Sino-Ocean subsidiary issues credit enhanced bonds

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Sino-Ocean Land Treasure IV issued USD200 million 3.8% credit enhanced green notes due 2025 backed by a standby letter of credit (SBLC) from China Zheshang Bank.

Paul Hastings acted as the English and Hong Kong counsel, Maples Group acted as British Virgin Islands counsel and Cathay Associates Kejie advised on PRC law to the issuer and guarantor. The guarantor is Sino-Ocean Land Treasure IV’s parent company Sino-Ocean Group.

Vivian Lam

Paul Hastings’ team was led by corporate partner Vivian Lam with support from counsel Jeff Lee and associate Hulka Lo.

Linklaters advised on English law for the joint lead managers and the trustee while King & Wood Mallesons acted as counsel on PRC law for the joint lead managers.

The issuance was the third offshore bond offering from the Chinese property sector with SBLC so far this year. The previous two were Greenland Group and Excellence Commercial Management.

Three successful deals promoted anticipation that Chinese property companies can use SBLC-backed trades as a credit-enhanced way to raise funds due to simple recourse and clear drawdown conditions.

Vivian Lam told China Business Law Journal that SBLC-bondholders can directly demand payment from the issuing bank in the case of issuer default.

Lam said it was important to note that issuing SBLC bonds involved a guaranteed bank so sufficient time must be allowed to negotiate the form of the SBLC. This had to encompass the “scope of protection required by the bondholders with a term that is adequate to cover the term of the bond issue plus a claim period”.

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