King & Wood Mallesons has advised Jiangsu NewHeadLine Development Group Co., Ltd (Jiangsu NewHeadLine Development Group) as its international and PRC counsels on its offering of US$200 million 6.20 per cent. guaranteed bonds due 2019. The deal is the first offshore bond issuance assigned with a high yield rating by a local government financing vehicle (LGFV) in China.

The bonds are issued by ZHIYUAN Group (BVI) Co., Ltd, a wholly-owned subsidiary of HK ZHIYUAN GROUP LIMITED, the guarantor for the bonds. HK ZHIYUAN GROUP LIMITED is in turn wholly-owned by Jiangsu NewHeadLine Development Group. The bonds enjoy the benefits of a keepwell and liquidity support deed and a deed of equity interest purchase undertaking provided by Jiangsu NewHeadLine Development Group. Jiangsu NewHeadLine Development Group is beneficially and wholly-owned by the Lianyungang Municipal Government, and focuses on infrastructure construction projects. Established in 1994, Jiangsu NewHeadLine Development Group is the largest LGFV of the Lianyungang Municipal Government that focuses on city construction and municipal development. Jiangsu NewHeadLine Development Group's operations and investment focus on municipal road construction, affordable housing construction, primary land development, and other supporting infrastructure construction.

Commenting on the deal, King & Wood Mallesons partner Hao Zhou said, “We are delighted to have represented Jiangsu NewHeadLine Development Group in its debut bond offering in the international capital markets. The combination of our local depth and global platform has delivered a landmark transaction for our client. We continue to see a lot of interest from PRC LGFVs in tapping the offshore debt markets and have been busy with serving clients in the this sector. The deal paves the way for future deals of a similar nature, which King & Wood Mallesons is best placed to act on given our first-hand experience.”

King & Wood Mallesons has extensive experience in advising the investment and financing platform of municipal governments on international bond issuances. In 2015, King & Wood Mallesons advised Qingdao City Construction Investment (Group) Limited, the investment and financing platform of the Qingdao Municipal Government, on its two bond offerings.

The King & Wood Mallesons international team was led by Hong Kong-based partner Hao Zhou. He was supported by partner Richard Mazzochi, senior associate Michael Lu and associate Marcus Wong. The King & Wood Mallesons PRC team was led by Beijing-based partner Yanyan Song, who was supported by associate Luming Jiang.