China Unicom’s latest US$1.8bn convertible bonds issuance is testament to the booming debt markets in Hong Kong. The issuance is the world’s largest international convertible bond (CB) issuance by a PRC company to date.

Freshfields and Sullivan & Cromwell acted as the China Unicom’s Hong Kong and US counsel respectively. Herbert Smith, which advised Sinopec on its US$1.5bn convertible bonds issuance in 2007, represented the underwriters.

“One unusual aspect was the American Depositary Shares (ADS) feature, which allows converting bondholders to request that their shares be delivered in the form of China Unicom's ADS listed on the NYSE.  Since relatively few issuers of CBs in Asia are listed in New York, this was an atypical feature that required that various mechanisms be built into the documentation as well as a fair amount of additional disclosure,” said Kevin Roy, partner at Herbert Smith.

Both Sullivan & Cromwell and Freshfields are the issuer’s long-term legal advisors, having advised the company in its merger with China Netcom Group in 2008. Freshfields also advised the company in its US$1.3bn share buyback from South Korean telco, SK Telecom, in October last year.

Chaoda Modern Agricultural recently also issued US$347m worth of convertible bonds in Hong Kong (advised by Sidley Austin, Maples and Calder and Clifford Chance) and Sino-Ocean Land, also two months ago, issued US$900m worth of convertible securities (advised by Kejie Law Office, Paul Hastings and Maples and Calder). ALB

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