China’s Seazen markets first dollar-bond offering by a private builder since 2023

Seazen Group, one of the few major private-sector Chinese developers yet to default, started marketing a dollar bond that would be the first of its kind in more than two years.

Once ranked among China’s top 10 developers by contracted sales, the company set the initial price target for the three-year notes at 13.25 per cent, a person familiar with the matter said. If the issuance were successfully priced, Seazen would be the first privately owned local builder to tap the publicly syndicated US-currency bond market since early 2023. The securities can be called and put after two years.

There has been a drought of dollar bond issuance by Chinese developers since the country became mired in a years-long real estate crisis, suppressing appetite for such debt. Dalian Wanda Group’s property-management arm was the last major privately held property firm to sell dollar bonds, pricing two such notes in early 2023.

Seazen has managed to withstand the headwinds in the sector and still operates an extensive line of shopping centres in smaller cities. Last year, rental income from commercial properties grew 13 per cent. It has also benefited from measures introduced by the government to broaden access to some commercial loans, putting up some of its properties as collateral to generate fresh funding.

The new bond offered a slight premium over the company’s existing 4.5 per cent note due in May 2026, which currently yielded 12.9 per cent, according to Bloomberg Intelligence analysts Daniel Fan and Hui Yen Tay.

“If printed, we expect this to attract more investors, both regional and global, to return to China high-yield dollar bonds,” said Zerlina Zeng, the head of Asian strategy at Creditsights Singapore. Seazen’s liquidity was better than most high-yield Chinese developers, so it could probably obtain cheaper funding onshore by pledging its commercial real estate assets, she added.