Ganzhou Development (GANZHO, Baa3/NR/BBB-) - New Issue FV
Ganzhou Development Investment (GANZHO, Baa3/NR/BBB-) - New Issue FV
New Issue: $Benchmark 3y
IPT: 5.6% area
FV: 5.4%
Ganzhou Development Investment is coming to the market with a 3y $benchmark deal. The issuer is a state enterprise company owned by Ganzhou Municipal Government in Jiangxi province, its principal focus being the financing of local infrastructure projects. Fitch recently assigned a BBB- rating to the proposed note.
In terms of relative value, we focus on recent SOE issuers in the 3 year space. In addition we also include Export-Import Bank of China (Single A), Chengdu Communications (High BBB) as well as Yueyang Constructions to create some rating boundaries. The recent issue from Knowledge City (mid BBB) as well as Chengdu Airport (NR) are useful peers.
We believe that Ganzhou Development Investment should trade a little wide to higher rated Knowledge City (c. 5bp), which leads us to a FV of Z+167bp and a yield around 5.4%.
