King & Wood Mallesons (KWM) advised Chongqing Nan’an District City Construction Development (Group) Co. Ltd. as its international counsel on its offering of US$800 million bonds, which consists of US$300 million 3.625% bonds due 2019 and US$500 million bonds due 2021. This transaction is the first USD bond offering issued under the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity signed early this year (the Chongqing Initiative). Chongqing Nan’an District City Construction Development is the largest investment and financing platform of the Chongqing Nan’an District Government.
In addition, KWM advised the joint lead managers as their PRC and international counsel in Chongqing Grain Group Co. Ltd.’s offering of RMB1 billion 4.02% bonds due 2019, with the benefit of an irrevocable standby letter of credit issued by Agricultural Bank of China Limited, Singapore Branch. This transaction is the first CNH bond offering issued under the Chongqing Initiative and, to date, the largest CNH bond offering by a corporate issuer in 2016. Chongqing Grain is one of the leading grain and edible oil enterprises in the Chongqing municipal region.
KWM has worked on the majority of PRC LGFV bond offerings to date as issuer’s or lead managers’ international counsel, including:
1. Chongqing Nan’an District City Construction Development (Group) Co. Ltd. – US$800 million bond
2. Chongqing Grain Group Co. Ltd. – RMB1 billion bond
3. Huai’an Development Holdings Co. Ltd. – USD$300 million bond
4. Jiangsu Hanrui Investment Holdings Co. Ltd. – US$300 million bond
5. Xuzhou Economic and Technology Development Zone International Investment Co. Ltd. – US$300 million bond
6. Jiangsu NewHeadLine Development Group Co. Ltd. – US$200 million bond. The deal is the first offshore bond issuance by a LGFV in China assigned with a high yield rating.
7. Yunnan Energy Investment Finance Co. Ltd. – US$300 million bond
8. Qingdao City Construction Investment (Group) Limited – US$500 million perpetual capital bond
9. Binhai Investment Co. Ltd. – US$200 million bond
10. Qingdao City Construction Investment (Group) Limited – US$800 million bond. This is the first USD bond issuance by the comprehensive LGFV of a municipal government in China.
11. Yunnan Energy Investment Finance Co. Ltd. – RMB600 million bond
“The surge in local governments turning to offshore markets to fund their operations has been increasing dramatically in the last 12 months. Having acted on 11 LGFV issuances since 2015 and with a broad network in China, KWM is best placed in advising our existing and future clients in similar transactions.” commented Hao Zhou, partner, KWM Hong Kong.
“These bond issuances are a testament to our ability to lead first-to-market capital market transactions, further reinforcing KWM’s global capability, all-round experience and expertise,” said Head of Hong Kong Banking & Finance Practice, Richard Mazzochi.
Hao Zhou led the international DCM team working on the above matters, supported by senior associates Michael Lu and David Liao and counsel Ian Hardee. PRC partners Song Yanyan, Zhang Mingyuan, Chen Fuan and a range of China-based associates advised the clients on PRC law in some of the above transactions.
