A $500 million fixed-for-life perpetual by Nan Fung International Holdings dropped sharply after it began trading on Tuesday in a sign investors may be starting to question the wisdom of structures, which leave them heavily exposed to duration risk.
The Hong Kong property developer’s senior perpetual non-call three-year offering was priced at par on a coupon of 5.5%, but immediately dropped one point when it opened for trading.
In turn, it also dragged down other recent senior fixed-for-life perpetuals by Cheung Kong Properties and Sun Hung Kai SHK, which are both nearly a point-and-a-half below their mid-May issue prices.
Nan Fung's...
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