An outsized $6.6bn bond deal by Evergrande, the Chinese developer, risks raising borrowing costs in Asia’s booming bond markets, analysts have warned, following a rare first-day price fall that left buyers of the deal nursing losses of $250m.
Asian companies have tapped international markets at a record pace this year, raising $128bn in US dollar-denominated bonds — almost double the amount at this point last year, according to ANZ. But the struggles of companies such as Noble, the Singapore-listed commodity trader, and MIE Holdings, the China-based oil and gas group undergoing a distressed debt exchange, have raised fears about the borrowing outlook for riskier junk-rated groups.
Evergrande exchanged $2.8bn of existing debt but also raised $3.8bn in new funds — far more than investors initially expected. The three new bonds included a single $4.7bn bond, with a coupon of 8.75 per cent, that set a new record in terms of deal size for Asia — 50 per cent bigger than the previous record sold just last year.