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Bond Market News

Shenzhen SOE to Become China South City’s Largest Shareholder with $245mn Equity Bail Out

January 3, 2022

Shenzhen SEZ Construction and Development Group (SZCDG), a state-owned enterprise will make an equity investment of HKD 1.9bn ($245mn) in China South City to become its largest shareholder. China South City plans to use the proceeds from the share placement to repay debt and for general corporate purposes. SZCDG would buy 3.35bn new shares of China South City at HKD 0.57/share, a 17% discount to Thursday’s closing price, representing 29.28% of the company’s share capital. China South City said that the funds would enhance its financial strength and financing capabilities, and provide it with an opportunity to broaden its shareholder and capital base, lower financing costs and improve its debt maturity profile, as well as diversify funding channels. China South City is currently rated B- by Fitch while it was downgraded to B- from B by S&P in mid-December post which its ratings were withdrawn.

China South City’s 11.95% 2023s were up 7.98 points to 79.27.

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