore and offshore bonds due as per a scenario analysis by Bloomberg Intelligence (BI). They noted that Fosun has only 18% exposure to the China real estate sector and has a more diverse portfolio helping position it better than most other China high-yield issuers. BI noted that the above analysis factors in a 30% haircut. Fosun’s core assets include Fosun Pharma, Fosun Tourism, Fidelidade and Yuyuan. They added that the asset sales proceeds including banking facilities of Fosun’s holding company could help cover its onshore and offshore bond maturities up to end-2024. BI also added that if Fosun does sell its non-core assets and its spreads narrow further, it could issue dollar bonds. They further said that it could join H&H, Wanda and Chindata in potentially issuing dollar bonds if its yields narrow below 10%. BI said that among conglomerates in Asia, Fosun’s dollar bonds due 2025 could offer relative value with a yield of ~15% vs. SoftBank whose dollar bonds due 2025 yield ~6.9%. However, it should be noted that Fosun’s portfolio size is smaller than SoftBank.
Fosun’s dollar bonds have risen by 2-3% over the course of last week. its 5.95% 2025s are currently up 1.8 points to 83.5, yielding 14.75%.
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