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China's VNET pulls $300 mln bond offer on tepid demand

China's VNET pulls $300 mln bond offer on tepid demand

reuters.com · 11/11/2021 02:52
China's VNET pulls $300 mln bond offer on tepid demand

By Scott Murdoch

- Data centre provider VNET Group Inc VNET.O said on Thursday it has pulled a planned $300 million bond offering, amid increasing caution in global sentiment towards Chinese high-yield debt deals.

"Due to adverse market conditions, the company decided not to proceed with the proposed USD bond transaction at this time, and will notify the investors and the market of our financing plans when it is appropriate to do so," a company spokesperson said.

Global investors failed to support the offering in strong numbers, two sources with direct knowledge of the matter said, which prompted the transaction to be shelved. The sources could not be named as they were not permitted to talk to the media.

VNET's bond had been rated 'B stable' by S&P and the company flagged initial price guidance of about 8.75% for potential investors, a term sheet for the deal showed.

VNET, which was previously known as 21Vianet Group, planned to use the money it was expecting to raise for future capital needs, according to the term sheet.

"The market conditions were just not there," one banker with direct knowledge of the matter said.

Asia's high-yield debt market has been mostly frozen for at least the past month as China Evergrande Group's 3333.HK debt woes continue to roil sentiment.

Fears around Chinese high yield have been visible in widening credit spreads as investors demand bigger premiums for holding nominally riskier debt. The spread of Chinese high-yield corporate dollar debt over U.S. Treasuries .MERACYC touched a record high on Wednesday, and remained near those levels on Thursday.

A lack of support for VNET's deal emerged even though the company is not related to China's troubled property sector which showed investors remained cautious towards mainland high yield issuance, one of the sources said.

"Until we see a policy response from China on property, any high yield deal is going to be tricky," one of the sources said.

(Reporting by Scott Murdoch in Hong Kong; Editing by Muralikumar Anantharaman)