China Evergrande Group, the country’s third largest developer, said it sold $200 million in three-year notes, and an additional $400 million each in four- and five-year bonds on Monday.
The notes carry coupons of between 9.5 and 10.5 per cent, and have the same terms and conditions as $2 billion of bonds Evergrande sold last week.
The deal brings the developers’ total sales to $6.6 billion so far this year, replacing Chinese gaming giant Tencent to become Asia’s biggest bond market borrower excluding Japan. Tencent sold $6 billion of bonds earlier this month.
Evergrande said it will use the proceeds to refinance existing indebtedness and for capital expenditure.
Fitch said in a release the developer expected to spend 20 billion yuan on non-property businesses, including the research, development and production of electric vehicles. This compares to the 16 billion yuan in non-property capex in 2018.
Evergrande has one of the highest debt ratios in the sector, but has pledged to cut its net gearing ratio – a leverage measure which compares its net debt against the book value of its equity – to about 70 per cent by June 2020 from 240 per cent in June 2017.
Though the ratio was lowered to 152 per cent at the end of last year, its total borrowings rebounded from the end of June. Chief Financial Officer Pan Darong attributed the rise to investments in new energy vehicles, but added he expected the debt ratio would decline to an industry average soon.