Corporate (ECM+DCM)

Exercise 5

Bond Issuance

Time Limit: 60 minutes

GoodCorp Limited is a Hong Kong listed company in the property development sector. Its Board has decided to issue USD-denominated bonds to refinance existing debt and fund new projects.

Key Facts:

  • Issuer: GoodCorp Limited

  • Issue Size: USD 500 million

  • Tenor: 5 years

  • Rating: Expected BBB- (S&P)

  • Use of Proceeds: 60% refinancing, 40% new projects

  • Initial pricing thoughts: 4.5%

  • Listing: Hong Kong Stock Exchange

The Board is particularly concerned about:

  1. Recent market volatility

  2. First-time bond issuance

  3. Complex group structure with PRC subsidiaries

  4. Existing loan covenants

Questions:

  1. What are the key documentation requirements for this bond issuance? Walk through the essential agreements and their main purposes.

  2. Explain the main roles and responsibilities of key transaction parties (issuer's counsel, underwriters' counsel, trustees, paying agents).

  3. What are the crucial aspects of due diligence for this transaction? Consider both legal and business perspectives.

  4. What key issues should be considered when drafting the offering circular? Focus on risk factors and business description.