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PLEASE READ THE AUTHOR CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE Fixed Income Credit Commentary 28 Apr 2022 Glenn Ko, CFA 高志和 (852) 3657 6235 .hk Polly Ng 吴宝玲 (852) 3657 6234 .hk James Wen 温展俊 (852) 3757 6291 .hk CMBI Fixed Income .hk 1 Zhongliang announced the exchange and consent solicitation for ZHLGHD 8.5%22 and 9.5%22 due 19 May22 and 29 Jul22, respectively to extend maturity, as well as the concurrent consent solicitation for ZHLGHD 12%23 to carve out cross-default trigger for the exchanged notes. The maturity extension should not be too surprising given the negative impact on property sales resulting from the lockdown in YRD and the effective shutdown of capital markets for most developers. We acknowledge that Zhongliang had 3 USD bonds/notes (issue size totaled USD850mn) since 2H21. There will not be upfront cash repayment but 1pt incentive fee and payment of accrued interests (c3-4pts) in cash. The coupon rates for the new notes/bonds will be increased 25bps effectively. Please see below for the key terms of the liability management exercise. CONCURRENT CONSENT SOLICITATION FOR ZHLGHD 12 04/17/23 CONSENT FEE 0.25pt APPROVAL THRESHOLD 50% DEADLINE 10 May22 EXCHANGE AND CONSENT SOLICITATION FOR ZHLGHD 8 1/2 05/19/22 & 9 1/2 07/29/22 INCENTIVE FEE 1pt NEW NOTES/BONDS Par-par exchange with no upfront repayment 70% of exchange notes/bonds will be exchanged into new bonds due 31 Dec23, subject to the cap of USD533mn, Zhongliangs available NDRC quota The remaining exchange notes/bonds will be exchanged into new notes due 15 Apr23. COUPON OF NEW NOTES/BONDS 25bps step-up effectively compared with 8.5% and 9.5% of the existing notes/bonds 8.75% for news notes due Apr23 9.75% for new bonds due Dec23 ACCRUED INTERESTS Paid in cash, to be accrued up to settlement date (to be on or before 17 May22) MINIMUM ACCEPTANCE LEVEL 90% DEADLINE 10 May22 CMBI Credit Commentary ZHLGHD Zhongliang: Exchange and consent solicitation 20 Apr 2022 2 CMB International Securities Limited Fixed Income Department Tel: 852 3761 8867/ 852 3657 6291 .hk CMB International Securities Limited (“CMBIS”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly owned subsidiary of China Merchants Bank) Author Certification The author who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the author covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that author in this report. 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