IFRASIA INTERNATIONAL FINANCING REVIEW ASIA FEBRUARY 10 2018 ISSUE 1028 www.ifrasia.com
Asian issuers pay to play as volatility blows hole in dollar bond pipeline Qingdao Haier among first to study novel D-share listing in Frankfurt Panda bond rulebook nears publication over two years after market reopens
BONDS
Widjaja-backed miner offers highest yield of 2018 to sell dollar bond debut 07
EQUITIES
Vietnam stock market gets a boost from privatisation plans 08
STRUCTURED FINANCE
PEOPLE & MARKETS
NAB prints Asia Pacific’s first Green mortgage securitisation 09
Hong Kong loosens IPO rules to allow pricing below marketed range 12
NOW AVAILABLE AVAILABLE IN
THOMSON REUTERS EIKON
IFR ASIA: AT THE HEAR HEART OF ASIA’S CAPITAL MARKETS IFR Asia is the world’s most authoritative source of Asian capital markets intelligence, providing indepth coverage on every significant issue across all asset classes. Established in 1997, it draws on IFR’s global editorial team – the largest of any capital markets publication with bureaux throughout the region – to provide the most reliable news, data and analysis there is. IFRAsia.com takes this unrivalled content and combines it with new search functionality, enhanced navigation and intraday updates to create the perfect business development tool for the region’s investment banking professionals.
To learn more about how you will benefit from IFR Asia’s market-leading intelligence, visit www.IFRAsia.com
A THOMSON REUTERS SERVICE
Upfront D-share dreams
P
lans to launch a new class of Chinese shares in Germany are gaining traction, but it would be a mistake to assume that Frankfurt will one day rival Hong Kong or the US as a gateway for Chinese equities. Qingdao Haier, which claims to be the world’s biggest white-goods manufacturer, manufacturer, is considering a listing listing of D-shares on the China Europe International Exchange in Frankfurt. CEINEX is a joint venture between German and Chinese exchanges, and its D-share concept has already won the blessing of regulators in both countries. Convincing issuers and investors, however, will be another matter. At a high level, access to a rich European investor investor base looks attractive for a Chinese company with global ambitions, such as Haier. But it’s hard to imagine the nascent D-share market competing with more established
A better option would be a trading link along the lines of Hong Kong’s tie-ups with Shanghai and Shenzhen. As and Hs on valuation or liquidity. liquidity. CEINEX was conceived as an offshore renminbi marketplace that would allow European investors to gain exposure to the Chinese currency through their existing trading accounts, and its most popular products are ETFs tracking Chinese equity markets. Trading data isn’t easy Some PRC issuers are coming on board: China Development Bank listed Green bonds on the exchange in November. But a big listing from a blue-chip stock like Haier would be a monumental leap. European investors do have other ways of taking a view on Chinese equities, and Haier’s Shanghai shares are already available to international investors through the Hong Kong-Shanghai Connect trading link. A better option would be a trading link along the lines of Hong Kong’s tie-ups with Shanghai and Shenzhen. A Frankfurt Connect would meet the same objectives, but
OPINION INTERNATIONAL OPINION INTERNATIONAL FINANCING REVIEW ASIA
without creating a new group of instruments that will will inevitably lack the liquidity of their home market. Haier may well decide to press ahead with a European listing, especially if it has its eye on future acquisitions in marketing, rather than fundraising, initial deals are likely to be far smaller than the exchange would like.
Jumping for junk
I
n a rollercoaster week for global markets, the latest batch of Asian high-yield bonds deserves close attention. US Treasuries are usually disastrous disastrous for sub-investment week have come from low-rated low-rated borrowers, with only one high-grade issuer clearing the market. Does this mean Asian investors are still looking to add risk, regardless of the turmoil in global markets? Or are these companies simply desperate to raise cash no matter what price? Both arguments make sense. Investors see junk bonds as offering a bigger cushion against rising US Treasury yields, and they certainly got some juicy coupons, with Sunshine Most issuers, meanwhile, preferred to wait for calmer times before launching their deals. Many Chinese issuers have offshore debt quotas due to expire next month, suggesting a sense of urgency behind Daegu Bank, the only high-grade issuer to sell US dollar bonds during the week, paid a premium to access the market ahead of an April maturity. Last week’s volatility presented a better entry point for brave investors – especially those who were already prepared to anchor deals before the sell-off. But if the US market stays shaky, hopes for a repeat of the stellar Still, the latest batch of high-yield offerings underlines just how far the Asian market has has come in the last couple of years. Not long ago, high-yield issuers would be the last when things turned bearish. bearish. The pool of wealth now available in China and beyond means that is simply no longer the case.
International Financing Review Asia February 10 2018
1
INTERNATIONAL FINANCING FINANCING REVIEW ASIA CONTACTS
EDITOR
EDITOR, IFR
+852 2912 6670
Matthew Davies +44 (0)20 7542 7504
[email protected] HEAD OF ASIAN CREDIT
Daniel Stanton +65 6417 4548 ASIA EQUITIES EDITOR
Fiona Lau +852 2912 6673
COMPANY INDEX
DESK EDITOR
Vincent Baby SUB-EDITOR
Dharsan Singh HEAD OF PRODUCTION
Victor Ng PRODUCTION ASSISTANT
DEPUTY HEAD OF ASIAN CREDIT
Mike Tsui
Frances Yoon +852 2841 5783
HEAD OF GLOBAL ADVERTISING AND
DEPUTY EQUITIES EDITOR, ASIA
S. Anuradha +65 6417 4547 SENIOR CREDIT CORRESPONDENT, ASIA
Kit Yin Boey +65 6417 4549 ASIA PACIFIC BUREAU CHIEF, LOANS
Prakash Chakravarti +852 2912 6671 SENIOR REPORTERS: HONG KONG
Thomas Blott +852 2841 5878 Carol Chan +852 2912 6604
SPONSORSHIP
Shahid Hamid +65 9755 5031 IFR ASIA AWARDS MANAGER
Paul Holliday +44 (0)20 7542 8018 GLOBAL ADVERTISING PRODUCTION MANAGER
+44 (0)20 7542 4348 SUBSCRIPTION SALES ENQUIRIES China, Hong Kong, Taiwan, Korea, Japan
Alan Wong Wong +852 2912 6606 India, Singapore, Malaysia, Thailand, Indonesia and Australia
EQUITY RESEARCHER: BEIJING
Ken Wang +86 10 6627 1259 SENIOR REPORTER: SYDNEY
John Weavers +61 2 9373 1655 SENIOR ANALYST: TOKYO
Takahiro Okamoto +813 6441 1773 ASIAN CREDIT CORRESPONDENT
Krishna Merchant +65 6417 4544
Samantha Harris +612 9373 1749 SUBSCRIPTION ACCOUNT MANAGER
Pia Batuan +65 6403 5542 CLIENT SERVICES
[email protected]
WEBSITE
www.ifrasia.com EMAIL ADDRESSES
REPORTER: HONG KONG
Ina Zhou +852 2912 6674
HONG KONG (HEAD OFFICE)
SINGAPORE
16/F Cityplaza 3, 14 Taikoo Wan Road, Taikoo Shing, Hong Kong +852 2843 6363
18 Science Park Drive, Singapore 118229, Singapore +65 6775 5088
TOKYO
30F Akasaka Biz Tower Tower,, 5-3-1 Akasaka, Minato-ku, Tokyo, Japan 107-6330 +813 6441 1119
LONDON
30 South Colonnade, Canary Wharf, London E14 5EP +44 (0)20 7250 1122 NEW YORK
3 Times Square, 18th Floor New York, NY10036 +1 646 223 4000
IFR Asia is a sister publication of International Financing Review. Review. The contents of this publication, either either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of the pub lishers. Action will be taken against companies or individual persons who ignore this warning. The information set forth herein has been obtained from sources which we believe to be reliable, but is not guaranteed. Subscriptions Subscriptions to IFR Asia are non-refundable after their commencement issue date. © Thomson Reuters 2018. Published by Thomson Reuters in Hong Kong. Printed in
2
ABC Financial Leasing Acleda Bank Adani Infra Adira Finance Advanced Semiconductor
10 18 26 27
Engineering AerCap Holdings African Development Bank Air Liquide Ajmer Vidyut Vitran Nigam Akbank Alinta Energy A-Living Services Ascendas India Trust
33 10 17 20 25 25 18 22 30
Asian Development Bank AusNet Services Holdings Bank Nederlandse Gemeenten Bank of Communications Financial Leasing Bank of Gansu Bank of Jiangsu Bank of TokyoTokyo-Mitsubishi Mitsubishi UFJ Bank Rakyat Indonesia Binh So Refinery
21 23 24 32 27 8
Bluestone Group Boya Bio-pharmaceutical Group
18 23
China Citic Bank China Construction Bank China Eastern Airlines China Jilin Forest Industry Group China Merchants Port Holdings China National Petroleum Corp Chinalin Securities Contemporary Eastern Investment Country Garden Holdings CRE Logistics REIT CSM Corporatama Daegu Bank Daegu Bank
24 18 29 10 21 23 23 24 25 29 27 31 4
DanaInfra Nasional DBS Bank Del Monte Philippines Emirates NBD Bank Export-Import Bank of Korea Ezion Holdings Fantasia Holdings Group Far East Horizon Fletcher Building
17 17 18
29 32 30 7 32 8 5, 19 10 30
Frasers Property Holdings Thailand 33 Fujian Zhanglong Group 5, 19 Ganfeng Lithium 22 Global Logistic Properties 20 GLP J-REIT 29 Golden Energy and Resources 5, 7 Grab 30 Greenland Holding Group 19 GuocoLand 30 Han’s Laser Technolog Technologyy Industry Group 24 Huabao Flavours and Fragrances 23 Huami 22 Huaneng Power International 23 Huarong Tianze Investment 21 Indonesia Eximbank Industrial Bank International Bank for Reconstruction and Development IT Finance Jaipur Vidyut Vitran Nigam
27 20 17, 18 25 25
Jiangsu Financial Leasing 23 Jiangyin Chengxing Industrial Group 20 JinkoSolar 22
International Financing Review Asia February 10 2018
Jinzhou Port Jodhpur Vidyut Vitran Nigam Jujiang Construction Group Krungthai Card KTK Group Latrobe Valley Power (Finance) Legend Holdings LY.com Minsheng Financial Leasing Muangthai Leasing National Australia Bank National Bank for Agriculture and Rural Development National Insurance
24 25 20 33 23 18 21 22 22 33 9 26 11
Nesta Investment Partners II 31 Nesta Investment Partners III 31 New Peak Group 22 Ningbo Joyson Electronics 21 Orient Group 24 Oriental Insurance 11 Panin Bank 26 Pegadaian 26 PetroChina 23 PetroVietnam Oil 8 PetroVietnam Power 8 Ping An International Financial Leasing 10 Power Finance Corp 26 Power Generation Corp 3 8 Qingdao Haier 4 Quality Houses 33 Red Star Macalline Group 19 Republic of Indonesia 4 Rural Electrification Corp 26 Shaanxi International Trust 23 Shandong Hi-Speed Group 20 Shangrao City Construction Investment Development Group 19 Shangrao Investment Holding Group 5 Siamgas and Petrochemicals 33 Singapore Post 30 Sinochem Hong Kong (Group) 20 Sino-Ocean Group Holding 20 Skylark 28 SMBC Aviation Capital 10, 32 SoftBank Corp 29 SoftBank Group 29 Srei Infrastructure Finance 26 Sunshine 100 China Holdings 5, 20 Techcombank 8 Tianjin Capital Environmental Protection Group 23 Tiphone Mobile Indonesia 27 Toei Reefer Line 28 Toyota Finance Australia 18 TP Bank 8 TPK Holding 32 United Asia Finance 25 United India Insurance 11 Uttar Pradesh Power Corp 25 Vatika Hospitality 26 Vedanta Resources 27 Vietnam Joint Stock Commercial Bank for Industry and Trade 33 Vietnam Rubber 8 Vincom Retail 8 Viva Energy Australia 18 Viva Energy Holding 18 Welspun 26 Westpac 17 Xiamen Contemporary Culture Development 24 ZH International Holdings 25 Zhongyu Gas Holdings 25
Contents BONDS
INTERNATIONAL FINANCING REVIEW ASIA
FEBRUARY 10 2018 ISSUE 1028
COUNTRY REPORT
04 Volatility sidelines Asian issuers
Global volatility meant only a handful of Asian issuers dared to brave the offshore bond market last week, and those that did had to pay up. BONDS
04 Haier
mulls landmark listing Chinese home-appliance giant Qingdao Haier is considering a listing in Frankfurt that would create a new class of stock for PRC companies. BONDS
06 Panda
rulebook on the horizon China has taken a big step towards the publication of long-awaited guidance on Panda bond offerings, more than two years after reopening the market.
NEWS 07 GEAR
pays year’s highest yield GEAR overcame choppy markets to make its offshore debut last Thursday, but the company had to pay the highest year-to-date yield in the Asian G3 sector.
17
AUSTRALIA
Westpac has released price guidance at 90-day BBSW plus 320bp–340bp for Westpac Capital 5 Notes, aiming to raise approximately A$750m 18
CAMBODIA
30 NEW ZEALAND
Fletcher Building is reviewing key projects of its building and interiors division as it expects to post losses on breaches of one or more of its loan covenants 30 PHILIPPINES
Acleda Bank’s five-year offshore loan, doubled in size to US$100m, was allocated to 11 banks with Shin Kong Commercial as sole MLAB
Food and beverage company Del Monte Pacific plans to list unit Del Monte Philippines on the Philippine Stock Exchange with an IPO of up to Ps16.7bn
19
30 SINGAPORE
CHINA
Greenland Holding, rated Ba1/ BB/BB, drew final orders of US$1.9bn for a US$700m dualtranche offering of US dollar senior unsecured notes 25
HONG KONG
ZH International Holdings plans to raise US$200m from the sale of US dollar shortterm notes to meet general corporate needs
GuocoLand raised S$50m from a tap of its 4.6% perpetual noncall five bonds, priced at par with a spread of 260.9bp over Singapore dollar SOR 31
SOUTH KOREA
Daegu Bank, rated A2/A– (Moody’s/S&P), drew final orders of US$2.3bn from 138 accounts for US$300m of US dollar senior unsecured bonds
07 Volatile Sing rates stall issuance Sales of Singapore dollar bonds
ground to a halt this month on large swings in local benchmark rates. 08 Vietnam steps up privatisations Vietnam’s equity capital market is
enjoying flurry of activity since the beginning of the year. 08 Ezion nears rehabilitation
Ezion Holdings has secured the support of its
secured lenders for a restructuring that will slash its debt burden.
12 Hong
Kong loosens IPO pricing rules Bankers in Hong Kong have welcomed the local bourse’s plan to allow issuers to sell IPO shares below indicative price ranges. 12 Singapore, Malaysia to renew trading link The two countries plan to
establish a new trading link between their stock markets. Bank has appointed Duncan Mann and
Apurva Shah as co-heads of financial sponsors for Asia Pacific.
INDIA
Golden Energy on Thursday overcame choppy markets on its offshore debut, but had to pay the highest yield in the Asian G3 sector year to date 26
PEOPLE & MARKETS
15 Who’s moving where Deutsche
25
INDONESIA
Panin Bank intends to issue Rp3.9trn five-year rupiah bonds at 7.6% with the help of five lead arrangers, according to a source close to the plans 28
JAPAN
Toei Reefer Line’s management buyout is back in the limelight after a revised bid from its president, who failed in an attempt last month
32 TAIWAN
The Taiwan Formosa bond market continued to provide ample fundraising opportunities for Asian issuers in the first five weeks of the year 33 THAILAND
Frasers Property Holdings Thailand will sell bonds of up to Bt5bn at end-February on its market return after a Bt2.5bn maiden issue late last year 33 VIETNAM
A US$100m term loan for Vietnam Joint Stock Commercial Bank for Industry and Trade has seen six lenders join in general syndication
16 In brief Singapore’s central bank is studying the risks cr yptocurrencies
pose, yet so far there is no strong case to ban trading of the digital coins.
29
Comment Jonathan Rogers is away
State-owned DanaInfra Nasional sold M$4bn of Islamic bonds in a multi-tranche transaction last week through five joint lead managers
ASIA DATA
MALAYSIA
34 This week’s figures International Financing Review Asia February 10 2018
3
News Panda rulebook 06
Singapore stalls 07
Vietnamese privatisations 08
Volatility sidelines Asian issuers
Bonds Handful of borrowers brave market, but investors demand high premium
BY CAROL CHAN, DANIEL STANTON
Global volatility meant only a handful of Asian issuers dared brave the offshore bond market last week, and those who did had to pay up. Ten-year US Treasury yields jumped 5bp on February 2 on better-than-expected non-farm payrolls and wage growth, then tighened 13bp last Monday before widening 10bp on Tuesday. The iTraxx Asia ex Japan investment-grade CDS index widened 4bp on Monday and by the same amount on Tuesday, as risk appetite fell. The REPUBLIC OF INDONESIA was forced to delay a planned US dollar offering, and the only Asian investment-grade issuer to complete a trade last week was South Korea’s DAEGU BANK with a US$300m 5.5-year issue. “We are still having calls on other deals, and other issuers are standing down,” said a DCM banker. The relatively short tenor and capped size of Daegu Bank’s
deal helped draw demand of more than US$2.3bn, but final pricing of Treasuries plus 135bp was estimated at 10bp–15bp wide of fair value, and the bonds tightened 17bp in
secondary trading on Thursday. Final pricing was also around 20bp inside initial guidance, fairly modest for an Asian dollar transaction, but in line with US investment-grade
Haier mulls Frankfurt listing
Equities Home-appliance maker among first to study new D-share format
BY FIONA LAU, JULIE ZHU
Chinese home-appliance giant QINGDAO HAIER is considering a listing in Frankfurt that would create a new class of stock for PRC companies. Haier said in a filing last Friday that it was studying the feasibility of issuing D-shares in Germany, adding that it had not yet decided on the potential issuance or hired any advisers. Reuters and IFR first reported the plans last Thursday, citing people familiar with the move. Shanghai-listed Haier is one
4
of a few Chinese companies studying the D-share format, a joint initiative of stock exchanges in Shanghai and Germany. The size of the share sale, which could take place as early as this year, has not been decided as the discussions are still at an early stage, according to sources. “The stock exchange would want the company to do a landmark transaction with a sizable offering, say around US$1bn, while the company may not want to sell a big chunk of shares at a discount,”
said one of the sources. As of last Thursday, Haier’s market capitalisation stood at Rmb117bn (US$18.7bn), with the stock trading at a forecast 2018 P/E of about 14.5. Generally, investors look for a discount when a listed company sells shares in a follow-on offering. D-shares, similar to Hong Kong-listed H-shares, are a new product being touted by the China Europe International Exchange (CEINEX), a joint venture trading platform that the Shanghai Stock Exchange, China Financial Futures
International Financing Review Asia February 10 2018
deals that came to market the same day. Daegu Bank has a US$300m bond maturing on April 29, giving it little flexibility on timing. On Thursday, Indonesia’s
Exchange and Deutsche Boerse created in November 2015. CEINEX markets itself as a gateway for Chinese firms looking to access European investors, offering renminbidenominated products including stocks, bonds and exchange-traded funds on the Frankfurt Stock Exchange’s existing infrastructure and under German regulations. CHINA SHOWCASE
The Shanghai Stock Exchange and Frankfurt Stock Exchange are looking for a well-known Chinese company to launch the D-share format through a sizable deal to showcase the German city’s appeal as a listing venue for Chinese companies, according to one of
For daily news stories visit www.i frasia .com
Green RMBS premiere 09
GOLDEN ENERGY AND RESOURCES
managed to print a US$150m five-year non-call three issue, but had to pay 9.375%, the highest yield in the Asian G3 market so far this year. The volatility forced some Chinese issuers to push back their offshore issuance plans in the hope that more benign conditions will prevail after the Lunar New Year holiday. “We’ve kept monitoring the markets but didn’t see a very good window to launch the deals,” said a syndicate banker from a Chinese bank. “Investors are very cautious, especially as some of our deals are those private, unlisted high-yield names, which find it hard to draw investors’ interest in a risk-off environment.” Still, a few Chinese issuers printed US dollar bonds last week, including property developers SUNSHINE 100 CHINA HOLDINGS and FANTASIA HOLDINGS GROUP, and Chinese local government financing vehicles FUJIAN ZHANGLONG GROUP and SHANGRAO INVESTMENT HOLDING GROUP.
Most of these deals were said to be heavily anchored, giving them confidence that they could make it through a
the people. The first three D-share listings are expected to raise between €500m (US$614m) and €1bn for a total of up to € 3bn, Reuters reported. So far, Frankfurt has struggled to attract listings from major Chinese companies, which generally prefer to float in the domestic A-share market for higher valuations, or in Hong Kong or the US, where investors are more familiar with such issuers. A series of scandals involving small-cap Chinese companies listed in Frankfurt has also dented investor interest in PRC entities. In 2014, the chairman of Ultrasonic, a small Chinese shoemaker listed on the
First reset on PRC perps 10
shaky market. On the other hand, nothing was heard from Guorui Properties, Jiangyin Chengxing Industrial Group, Guangzhou City Construction Investment Group, Shandong Hi-Speed Group, Inner Mongolia BaoTou Steel Union, HC International, Hubei Science & Technology Investment Group and Taizhou Huaxin Pharmaceutical Investment, all of whom originally aimed to issue bonds late last month or earlier this month, but now will have to wait until late February to get
Indian insurers raise sub debt 11
going, according to market sources. CLOCK TICKING
Chinese issuers are unlikely to launch deals this week, considering that settlement usually takes four or five working days. Lunar New Year falls on February 16 and China has a week-long holiday from February 15. Bankers said deal flow from China was likely to resume in the week of February 26. However, as many issuers have offshore debt issuance quotas
RISK OFF CREDIT SPREADS IN ASIA HAVE REVERSED COURSE THIS MONTH
90 85 80 75 70 65 60 55 Jul 17
Aug 17
Sep 17
Oct 17
Nov 17
Dec 17
Jan 18
Feb 18
iTraxx Asia ex-Japan IG index (bp) Source: Markit via Thomson Reuters Eikon
Frankfurt Stock Exchange, disappeared, together with his son, with US$60m from the company’s bank account.
company’s strategy to raise its international profile as a leading Chinese manufacturer, especially as Germany is
“The stock exchange would want the company to do a landmark transaction with a sizable offering, say around US$1bn, while the company may not want to sell a big chunk of shares at a discount.”
In the same year, the CEO of Frankfurt-listed Youbisheng Green Paper also disappeared. Haier’s move to sell shares overseas fits with the
renowned for its expertise in white goods, according to another source. Haier bought General Electric’s white-goods business
International Financing Review Asia February 10 2018
from the National Development and Reform Commission that will expire by the end of March, that will not leave much time for them to complete their planned bond sales. Indeed, many Chinese issuers wanted to complete their deals before Lunar New Year, according to bankers. “Nobody know whether the market will be better or even worse after the holidays,” one of the bankers said. “They want to use up their offshore debt quotas before they expire, as there is no assurance whether they can secure an extension from NDRC or whether they will get into trouble when applying for new quotas.” However, another banker dismissed some of the worries. He said there are examples of other issuers getting NDRC extensions. “I think NDRC will be reasonable in this regard as it also knows the market situation,” the banker said. He said he had seen a list of more than 10 companies to which NDRC had granted offshore debt issuance quota extensions from end-December last year to end-June this year.
in 2016 and claims to be the world’s biggest maker of large home appliances. According to the company’s 2016 annual report, citing research from Euromonitor, Haier controlled 10.3% of the global market for large home appliances, ranking No 1 for the eighth consecutive year. Shanghai Stock Exchange said last year that CEINEX would initially welcome D-share offerings from China’s blue-chip listed companies, especially manufacturers looking to expand overseas. Issuing D-shares could help Chinese companies increase the awareness of their brands in Europe, and promote their business in the European market, according to SSE.
5
News
Panda rulebook on the horizon
Bonds Long-awaited guidance looms after initial approval from regulators
BY INA ZHOU
China has taken a big step towards the publication of longawaited guidance on Panda bond offerings, more than two years after reopening the market in September 2015. The main regulator for corporate bonds in the interbank market said last week a committee had granted initial approval to a new rule on non-financial Panda bonds, raising hopes that the rulebook is finally on the horizon. The National Association of Financial Market Institutional Investors, which operates under the People’s Bank of China, said in a statement on its website that its Bond Market Professional Committee had passed guidance on overseas non-financial corporate debt instruments, without giving details. Market participants said that meant rules on Panda bonds were imminent, as they now only require a second approval from another committee at NAFMII and registration with the PBoC before being published. NAFMII oversees corporate and sovereign Panda bonds in China’s vast interbank market. Bankers have been waiting for explicit guidance for the Panda bond market for the past two years. That did not stop deals from coming to market, but meant most issues had to be reviewed on a caseby-case basis, with little clarity over the odds of regulatory approval. “We are very much looking forward to the new rules after going through ambiguity in the past. We do hope it will give us clear guidance”, said a Beijing-based DCM banker with a Chinese bank. Bankers who have seen NAFMII’s new rules said they deal mainly with technical issues such as the types of
6
documentation required and the registration process, and are roughly in line with existing practice in the Panda bond market. NAFMII has not directly addressed sensitive issues like accounting systems and the use of proceeds, but asked issuers to meet certain requirements set by Chinese regulators, including the PBoC, these bankers said. The main sticking point for regulators has been the complexity of reconciling foreign accounting and auditing standards with their Chinese equivalents. Those issues are expected to be addressed in new guidelines from the PBoC, which could come out before the release of NAFMII’s rules, bankers said. “This time, Panda bond rules, from both NAFMII and PBoC, look set for publication,” said a Shanghai-based DCM banker. He expected both sets of rules to be announced after the Lunar New Year, with the PBoC likely to publish first. According to sources, the PBoC’s guidance is expected to stipulate that financial and corporate issuers using accounting standards that
are not recognised by China’s Ministry of Finance, such as US GAAP, will need to provide quantitative reconciliation or qualitative restatement of their financial reports for any public offering of Panda bonds. These issuers will also have the option of adopting the private placement format, which does not require reconciliation or restatement of financial reports, sources said. MORE DIVERSE ISSUERS
Bankers said the new rules would potentially open Panda bonds to a more diverse range of issuers, but did not foresee a jump in supply, given rising onshore yields, additional costs for some issuers and some disclosure requirements with which non-Chinese issuers might not be comfortable – for instance, updating their financial statements quarterly in China. As the MoF only recognises European and Hong Kong accounting standards, issuers using other norms will face additional costs to adjust their financial statements for a public offering. Private placements usually required a higher liquidity premium,
International Financing Review Asia February 10 2018
bankers said. Sovereigns, supranationals and agencies are not subject to the rules on accounting treatment for public offerings, sources said. In the past three years, some foreign names have tested the Panda bond market, but offshore-incorporated Chinese issuers have been the main issuers. Bankers do not expect that dynamic to change soon. Excluding sovereigns, only two issuers have launched public offerings of Panda bonds without Hong Kong accounting standards. To win approval, National Bank of Canada and Maybank had to provide qualitative explanations of accounting differences. In the private placement segment, Daimler, French water-management company Veolia Environnement, Russian aluminium producer Rusal, and Japanese lenders Bank of TokyoMitsubishi UFJ and Mizuho Bank are the only issuers not following Hong Kong accounting standards. According to United Credit Ratings, issues of Panda bonds in the interbank and exchangetrade markets fell 40% in 2017 to Rmb71.7bn (US$11.3bn)
For daily news stories visit www.i frasia .com
GEAR pays year’s highest yield
Bonds Indonesian coal miner offers Asia’s richest returns of 2018 for US dollar debut
BY DANIEL STANTON
GOLDEN ENERGY AND RESOURCES
overcame choppy markets to make its offshore debut last Thursday, but the Indonesian thermal coal producer had to pay the highest yield in the Asian G3 sector year to date. It priced US$150m of five year non-call three senior bonds at 98.53 with a coupon of 9% to yield 9.375%. This was tightened from initial price guidance of 9.5% area. That exceeded 9% yields seen from Ronshine China Holdings and China Logistics Property Holdings, although the latter’s issue was for a tenor of just 362 days.
The size was short of the US$300m Moody’s had estimated in its rating note on January 19, but would help the issuer establish a track record with bond investors and build access to capital markets. The notes are expected to be rated B1/B+ (Moody’s/Fitch), in line with Singapore-listed GEAR’s issuer rating. Price references were Geo Energy Resources’ 2022 bonds, rated B2/B/B+ and quoted at 8%, and Indika Energy’s curve. Indika, rated Ba3/B+ (Moody’s/ Fitch), had 2022s at 5.78% and 6.12%. GEAR was expected to pay a premium over those names due to the market conditions, its debut status, and
the controversial history of its sponsor. The Widjaja family’s Sinarmas Group owns a 91% stake in Dian Swastatika Sentosa, which holds a 87% stake in GEAR. The Sinarmas sponsorship deterred some investors, who still remember bondholders of the group’s flagship Asia Pulp and Paper being practically wiped out after a default in 2001. “We cannot recommend any bonds issued by Widjaja-related companies due to the family’s track record of low willingness to pay,” wrote Lucror Analytics. However, other companies related to the family have managed to access the offshore
Volatile Sing rates stall issuance
Bonds Emirates NBD’s launch of Singapore dollar note awaits calmer rates backdrop
BY KIT YIN BOEY
Sales of Singapore dollar bonds ground to a halt this month as large swings in local benchmark rates forced issuers and investors to rethink pricing expectations. Bankers had hoped the strong momentum in January issuance would continue into February. A dozen bonds of a combined S$2.2bn (US$1.7bn) were sold last month, up sharply from just three prints of S$920m in January last year, according to OCBC Bank’s credit research data. One debt originations head said the recent moves in the SOR levels were not favourable and sentiment in the market was quite tricky with the uncertainties. “There are a few deals in the pipeline. Typically, we get issuers with needs for planned capital expenditure or asset acquisitions funded in the first two months of the year,” he
said. “With the choppiness in the market, issuers are now just monitoring the volatile markets and waiting for the right windows.” EMIRATES NBD BANK held meetings with fixed-income investors on February 1 for a potential senior Singapore dollar bond. DBS Bank , Emirates NBD Capital, HSBC and Standard Chartered are joint lead managers and bookrunners. Since the roadshow, Singapore dollar SOR rates had oscillated wildly, but mostly upwards, in tandem with US Treasury yields. Sharp moves came on January 29, when short tenors in the SOR curve climbed 5bp–8bp and long tenors went up 8bp–10bp. On January 31, rates fell 2bp–6bp across the curve before rising a total of 6bp–12bp over the next two days. Last Monday, the 10-year US Treasury yield touched 2.89% – the highest since January 2014 before a flight to quality amid
a global sell-off in risk assets sent it tumbling to 2.72%. The following day, the Singapore dollar SOR rates fell at a less frenetic pace of 2bp-6bp across the curve, reflecting a decoupling from the Treasury moves. “The SOR rates are outperforming the US rates, mainly because the Singapore dollar is benchmarked against a basket of currencies and that has provided a buffer to the impact from the US rates,” said one banker. PRICE EXPECTATIONS
“The volatility is due mainly to uncertainties over how many rate hikes there will be in the US, but the healthy economic fundamentals in Singapore remain unchanged and there is still a lot of liquidity here. So, there is a bit of over-selling.” One consequence of the swings is a widening in price expectations between issuers and investors. Over the medium
International Financing Review Asia February 10 2018
market in recent years, notably APP-China Group and Bumi Serpong Damai, and there was clearly sufficient investor demand to complete the deal. Final book statistics were not disclosed, but, when final guidance was announced, orders were said to be over US$250m. The volatile market conditions and divisive nature of the credit meant that orders reflected true demand and were not inflated. The bonds were trading around reoffer on Friday morning, though most investors had taken a buy-andhold approach. Credit Suisse and CLSA were joint bookrunners. In November, GEAR announced it would buy a stake of around 10% in Australian gold miner Westgold Resources for A$67.86m (US$52.7m).
term, investors are likely to demand higher new-issue premiums ahead of imminent US rate rises this year. This will mean a longer price-discovery process, especially for newer credits like Emirates NBD. “Smoothening out the volatilities, SOR rates are likely to drift higher as the US Fed hikes rates,” said Eugene Leow, rates strategist at DBS for G3 and Asia markets. “Broadly speaking, Sing dollar rates are still low as the market is factoring in US dollar weakness.” Bankers say Emirates NBD is willing to wait for a favourable window as it is not in urgent need of funds. Its foray into Singapore dollars is to diversify its funding avenues and currencies, as it did in Australia where it pushed through a A$450m (US$364m) 10-year Kangaroo bond on February 1. Emirates NBD Bank was formed in 2007 from a merger of Emirates Bank and the National Bank of Dubai. Its predecessor, Emirates Bank, had raised a total of S$190m in three separate Singapore dollar issues in 2006.
7
News
Vietnam steps up privatisations
Equities Deals draw mixed response over pricing and due diligence concerns
BY S ANURADHA
Vietnam’s equity capital market is enjoying a flurry of activity since the beginning of the year as the government steps up the pace of privatisations to cut its fiscal deficit. Five state-owned companies, VIETNAM RUBBER, PETROVIETNAM POWER, PETROVIETNAM OIL, BINH SO REFINERY and POWER GENERATION CORP 3 (Genco 3) raised a combined D18.1trn (U$797m) from IPOs so far this year. This year’s IPOs are much larger than the sub-US$100m floats of the past. The increased sizes reflect the government’s efforts to slash its fiscal deficit, which has exceeded 6% of GDP between 2012 and 2016 and is due to fall to under 3.5% of GDP by 2020. The government said last Monday it had set up a committee to oversee around D5,000trn of state-owned
corporate assets as part of an initiative to boost privatisation. The new Committee for State Capital Management at Enterprises would be more comprehensive than the State Capital Investment Corporation, Vietnam’s main state investment arm, officials said. This is designed to simplify the sale of equity stakes in state-owned companies, which have suffered delays and complications because many fall under the management of multiple ministries. A vibrant stock market is providing a favourable environment for privatisations. The benchmark Vietnam Index rose close to 50% in 2017 and is up 5.7% year to date. Regulators have also improved listing procedures to woo investors. The shares sold in the recent IPOs will be listed within 90 days as opposed to years in the past.
Investor interest in Vietnam has grown steadily, especially after VINCOM RETAIL’s record D16trn IPO last year, which attracted investors beyond the usual line-up of frontier-market funds. A group of employees raised D4.68trn through the sale of 94.5m Vincom Retail shares last Monday. Despite the positive backdrop, demand has been mixed due to concerns over pricing and a lack of due diligence. Bankers say only share sales in privately owned companies are likely to attract broad-based demand this year. Many international investors remain uncomfortable with state-owned companies. “Due diligence remains a big issue. Investors are not sure about the accuracy of the numbers provided in the offer documents,” said a Singaporebased ECM banker. Recent global market volatility
Ezion nears rehabilitation
Restructuring Secured lenders support US$1.5bn refinancing as c reditors get equity
BY KIT YIN BOEY
Cash-strapped Singaporean oilrig and support-boat company EZION HOLDINGS has received the support of its secured lenders for a restructuring that will slash its debt burden and reduce interest costs. DBS Bank, OCBC Bank, United Overseas Bank, Malayan Banking, CIMB Bank and Caterpillar Financial signed a binding agreement on a US$1.5bn refinancing, which will include minimal fixed principal repayments over six years and lower interest rates. The lenders have also agreed to provide revolving credit facilities of another US$118m. In return, the secured lenders will receive new shares and warrants. As a sweetener,
8
major shareholder and Ezion CEO Chew Thiam Keng and his family have offered 100m of their personal shares to be pledged in favour of the secured lenders. The agreement with lenders comes a few days after the company made an early redemption of a S$120m (US$90m) 3.65% DBS Bankbacked bond. Major bondholder Ravi Murarka had demanded that his investment in the bond be redeemed, claiming that the suspension of Ezion’s stock had triggered a redemption clause, and the repayment removed the prospect of a potential court battle. Some elements still need to be ironed out before Ezion can exit the restructuring and resume trading of its shares.
The company has yet to sign a binding term-sheet to refinance US$18m with three unsecured lenders, which it said was being finalised. Ezion will also need to hold an extraordinary general meeting to obtain approval from existing shareholders for the issuance of new shares to creditors. Assuming creditors convert all debt into shares, the company’s issued share capital, on a diluted basis, would rise to 6.227bn shares from 2.074bn shares. In a detailed statement to the Singapore Exchange on Wednesday, Ezion outlined a restructuring plan involving the issuance of shares and warrants to all creditors, including its legal and financial advisers – a reflection of the company’s acute lack of cash resources.
International Financing Review Asia February 10 2018
has also raised doubts over whether the recently privatised state-owned companies will be able to sell stakes to strategic investors, as originally planned. “There is no way these companies can function properly without the technological and financial inputs of the strategic partners,” the banker said. Stakes of 28.88% in PV Power, 44.72% in PV Oil and 49% in Binh So are due to be sold to strategic investors. All three are subsidiaries of state-owned PetroVietnam. The recent IPOs have had mixed results as a result of these concerns. The Vietnam Rubber deal, which closed on February 2, raised only D1.311trn, less than a quarter of the target due to the overall lack of interest in the sector. Similarly, investors bid for just 2.8% of Genco 3’s IPO on valuation concerns and what they said was inadequate marketing. The auction
Ezion had said in November that its free cash flow in the third quarter of 2017 was just US$3.1m, with cash balances at just U$47.2m. Holders of six bonds of a combined S$575m (US$433.3m) agreed in November to waive certain covenants, including any event of default. The majority of bondholders also voted on their choices of restructuring options. Close to 60% of holders of series 003 to 007 senior bonds chose to swap into 0.25% series B convertible bonds due 2023, while 16% chose series A 0.25% non-CBs due 2024. Another 20.78% of holders of series 008 perpetuals voted to hold amended notes which are also convertible into shares. Assuming bondholders choose to convert all their notes into shares, they stand to hold about 35% of Ezion’s enlarged share capital, while secured lenders will have close to 4% and others will take 5%, leaving
For daily news stories visit www.i frasia .com
raised only D184.8bn for the government, with only 0.36% of the capital sold instead of the 12.8% on offer. On the other hand, PV Power’s D7trn and PV Oil’s D4.1trn IPOs garnered strong responses, despite being priced at respective P/E multiples of 25 and 20. Regionally, oil marketing companies trade at P/Es of 10–15 and power companies at 10–12. “The power and oil distribution companies were marketed as consumer plays and managed to sail through,” said an ECM banker away from the deals. The Vincom Retail block also did well, despite the global market turmoil last Monday. Around 94.5m shares were sold at the bottom of D47,750– D49,500 range, or a 6.9% discount to the pre-deal spot. Books were covered with participation from sovereign wealth funds, long-only institutions and hedge funds. Credit Suisse, Citigroup and Deutsche Bank were the joint bookrunners. Maybank was comanager.
shareholders with the balance of around 56%. Ezion told local media that, once the restructuring was completed, its overall debt would drop about 40%, based on full conversion of debt to equity. According to its statement to the exchange, the warrants, when exercised in full, could raise new funds of up to S$530.5m (US$400m). Ezion also said all stakeholders would not suffer haircuts. “This is a very smart plan by the company to get all debt converted into shares and warrants,” said one credit analyst. “It does not need to come out with cash and, as the creditors are nominally swapped into shares, there are no haircuts, which optically looks good, but bondholders receive far lower coupons of 0.25% in the CBs, compared with the coupons of 4.5% to 7% they received prior to restructuring.”
NAB prints first Green RMBS
Structured Finance Asia Pacific’s first Green RMBS prices in line with standard tranche
BY JOHN WEAVERS NATIONAL AUSTRALIA BANK reopened
the domestic securitisation market last Thursday with a self-led A$2bn (US$1.56bn) RMBS offering, which was also the first from Asia Pacific to include a green tranche. The innovative trade, via National RMBS 2018-1, is the latest sign of growing demand for environmentally responsible investments in Australia and adds another feather to the cap of NAB, the market leader in Australian Green bond issuance. The A$300m Class A1G notes, expected to be certified as climate bonds under the Climate Bonds Initiative standards, priced in line with the standard A$1.54bn Class A1As. The A1G notes are backed against a mortgage pool that satisfies the CBI’s July 2017 low-carbon building guidance for Australian residential properties. This covers energy-efficient homes built after 2005 in three states – New South Wales, Victoria and Tasmania. Bankers away from the trade welcomed the development, but some expressed concerns about the structure’s rather loose criteria. “There is no correlation between cash flows on the green loans in the mortgage pool and the repayment of the Green bonds,” said one DCM manager. “As a result, if the mortgage loans backing the Green bonds, which rank pari passu with the standard Class A1As, are all paid off early and/or mortgage borrowers switch to new lenders, Green bondholders could be left holding notes with no Green loans in the underlying mortgage pool.”
In response, NAB told IFR that the green mortgage pool backing the A1Gs is A$474m, or 1.6 times the A$300m tranche, “ensuring a conservative buffer in the event of asymmetrical Conditional Prepayment Rate performance of the green and non-green mortgages … to give us comfort we will be able to satisfy the use-of-proceeds test”. The green tranche was 1.8 times oversubscribed and predominantly sold to domestic accounts. Real money took 82% and bank balance sheets 18%, with 81.2% allocated to so-called dark green and light green investors. For the overall trade, Australian investors bought 63% and offshore 37% with real money and balance sheet taking 56% and 44%, respectively. There were 51 investors in the final book, including 17 from overseas. STANDARD PRICING
The only previous green assetbacked securities issued in Australia were much smaller offerings originated by consumer-finance specialist FlexiGroup. The A$50m A2G notes within Flexi ABS Trust 2016-1 and A$50m Class A2Gs within Flexi ABS Trust 2017-1 priced 5bp and 3bp tighter than the standard tranches, respectively. As a result, Flexigroup managed to achieve the “holy grail” of the green market, convincing investors to accept lower yields over conventional notes. Such “good-cause” premiums could trigger a rush of Green offerings from issuers that have so far baulked at the higher documentation costs involved. The FlexiGroup result stood out, however, both in national and international terms. All senior unsecured
Australian dollar Green bonds, like the NAB RMBS, have priced in line with standard curves. Furthermore, the only other Green RMBS issuer globally, Dutch mortgage lender Obvion, paid slightly higher spreads over standard RMBS for its two trades in 2016 and 2017, both targeted exclusively at green investors. MAJOR BANK COMPS
Both flavours of NAB’s A1 notes, with weighted-average lives of 3.0 years, came at the tight end of final guidance of one-month BBSW plus 85bp– 88bp, refined from initial 88bp area talk. Pricing of the new NAB A1 notes compares with the 90bp margin CBA paid for the A1 notes at the previous major bank RMBS issued on November 17, the A$2.65bn Medallion Trust Series 2017-2. The Medallion A1s had a longer WAL of 3.5 years. The National RMBS 2018-1 A$70m Class A2s, A$46m Class Bs, A$16m Class Cs, A$14m Class Ds and A$8m Class Es, all with 5.7-year WALs, priced 120bp, 170bp, 220bp, 320bp and 445bp wide of one-month BBSW, respectively. Thanks to large oversubscriptions, ranging from 2.5 times for the Class Es to 6.3 times for the Class Cs, NAB was able to price the notes 10bp–15bp inside both initial guidance and the CBA Medallion 2017-2 Class A2s, Bs, Cs, Ds and Es. These Medallion notes, all with 6.2-year WALs, priced 135bp, 185bp, 235bp, 335bp and 455bp over one-month BBSW, respectively. The National RMBS 2018-1 A$6m Class Fs priced 575bp wide of one-month BBSW, matching the CBA Medallion Class F spread.
Follow IFR Asia @IFRAsia International Financing Review Asia February 10 2018
9
News
Leasing firms flock to loans
Loans SMBC Aviation joins crowd as fast-growing Chinese borrowers dominate
BY PRAKASH CHAKRAVARTI
Aircraft-leasing company SMBC AVIATION CAPITAL has launched a debut US$600m syndicated loan, adding to the list of financings from the sector in recent months. The leasing sector holds a lot of appeal for lenders in Asia, thanks to the growth stories and parentage of the borrowers, and the opportunities they offer in a deal-starved environment. Since September, more than 20 leasing companies have tapped the Asian market for loans of almost US$6bn, including borrowings of US$2.83bn that are in syndication. Among them is Amsterdamheadquartered AERCAP HOLDINGS, which is returning to the Asian loan market after nearly two years for a US$600m four-year revolving credit facility. Parentage and strong credit
profiles are among the most important factors drawing lenders to leasing companies, several of which are units of large financial institutions. Sumitomo Mitsui Financial Group owns 66% of SMBC Aviation Capital, which is rated A–/BBB+ (Fitch/S&P). AerCap has ratings of BBB- from both Fitch and S&P. Among borrowers with loans in syndication are ABC FINANCIAL LEASING and PING AN INTERNATIONAL FINANCIAL LEASING. The former is a unit of Agricultural Bank of China, one of the Big Four banks on the mainland, while PAIFL is a unit of Ping An Insurance Group, the world’s largest insurer. Lending to leasing companies means taking indirect exposure to the parents, which do not have a history of borrowing in the syndicated loan markets. “The leasing units present
a good opportunity for proxy exposure to their parents at a decent premium,” said a senior loans banker in Singapore. MADE IN CHINA
The majority of the leasing company borrowers are from China, where domestic liquidity has been shrinking and the cost of borrowing rising after recent deleveraging measures in the financial sector. Although yields on three year Chinese Treasury bonds had tightened to 3.61% last Wednesday from 3.78% at end-December, they were still significantly higher than the 3.49% mark last July, according to China Central Depository & Clearing. The domestic market for Chinese leasing companies is not entirely shut, but some of their biggest loans have been offshore.
Step-up jolts Chinese perps
Bonds First coupon reset deals a blow to popular domestic debt structure
BY INA ZHOU
The first coupon reset on a perpetual bond in China’s domestic market last week gave a wake-up call to investors who had viewed the format as nothing more than higher yielding bullet bonds. CHINA JILIN FOREST INDUSTRY GROUP
took the unprecedented step of paying a step-up coupon on perpetual bonds, after eschewing the first call date on February 4. The company decided to forgo the call option on its Rmb1bn (US$159m) 7.10% perpetual noncall three bonds and, instead, raised the coupon to 10.55%, in line with the original prospectus, according to a filing to the Shanghai Clearing House. The incident added to worries over the issuer’s ability to service its debt, after it delayed at least four other offerings of onshore
10
perpetual bonds in the past two weeks. “The issuer was willing to defer the payment of the notes by paying as much 300bp. That speaks a lot about the refinancing difficulties of the company,” said a senior credit analyst at a Chinese securities house, suggesting that it might have defaulted on a three-year note with a bullet maturity. The perpetual notes were issued in the interbank bond market in February 2015 at a 7.10% coupon for the first three years. According to the bond prospectus, if the notes were not called at the end of the third year, the coupon would reset for the next three years to the initial spread of 393bp over the three year Chinese Treasury yield, plus 300bp. The notes were bid at a yield
of 10.59% last Friday, according to Thomson Reuters prices. Last November, China Chengxin downgraded Jilin Forest to A+ from AA–, citing concerns over its losses, rising debt and refinancing pressure. In the first three quarters of 2017, the company, based in northeastern Jilin province, posted losses of Rmb473m. The State-owned Assets Supervision and Administration Commission of Jilin province held a 65% stake in the company at the end of 2014, according to the bond prospectus. TAKEN FOR GRANTED
Perpetual bonds took off in the onshore market in December 2013 and the format became popular in 2015 and 2016 as it allowed issuers to book the securities as equity in their accounts, thereby reducing their
International Financing Review Asia February 10 2018
In the past five months, they have raised US$5.45bn, of which US$3.03bn has been offshore. Most of these borrowers have met with a strong receptions from lenders even when returning for more than one borrowing. FAR EAST HORIZON, a unit of state-owned chemicals conglomerate Sinochem Group, is in the market for a US$800mequivalent three-year bullet loan, only three months after raising a similar-sized facility. The new loan pays a top-level all-in pricing of 155bp, based on an interest margin of 130bp over Libor/Hibor, close to the 158.33bp all-in via the same margin on the previous loan completed in November. That loan attracted 13 banks in general syndication and had five mandated lead arrangers and bookrunners. Eight banks are MLABs on the new loan. Far East
gearing, and attracted investors looking for yields in a bullish market. Coupon resets and step-up clauses are common in offshore perpetual bonds. Resets give investors some protection against rising rates, while steep step-ups provide issuers with an incentive to redeem bonds at the first opportunity. Jilin Forest’s coupon reset broke an implicit rule in China that issuers must redeem the notes at the first call date and prompted investors to rethink strategies involving the format. “The unspoken rule for perps has been that issuers must and will redeem bonds at the first call date. Both investors and underwriters have taken that for granted,” said a Shanghai-based syndicate banker at a Chinese bank. He said perps had been touted in the past few years as illiquid but higher-yielding bonds, with issuers offering premiums of 40bp–50bp over bullet bonds. A Shenzhen-based DCM
For daily news stories visit www.i frasia .com
Horizon is also raising a three year onshore loan of Rmb1.8bn (US$184m). Chinese leasing companies present a seductive growth story for lenders. Leasing units of Chinese banks, with ratings from Fitch, grew their assets at an average compound annual growth rate of 21% between 2011 and 2016, the rating agency said in a report last May. In a separate report later last year, Fitch said the sector and rating outlooks for Chinese leasing companies were stable, reflecting continued sovereign and institutional support, and expanding growth and funding opportunities. However, some lenders in the retail syndication market are warning that they are nearing their lending limits. “Our exposure to the leasing industry has almost hit the internal limit, as we have been very supportive of leasing companies in the past few years,” said a loan banker at a Taiwanese bank in Hong Kong.
banker noted that the precedent had made investors think for the first time about the possibility of never getting their principal back. With Jilin Forest’s perps becoming ever more equitylike over time if they are not redeemed, fund managers could find themselves in violation of their investing mandates if they hold them in their portfolios, he said. “It [the Jilin Forest incident] is a disaster for perpetual bonds,” said the DCM banker. “Investors are definitely rethinking about such notes and will ask for more premiums.” Market participants expect onshore perpetual bond issuance to decelerate and potential issuers to be limited to topquality state-owned companies, which are under government orders to reduce their debt levels. Jilin Forest held a bondholder meeting last Friday behind closed doors to discuss the decision not to call the bonds. The company declined to comment.
India bends sub debt rules
Bonds Regulator makes exceptions for state-owned insurers in need of capital
BY KRISHNA MERCHANT
Indian state-owned insurance companies are getting a pass from regulators to raise subordinated debt as the government prepares to enlist them in a bid to extend health coverage to half a billion poor people. Whereas the Indian banking regulator has repeatedly relaxed requirements to make it easier for all banks to make payments on their Tier 1 capital securities, the insurance regulator has been granting exemptions on a case-by-case basis to specific state-owned general insurers. UNITED INDIA INSURANCE (UIIC) raised Rs9bn (US$141m) from a maiden offering of subordinated bonds, pricing the 10-year non-call five notes at 8.25%. Crisil, which assigned a AAA (stable) rating to the deal, said this took into account forbearance from the Insurance Regulatory and Development Authority of India, which allowed UIIC to service interest throughout the life of the instrument, irrespective of its solvency ratio. Brickwork assigned an identical rating to the instruments. Normal IRDA rules do not allow insurers to make interest payments on such securities if their solvency ratio is below 1.5. UIIC was able to issue subordinated bonds even though its reported solvency ratio was 1.08 as of last September, below the minimum regulatory requirement, because of a deterioration of its underwriting performance, according to Crisil. The ratio is expected to rise above 1.5 after the fundraising, according to Icra. IRDA has also allowed UIIC to issue subordinated debt equivalent to 50% of its net worth, above the 25% limit for
other insurers. Last March, NATIONAL INSURANCE raised Rs8.95bn from 10 year subordinated bonds at 8.35% after similar regulatory forbearance was granted to the company. “The rules are rewritten by the regulator for insurance companies, which are facing losses, because these relaxations are not given to private sector companies,” said a source away from the UIIC deal. UIIC reported a net loss of Rs19.13bn in FY17 compared to a profit of Rs2.21bn in FY16. “It is a practical solution for a government, which is under fiscal deficit stress,” the same source said. Since July 2016, 11 insurance companies have raised Rs28bn from subordinated bonds, according to Prime Database, after the regulator issued guidelines allowing them to tap the Tier 2 market. “State-owned insurance companies will find subordinated bonds an efficient avenue to shore up solvency ratio at a relatively cheaper cost, as compared to raising equity capital,” said Krishnan Sitaraman, senior director at Crisil Ratings. “While reported solvency ratios of some state-owned insurance companies are low, they have equity investments that have substantial unbooked appreciation. If required, they can sell some of their equity investments and realise the gains on their books, which can help enhance their reported solvency ratios,” he said. The adjusted solvency ratio for UIIC was 2.13 as of last September, according to Crisil. UIIC’s issue found tepid demand, however, and was kept open for two days. Life Insurance Corporation of India is rumoured to have bought half of the subordinated bonds, while public-sector insurance
International Financing Review Asia February 10 2018
companies picked up the remainder. Analysts say such crossholdings of subordinated debt among insurance companies does not necessarily increase systemic risk. “This is because the size of the investment in such securities is quite small in proportion to their overall investment portfolio,” said Sitaraman of Crisil. “Subordinated bonds are of longer tenor. In the Indian context, investors in longertenor bonds typically include insurance companies and pension funds.” FUNDING HEALTHCARE
In the budget for 2018/19, the government widened its fiscal deficit target to finance a sharp rise in spending on rural areas and healthcare. It also suggested the possibility of a mega IPO from the stateowned insurance sector after unveiling plans to merge stateowned general insurers ORIENTAL INSURANCE, National Insurance and United India Insurance for a listing as one entity, without indicating the timeframe. The government also announced a plan to provide health insurance to 500 million poor people, which would require an estimated Rs110bn in federal and state funding each year. Government health insurance companies have agreed to fund this programme, according to a Reuters report. Many bankers believe that raising subordinated debt will eventually pave the way for state-owned insurance companies to merge, list and fund the massive healthcare programme. Among other public-sector insurance companies, Oriental Insurance has been talks with bankers to issue subordinated bonds. It has yet to make an official announcement on the plan.
11
People Markets
&
TOP STORY REGULATION
Hong Kong loosens IPO pricing rules Bankers welcome plan to allow below-range pricing Bankers in Hong Kong have welcomed the local bourse’s plan to let issuers price IPO shares below the indicative range, saying challenging market conditions. In a February 2 guidance letter, the Stock Exchange of Hong Kong, a subsidiary of Hong Kong Exchanges and Clearing, allows issuers to price shares as much as 10% bottom end of the indicative price range, subject to certain conditions. Under the previous system, any issuer wanting to price an IPO below the range had to issue a supplemental prospectus referred to as the withdrawal mechanism. “I can’t think of a single deal I’ve worked on where the withdrawal mechanism has been used,” said the head of equity capital markets at one major bank. “The timing required means that you have no option but to pull the deal and wait for a more favourable time to relaunch. I’ve been saying for quite some time that the exchange needs to look at t his. It is important as sometimes the market can move against you unexpectedly.” Bankers said the withdrawal mechanism operator Renhe Commercial priced its
IPO at HK$1.13 (US$0.14), below the indicated range of HK$1.40–$1.71, to raise HK$3.39bn. The new pricing mechanism applies only if the span between the top and the low ends of the indicative price range does not exceed 30%. Issuers must also disclose in the
prospectus that they are using the new it. SEHK has not listed any restrictions on new guidelines. The changes are effective immediately on a pilot basis and will be reviewed by the
The reform brings Hong Kong closer to other jurisdictions, most notably the US, which allows issuers to both upsize or downsize IPOs provided the changes do not exceed 20% of the maximum offering price initially stated. In the last few years, the US Securities and Exchange Commission’s rules have which have taken advantage of investor appetite to price above the range. When Facebook listed in 2012, overwhelming retail demand allowed the tech giant to increase the price range from the top end of the new range. Hong Kong has, in the last year, seen a huge demand from investors. Last November, Chinese online car retailer Yixin raised HK$6.77bn after selling shares at the top end of the indicative price range. Tencent Holdings’ online publisher, China Literature, also priced at the top In September, Chinese online insurer ZhongAn Online P&C Insurance also priced at the top to raise HK$11.9bn.
Singapore, Malaysia to renew trading link
arrangements, including clearing and settlement. Meanwhile, MAS and SC said they would set up cross-border supervisory and enforcement arrangements. The renewed collaboration between the stock markets in Singapore and Malaysia follows the ultimately unsuccessful ASEAN Trading Link, launched in 2012. SGX and BM were founding members of that initiative, before the Stock Exchange of Thailand joined later the same year. That scheme was designed to include the bourses in Indonesia, Vietnam and the Philippines eventually as part of efforts to improve integration between South-East Asia’s capital markets. However, trading volumes failed to pick up, and SGX announced last year that the scheme would be abandoned, without
giving a reason. Under that scheme, US software company SunGard set up an order system that allowed all three exchanges to receive live price feeds from one another. However, brokers still had to rely on their counterparts in other markets to execute trades and deal with the clearing and settlement. So, the link was not seen as an improvement on the status quo. The latest efforts from Singapore and Malaysia to establish a trading link promise to address these issues. “The two countries have made it clear that they will collaborate on post-trade arrangements. It will be an end-to-end connect scheme, but it is still early days to know what model they will use,” said Alvin Goh, head of securities services for the
Singapore and Malaysia plan to establish a trading link between their stock markets, 16 months after shuttering a similar, though less comprehensive, scheme involving Thailand’s bourse. The Monetary Authority of Singapore and the Securities Commission Malaysia announced plans last week to allow investors in Singapore and Malaysia to trade shares on each other’s exchanges. Singapore Exchange and Bursa Malaysia said they would collaborate on post-trade
12
“I can’t think of a single deal I’ve worked on where the withdrawal mechanism has been used. The timing required means that you have no option but to pull the deal and wait for a more favourable time to relaunch.”
International Financing Review Asia February 10 2018
listing committee after 12 months. US RIVALRY
Please send job moves to
[email protected]
Bankers were more circumspect, however, about whether the exchange should allow issuers to price above the range. “If you put yourself in a retail investor’s shoes, you may be investing on margin,” said one ECM banker. “If a deal has priced above the top end of the range, the investor why the exchange wants to be protective of them given their importance in the Hong Kong IPO market.” SEHK issued another guidance letter on IPO allocations on February 2, again aimed at shoring up protection for investors. Under current rules, when the retail shares are automatically reallocated to retail investors under the clawback mechanism. The new guidelines state that when the the placement tranche of an IPO is undersubscribed, or fully subscribed but oversubscribed, issuers can only reallocate shares from the placement tranche to the retail portion of not more than double the initial allocation to the retail tranche or not more than 30% of the total offered shares. “The placing tranche reallocation guidance letter aims to better protect investors who subscribe for shares under the public subscription tranche by limiting how such investors are allocated shares which are not taken up by institutional and professional investors for whatever reasons,” said David Graham, HKEx’s chief THOMAS BLOTT
ASEAN region at Citigroup. Similar trading schemes exist between the Hong Kong stock exchange and those of Shanghai and Shenzhen. According to Hong Kong Exchanges and Clearing, total northbound trading volumes in 2017 hit Rmb2.27bn (US$361m), a 194% year-on-year increase, while southbound turnover grew 170% year on year to Under both Stock Connect schemes, HKEx’s subsidiary, Hong Kong Securities Clearing Company, and its mainland equivalent, China Securities Depository and Clearing Corporation, entered into an agreement, whereby the former provided settlement services for northbound trades and the latter for southbound ones. THOMAS BLOTT
CBA expects A$375m moneylaundering fine expects to money laundering after a probe which has cast a shadow over the major lender in recent months. CBA booked the provision in its results for “The group believes this to be a reliable estimate of the level of penalty that a court may impose. This takes into account currently available information including legal advice received by the group in relation to Austrac’s claims,” the bank said in a statement. CBA was referring to the proceedings
on CBA’s results. The bank reported a fall in years. six months to end-December, as opposed to seven analysts Reuters polled.
COMMONWEALTH BANK OF AUSTRALIA
“The group believes this to be a reliable estimate of the level of penalty that a court may impose. This takes into account currently available information including legal advice received by the group in relation to Austrac’s claims.” launched in federal court last year for alleged breaches of anti-money laundering and CBA oversaw tens of thousands of illicit transfers, amounting to A$624.7m, including some involving known criminal gangs. CBA has blamed a coding error for most of the alleged breaches, although it is contesting some of the other charges. Each breach carries a maximum penalty of However, most analysts had expected a resignations, including that of CEO Ian Narev, the scrapping of bonuses for senior executives, and laid the groundwork for a Royal Commission to look at the conduct of CBA also booked expenses of a further A$200m related to regulatory and compliance costs, which includes outlays related to the Royal Commission.
International Financing Review Asia February 10 2018
REVENUE GROWTH
Its underlying results were strong as the back of higher net interest income, in particular. Net interest income was up 6% to mixture of loan growth and an increase in its deposit base. Its institutional bank continued to struggle mostly because a lack of volatility hurt its markets business. The bank’s common equity Tier 1 ratio stood at 10.4%, just a fraction short of the Regulation Authority has set for the big four banks by 2020. CBA cautioned, however, that its CET1 ratio would fall from July 1 onwards as it adopted the new AASB 9 accounting standards, which would raise provisions. Rival NATIONAL AUSTRALIA BANK last Thursday driven by the lowest quarterly bad debt charge in two years. Australia’s fourth-biggest bank by market value posted unaudited cash earnings of December 31. The quarterly result was boosted by a 23% decrease in bad and doubtful debts to A$160m, representing the lowest bad debt charge since the quarter ended December Its CET1 ratio rose slightly to 10.2% at the end of December versus 10.1% at the end of September. WESTPAC BANKING CORPORATION said last Monday its stressed assets fell in the three months to December 31, down 2bp quarter on quarter to 1.03%. in capital through the launch of new hybrid securities. The bank’s Tier 1 capital ratio was 10.1% at the end of December, lower than the 10.6% reported at the end of September. numbers in its quarterly trading updates. Australia and New Zealand Banking Group said earlier this month it would stop reporting quarterly earnings. THOMAS BLOTT
13
People Markets
&
StanChart prunes coverage, may cut IB jobs is shifting its focus by boosting lending to key industries and clients in a move that could cut about a dozen investment banking jobs as it dials back in areas like private equity, sources told Reuters. The Anglo-Asian bank is expanding into consumer-led industries including pharmaceuticals and healthcare, while continuing to build on its strong client base of oil and gas as well as metals and mining. It will, however, be selective in sectors such as technology and telecommunications that are more heavily dominated by US investment banks. Some of those jobs will likely be STANDARD CHARTERED
Macquarie Group projects record profit growth said last Tuesday it expected due to its asset management, proprietary investing and banking services units. In a trading update, Australia’s biggest in the nine months to end-December from those “annuity-style businesses” was higher year on year, offsetting lower earnings from market-facing businesses. “The outlook was slightly better than MACQUARIE GROUP
14
redeployed in other parts of its main corporate banking unit that StanChart is trying to strengthen. The changes form part of a two-year overhaul at the bank – triggered in part by a spike in non-performing loans in China and India – that investors hope will help StanChart return to higher revenue growth. StanChart is shifting power back towards more traditional relationship bankers who control straightforward lending to corporate clients and away from coverage bankers, who tend to specialise in M&A and other banking products. Among the senior bankers leaving StanChart is Hong Kong-based Ken Tung , who led the coverage of private-equity Other recent departures include Stephen Priestley, who led coverage of companies in Africa and the Middle East, and Darcy Lai, who covered clients in Greater China and North Asia.
Reuters could not immediately obtain a spokesman for StanChart declined to comment on individual moves. StanChart continues to hire in its core banking business and has in recent months brought Andrew Au on board as head of global banking for Greater China and North Asia, and Rob Snell as global subsidiaries head. The bank’s M&A advisory services will now be more geared towards its existing priority clients, who would also have credit appetite to fund acquisitions, one source with knowledge of the matter said. “We are investing in the coverage model and we have built everything around the client. We want to be relevant to them and we need to make sure that our coverage bankers are producing for them,” said StanChart’s global head of banking, Paul Skelton.
expected, but they are getting caught in the overall panic in markets,” said Hugh Funds Management, which holds Macquarie volatility and a lower Australian dollar, but risk aversion is driving all listed asset managers down.” Macquarie makes money from M&A advisory and fees from trading in commodities, shares and currencies, but it also collects fees based on the performance of its global funds, which have proven to be a less volatile source of income. About 60% of the Sydney-based bank’s income comes from outside Australia. “Trading conditions across the group were satisfactory in the December 2017 quarter,” CEO Nicholas Moore said in a statement,
adding the bank was “positioned to deliver superior performance in the medium term”. Macquarie said its group tax rate would go down 3%-4% in the medium term as a result of US tax cuts, although no change was Its effective tax rate in the US would fall by The bank’s asset-management business, its biggest-earning unit, saw a 2% quarteron-quarter increase in assets under management as of December 31. The group said its A$1bn share-buyback programme remained in place, though it Macquarie’s common equity Tier 1 capital ratio stood at 10.7% as of December 31, versus 11% as of September 30.
International Financing Review Asia February 10 2018
SUMEET CHATTERJEE, LAWRENCE WHITE
PAULINA DURAN
Please send job moves to
[email protected]
Singapore says more covered bonds, please! Singapore’s major banks have repeated calls for a relaxation of the cap on covered bond issuance to promote the development of a local market for senior secured bonds. The Monetary Authority of Singapore’s encumbrance limit restricts banks from using more than 4% of their assets as security for covered bonds. As a result, only the city’s biggest banks have sold covered bonds, and none have issued in the local market. “We are somewhat constrained by the encumbrance limit,” said Yeoh Hong Nam, executive director, head of wholesale funding at DBS Bank, speaking last Tuesday at the Euromoney/European Covered Bond Council Asian Covered Bond Forum in Singapore. “We need to balance our presence in the market to maintain investor access, but need to maintain reserve capacity for issuance in stressed conditions.”
DBS, OCBC and United Overseas Bank have raised more than US$7bn from covered bonds in the offshore market. However, other Singapore-based banks, which are subsidiaries of foreign institutions and have smaller asset bases, have found the limited size of their issues unviable, given that the cost of establishing a covered bond programme might run into millions of dollars. Some might only be able to issue one benchmark-sized bond before reaching the encumbrance limit. These smaller banks are likely to be the main issuers of Singapore dollardenominated covered bonds because DBS, OCBC and UOB have such low costs of funding in their home currency that they would rather save their encumbrance limits to issue offshore at tight spreads. As a result, no bank has established programmes to issue covered bonds in Singapore dollars so far. “Four per cent is a reasonable starting point, but, for longer-term development, I would think having a higher limit would enable the development of the covered bond market in Singapore,” said Ang Suat Ching, head of funding and capital management at OCBC Bank.
Banks must exclude their high-quality liquid assets when calculating their total assets, reducing the total amount they can issue under the encumbrance limit. “In that sense, our 4% is a very highquality 4%,” said Ang. Bankers have suggested that the MAS could allow HQLAs to be counted towards total assets, increasing the amount of covered bonds each bank can issue, rather than raise the encumbrance limit. a jurisdiction to tweak that without changing the number,” said Brandon Goh, UOB. Australia and New Zealand have higher respectively, while some other jurisdictions have no limits at all. Speaking earlier at the same conference, development department at MAS, said it had received feedback from market participants about raising the encumbrance limit. There was no indication, however, of whether MAS planned to raise the limit or change how it was calculated. DANIEL STANTON
client group for Hong Kong and regional head of
WHO’S MOVING WHERE...
insurance coverage for APAC ex-Japan.
DEUTSCHE BANK has appointed Duncan Mann
and
Based in Hong Kong, he was recently a partner
Apurva Shah as co-heads of financial sponsors for
at KPMG where he was head of its restructuring
Alan Butterfieldhas joined Australian fintech
Asia Pacific. They replace Mohamed Atmani, who is
services practice in China and Asia-Pacific for the
firm FC CAPITAL in Sydney as head of the credit
leaving the bank.
last 10 years.
opportunities fund.
Mann has been with Deutsche some eight years
Middleton has been appointed co-head alongside
FC Capita offers commercial lending and
and was promoted to managing director last year.
Brandon Gale, who has been with the US
investment banking services, as well as a range
He is due to relocate from Sydney to Hong Kong
investment bank since 2004 and relocated to
of technology-driven products focussed on small
shortly.
Singapore in 2013.
to medium-sized enterprises in Australia and
Shah is a Mumbai-based managing director and
elsewhere.
has been with Deutsche since 2005. He has also
worked at Citigroup and Merrill Lynch.
Hong Kong-based debt capital markets business.
banker, was managing director of boutique
Deutsche hired Atmani as regional head of
Mareachealee has worked at Credit Agricole,
corporate advisory firm Buttress Investments
financial sponsors only 16 months ago. He has
where he was last head of high-yield capital
for close to four years after leaving GE Capital in
worked at UBS, Credit Suisse and ABN AMRO.
markets and special situations in Asia.
2014. At GE Capital, he was head of leveraged and
He has also been with investment firm Sandell
sponsor finance for Australia and New Zealand.
FIDELITY INTERNATIONAL has named Jenn-Hui
Tan
has hired Rajiv Mareachealee to lead its
SC LOWY
Butterfield, an experienced leveraged-finance
Asset Management, Dresdner Kleinwort Mitsubishi UFJ Financial Group has reshuffled
head of capital markets and corporate governance
Wasserstein, Merrill Lynch and Bear Stearns.
for Asia Pacific.
Florian Schmidt, who was head of DCM at SC Lowy,
its investment banking division, promoting Saburo
He replaces Kirsty Mactaggart, who left last year
recently left to start his own consultancy firm.
Araki to president and CEO of MITSUBISHI UFJ
as head of equity capital markets and corporate
.
SECURITIES HOLDINGS
finance.
Tan has been with Fidelity for over 10 years and,
financial institutions group for Asia Pacific, a newly
Mitsubishi UFJ Morgan Stanley Securities, the
until his new post, was director for corporate
created position.
majority-owned securities joint venture with the
finance.
Based in Hong Kong, Kim will report to Andrew
US bank.
Based in Singapore, he reports to Tim Orchard,
Landman, head of client business for APAC,
MUFG also has another securities JV with Morgan
chief investment officer for APAC ex-Japan.
and David Lomas, head of the global financial
Stanley, Morgan Stanley MUFG Securities, which
institutions group. She is due to start in April.
the US bank controls. The changes at the other JV
HOULIHAN LOKEY has hired Edward Middleton as
Kim joins from Deutsche Asset Management,
have no impact on it.
co-head of financial restructuring in Asia.
where she was most recently head of the global
Araki, 60, is an MUFG lifer, having joined
has hired Kimberly Kim as head of its
BLACKROCK
International Financing Review Asia February 10 2018
Araki has also been made president and CEO of
15
People Markets
&
Mitsubishi Bank, its predecessor, in 1981. He has held several senior positions, including recently as head of the corporate banking unit. Before this stint, he was a general manager in the human resources division, a common career path for senior executives at Japan’s megabanks. Araki replaces Takashi Nagaoka, who has been appointed chairman of Mitsubishi UFJ Securities Holdings and deputy chairman of the Morgan Stanley JV. Nagaoka, 63, joined Mitsubishi Bank in 1976. His background is in equity capital markets, although he has had stints in retail and corporate banking. In both roles, he replaces Toshirou Toyoizumi, who is retiring and has been appointed senior adviser for the securities division. The changes take effect on April 1. Andy Yung has resurfaced at DBS BANK,
Hong Kong, after a brief stint at Bank of Communications, Hong Kong. Yung started in January as vice president on the
loan origination team with a focus on North Asia. He reports to Stockor Ng, senior vice president and team head for syndicated finance at DBS Bank Hong Kong. Yung was deputy chief product manager in BoCom’s structured and capital finance department for about two months. Before BoCom, Yung was at HSBC, where he was last an associate director of the loan syndication team. Frank Sun, former head of Asia healthcare investment banking at UBS, has joined privateequity firm YUNFENG CAPITAL as managing director. Alibaba chairman Jack Ma jointly set up the firm in 2010 with David Yu, founder of display advertising company Target Media. Sun is not the first former investment banker to head to Yunfeng as former Goldman Sachs banker Yali Zhu joined last year as head of its Hong Kong brokerage. After spending 11 years with the Swiss investment
IN BRIEF
Monetary Authority of Singapore No cryptocurrency trading ban yet Singapore’s central bank has been studying the potential risks that cryptocurrencies pose, though there is no strong case, as yet, to ban trading of the digital coins in the city-state, according to Deputy Prime Minister Tharman Shanmugaratnam. “Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies is (sic) growing internationally. It is too early to say if they will succeed,” Shanmugaratnam said. “If some do succeed, their full implications will also not be known for some time,” the deputy prime minister said in a written answer to questions from members of parliament on banning the trading of bitcoin or cryptocurrency. “The Monetary Authority of Singapore has been closely studying these developments and the potential risks they pose. As of now, there is no strong case to ban cryptocurrency trading here.”
performing loan ratio fell to 3.46% from 4.00% a year earlier. The bank has been under pressure to tackle bad debt after provisioning rose in recent years with NPL spreading beyond the commodities sector to consumer-related businesses. Fee-based income grew 16.4% in 2017. Mandiri’s net interest income last year rose 1%, while its net interest margin came in at 5.87%, versus 6.44% in 2016.
DBS Group Higher NIM projected in 2018
State-controlled BANK MANDIRI saw its 2017 net profit soar 49% year on year to Rp20.6trn (US$1.52bn) on lower provisioning for soured loans, as well as rapid growth in fee-based income. Indonesia’s largest bank in asset terms said the growth last year marked a rebound from its worst showing in five years in 2016. Mandiri’s provisions for bad loans declined 35% to around Rp15.95trn, while its gross non-
an improving interest rate environment to lift its 2018 net interest margin, having reported a 33% increase in quarterly profit, on par with market expectations. The results came after the bank had surprised markets in November with a doubling of its quarterly provisions for the troubled oil-and-gas sector and said the worst was probably over. Kicking off the reporting season for Singapore banks on Thursday, DBS said its NIM rose 7bp to 1.78%. South-East Asia’s largest bank in asset terms reported net profit of S$1.2bn (US$905m) for the 2017 fourth quarter versus S$913m a year earlier. This matched the S$1.2bn average estimate of six analysts in a Thomson Reuters survey. CEO Piyush Gupta said the driver of full-year performance was broad-based growth in loans and fee income, which more than of fset the impact of less favourable interest rates and trading income.
16
International Financing Review Asia February 10 2018
Bank Mandiri Profit soars 49% on lower provisions
DBS GROUP expects
bank, Sun was one of a number of investment bankers to leave last year. He had also worked at Morgan Stanley. FLAGSTAFF PARTNERS, an Australian boutique
advisory firm, has hired Matt Wilson as managing director from JP Morgan. Wilson was head of healthcare and technology, media and telecommunications coverage and co-head of financial sponsors coverage for the US bank in Australia and New Zealand. He was with JP Morgan for over 10 years and spent just over three years at Macquarie Bank. Flagstaff has also promoted Steve Hammerton and James Hawkins to MD. Hammerton joined Flagstaff in 2009 and was previously a director in Merrill Lynch’s London and Melbourne offices. He has worked at PricewaterhouseCoopers. Hawkins has been with Flagstaff since 2011 and was formerly with Macquarie Capital and law firm Clayton Utz.
Net fee income grew 23% in the quarter, with the wider spread across most streams, led by wealth management and investment banking.
Credit Suisse HK fines local units for breaches Hong Kong’s securities regulator has fined the local units of CREDIT SUISSE HK$39.3m (US$5m) for internal-control failures that resulted in regulatory breaches. Among the breaches were failures to separate client securities, report direct business transactions, comply with short-selling requirements, the Securities and Futures Commission said in an e-mailed statement last Thursday. These breaches took place between 2010 and 2016. Credit Suisse had reported the regulatory breaches and failings to the SFC and involved its senior management to address the regulatory concerns at an early stage, the SFC pointed out. “In this instance, Credit Suisse’s prompt and extensive co-operation have significantly expedited the effective resolution of the issues that caused the SFC’s concerns,” said SFC executive director of enforcement Thomas Atkinson. “Otherwise, the sanctions for similar failures would have been substantially higher.” Credit Suisse said it had taken “appropriate action to ensure its legal and regulatory obligations were upheld at all times” and to prevent repetition of these incidents. “The resolution announced by the SFC today does not place any constraints on Credit Suisse’s business activities in Hong Kong or elsewhere.”
COUNTRY REPORT Australia 17 Cambodia 18
China 19 Hong Kong 25 India 25 Indonesia 26 Japan 28 Malaysia 29
New Zealand 30 Philippines 30 Singapore 30 South Korea 31 Taiwan 32 Thailand 33 Vietnam 33
AUSTRALIA DEBT CAPITAL MARKETS › WESTPAC
TARGETS SUB MARKET
WESTPAC has
released price guidance at 90day BBSW plus 320bp–340bp for Westpac Capital 5 Notes, an Additional Tier 1 retail note offer, aiming to raise approximately A$750m (US$585m). The new notes, rated BB+ (S&P), include a reinvestment offer for eligible holders of the A$1.19bn Westpac CPA AT1 notes due to be called on March 31. The offer for the new perpetual non-
call 7.5-year (September 22 2025) is expected to open on February 13 and close on March 6. The margin is due to be set on February 12 following the bookbuild. ANZ, CBA, JP Morgan, Morgans, NAB, UBS and Westpac’s own syndicate team are joint lead managers. The last Australian major bank to sell domestic AT1 notes was ANZ with last September’s A$931m ANZ Capital Notes 5. The perpetual non-call 7.5-year (March 20 2025) floating-rate note priced 380bp wide of 90-day BBSW. Also in the subordinated segment, Westpac privately placed a reverse-enquiry driven self-led A$150m 10-year non-call Tier 2 note last Wednesday, priced at three month BBSW plus 140bp. The following
day the note was tapped for A$75m at the same margin. This was Westpac’s second local currency T2 note, rated Baa1/BBB (Moody’s/S&P), in recent weeks after January 17’s A$160m 5.0% 30-year bullet EMTN, aimed at Asian life insurers. The previous T2 note from an Aussie major in the domestic market was National Australia Bank’s ASX-listed A$800m 11.5 year non-call 6.5 in February 2017, priced at three-month BBSW plus 220bp. › AUSNET MTN RAISES A$500M
AUSNET SERVICES HOLDINGS ,
rated A3/A– (Moody’s/S&P), raised A$500m from last Friday’s 10.5-year domestic MTN sale, the second and largest corporate domestic bond
Duration jump for Kangaroo bonds
Bonds Asian real money investors turn their attention to the 10-year segment
A greatly expanded investor pool is triggering a run of large, long-dated issues in the SSA Kangaroo market, in stark contrast to recent years, when mid-curve trades were in the ascendancy. Supranationals and agencies have raised a combined A$5.9bn (US$4.6bn) from 44 Kangaroo bonds from so far this year, with A$3.8bn coming via new 10-year and 10.5year issues or taps, to take average deal maturities out to 9.5 years. This represents quite a shift from early 2017, when just A$1.0bn of the A$4.4bn year-ago SSA sales total was related to longdated Kangaroos, with only three of these trades raising A$100m or more, the largest being A$150m. Small taps or private placements then dominated the segment, targeting Japanese life insurers in search of highyielding Triple A long-term Australian dollar bonds to hedge daily inflows from their Australian dollar-denominated life insurance policies. “Japanese insurers still play a large part, but we are currently seeing much greater interest from fund managers, central banks and official institutions, particularly out of Asia, alongside selective demand from Australia and Europe,” said Paul White, global head of syndication at ANZ. This year has already delivered 13
A$100m-plus long-dated issues, including two A$500m 10.5-year Kangaroos, from the ASIAN DEVELOPMENT BANK and last Tuesday’s INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT print.
The previous IBRD 10.5year sale in April 2026 raised A$150m. HIGH-QUALITY BOOK
The latest 10.5-year offering from the World Bank funding arm confirmed the broadening real-money investor base. Central banks and official institutions, which traditionally focus on the five-year segment, bought 64%, with asset managers and insurance companies taking 20%, while banks and corporates picked up the remaining 16%. Asia was allocated 88%, Australia 8% and Europe 4%. Asian banks, central banks and official institutions are looking to diversify portfolios overseas, away from local markets where property, resource and bank credits tend to dominate. In doing so, they are drawn to the recent back-up in yields and relative cost of funding advantages at the long end of the Kangaroo curve. The larger, more liquid, deals now being printed further adds to their allure. The AFRICAN DEVELOPMENT BANK priced a A$360m 3.35% 10.5-year Kangaroo on January 30 at a yield of 3.38%, a decent pick-up over the 3.1575% to 3.21% yield
International Financing Review Asia February 10 2018
range for taps of its July 2027s between April and October last year. In absolute yield terms, the ACGB/ Treasury spread had narrowed from around 30bp a year ago, but remained positive at 10bp–20bp during January, whereas the fiveyear ACGB fell to flat to Treasuries, having offered 40bp more juice in early 2017. “The US dollar market is compelling in the three-year to five-year segment, while the 10-year-plus Kangaroo segment is attractive on a comparative cost of funding basis. We expect this to remain the case unless yields retreat and/or the cross-currency swap basis narrows significantly,” White said. Overall, SSA Kangaroo supply is unlikely to reach 2014’s recent annual high point of A$26.0bn, especially if five-year offering remains in the doldrums. This seems likely in the near term as the five-year ACGBs/ Treasury spread had fallen to negative 15bp last Thursday as US yields ratcheted higher. The 10-year spread tightened to just positive 2bp. Three-year to four-year issuance withered after 2011, when the Australian Prudential Regulation Authority left Kangaroos off its list of high-quality liquid assets for Basel III purposes, thereby depleting the natural bank-balance-sheet demand for this shortterm paper. JOHN WEAVERS
17
issue of the year so far. The 4.2% August 21 2028s priced at 99.811 for a yield of 4.2225%, in line with asset swaps plus 130bp area guidance. Australia’s four major banks, ANZ, CBA, NAB and Westpac, were joint lead managers on the trade. The AusNet Services subsidiary, Victoria’s largest energy delivery service, previously sold a A$425m 4.4% 10.5-year MTN on February 7 last year, priced 165bp wide of asset swaps. The only other Australian corporate issuer to access the local bond market in 2018 was fellow utility United Energy Distribution, rated A– (S&P). On January 24, UED sold a new A$150m five-year floating-rate note at three-month BBSW plus 97bp alongside a A$250m tap of its 3.85% October 2024 paper at asset swaps plus 112bp.
with a A$175m sale of 2.5% three-year MTNs, priced 60bp wide of asset swaps. › BNG
TAPS 2028S FOR A$50M
The only SSA to access the SSA Kangaroo market last week for a A$50m or larger trade, besides the World Bank, was Dutch public-sector lender BANK NEDERLANDSE GEMEENTEN (Aaa/AAA/AA+), which tapped its 3.3% July 17 2028 line for A$50m to increase the issue size to A$715m. Nomura and TD Securities were joint lead managers for Friday’s reopening, priced at 99.811 for a yield of 3.4425%, 53bp over asset swaps and 59bp wide of the May 2028 ACGB.
›
STRUCTURED FINANCE › BLUESTONE
›
›
CCB SYDNEY SELLS A$150M FRN
CHINA CONSTRUCTION BANK,
Sydney branch (A1/ A/A), raised A$150m from last Thursday’s one-year floating-rate note sale via joint leads ANZ, CBA and Westpac. The note priced in line with initial threemonth BBSW plus 55bp area guidance. The other Australian major bank, NAB, arranged CCB Sydney’s previous local trade on February 2, a A$100m tap of its November 24 2020 floater, priced 91bp wide of three-month BBSW. ›
READIES NON-CON RMBS
SOLID DEMAND FOR IBRD 10.5-YEAR
The INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (Aaa/AAA/AAA) overcame extremely choppy markets conditions last Tuesday to secure a high-quality order book for a A$500m 10.5-year Kangaroo issue via joint lead managers Deutsche Bank and Nomura. Central banks and official institutions bought 64% of the World Bank funding arm’s latest issue. Asset managers and insurance companies purchased 20%, while banks and corporations took the remaining 16%. Asia was allocated 88%, Australia 8% and Europe 4%. The 3.3% August 14 2028s priced at 99.846 for a yield of 3.3175%, 42bp wide of asset swaps and 48.75bp over the May 2028 ACGB.
TOYOTA AUSTRALIA PLANS FIVE-YEAR
TOYOTA FINANCE AUSTRALIA,
rated Aa3/AA– (Moody’s/S&P), has mandated ANZ, CBA and NAB for a potential five-year Australian dollar bond issue. Toyota Finance Australia previously visited the local market on November 30
18
an accordion feature. Borrower VIVA ENERGY HOLDING is rated BBB– (S&P). The interest margin is 110bp over Libor and the upfront fee is 20bp for commitments of US$50m or US$100m. A roadshow took place in Singapore last week and Sydney on Monday. Commitments are due on March 9. Viva Energy owns more than 900 Shell service stations, with support from 20 fuel import and storage terminals and Victoria’s Geelong refinery. In 2016, Vitol carved out the freehold properties underpinning the fuel retailing and convenience store network of Viva Energy and spun it off into listed property trust Viva Energy.
Specialist residential mortgage lender BLUESTONE GROUP has released price guidance for six tranches of an indicative A$250m non-conforming RMBS issue, Sapphire XVIII 2018-1. Macquarie is arranger on the issue and joint lead manager with CBA. For the A$125m Class A1s, the A$50m Class A2s and the A$29m Class A3s, all with 2.1-year weighted-average lives, price talk is one-month BBSW plus 120bp area, 160bp– 165bp and 180bp–185bp, respectively. For the A$2.5m Class Fs, the A$1.5m Class Gs and the fixed-rate A$6m Class X1s, with WALs of 3.6, 2.3 and 1.0 years, guidance is one-month BBSW plus 710bp– 715bp and 1,050bp–1,010bp and 9% area, respectively. The Class B, Class C, Class D and Class E notes have all been pre-placed. On November 1, Bluestone printed A$300m non-conforming RMBS through Sapphire XVII 2017-2. This followed the A$250m non-conforming Sapphire XVI 2017-1 trade on May 17.
SYNDICATED LOANS › VIVA ENERGY SEEKS US$600M REFI
Vitol unit VIVA ENERGY AUSTRALIA is in the market for a US$600m two-year loan to refinance a borrowing-base facility raised to back the 2014 takeover of Shell’s Australian refining operations and petrol stations. ANZ, Mizuho Bank, NAB and UOB are leads on the facility, which has a greenshoe option to increase the size to US$700m. In addition, Viva Energy has an option to extend the loan for another 12 months and increase the amount to US$900m through
International Financing Review Asia February 10 2018
LOY YANG B ACQUISITION LOAN CLOSES
A five-year loan of A$715m (US$562m) backing ALINTA ENERGY’s acquisition of the Loy Yang B power plant in Australia from Engie and Mitsui & Co closed at the end of last year. The facility comprised a A$50m revolving credit for capital expenditure, a A$15m revolver for working capital and a A$650m term loan. The interest margin is 235bp over BBSY and the commitment fee is 40% of the margin. The lenders were ANZ, Bank of China, DBS Bank, Intesa Sanpaolo, Standard Chartered, SMBC and UOB, with LATROBE VALLEY POWER (FINANCE) as the borrower. Alinta paid more than A$1.1bn for the 935MW power plant, the newest and most efficient coal-fired generator in Victoria state.
CAMBODIA SYNDICATED LOANS ›
ACLEDA LOAN GOES TO 11 LENDERS
A five-year offshore loan for ACLEDA BANK, doubled in size to US$100m, was allocated to 11 banks with Shin Kong Commercial Bank as sole mandated lead arranger and bookrunner. The loan, which is for working capital, carries an interest margin of 350bp over Libor and has a four-year average life. Banks were offered an all-in pricing of 360bp, via a 40bp upfront fee. Japan’s SMBC holds an 18.25% stake in Acleda, Cambodia’s largest lender, while Cofibred, a subsidiary of Paris-based Bred Banque Populaire, and Japan’s Orix own 12.25% each. For full allocations, see www.ifrasia.com.
COUNTRY REPORT CHINA
CHINA DEBT CAPITAL MARKETS › GREENLAND
DRAWS ROBUST ORDERS
GREENLAND HOLDING GROUP ,
rated Ba1/BB/ BB, drew final orders of US$1.9bn for a US$700m dual-tranche offering of US dollar senior unsecured notes. The Chinese property developer priced on February 2 US$400m of 5.25% three-year notes at 99.317 to yield 5.50% and US$300m of 5.90% five-year notes at 99.043 to yield 6.125%, both at the tight end of final guidance ranges and well inside the initial 5.750% area and 6.375% area, respectively. Proceeds will be used for debt refinancing and general corporate purposes. The three-year tranche drew orders of US$1.1bn from 47 accounts. Asia took 87% and Europe got 13%. In terms of investor
types, 34% were private banks, 33% were asset managers, 32% were banks, and 1% were corporations. Orders for the five-year tranche came to US$800m from 45 accounts. Asia took 88% and Europe got 12%. In terms of investor types, 53% were asset managers, 26% were private banks, 10% were banks and 11% were corporations. Greenland Global Investment is the issuer of the Reg S notes, while Greenland Holding Group is the guarantor. The notes have an expected Ba2 rating from Moody’s. BOC International and China Citic Bank International were joint global coordinators, as well as joint bookrunners and joint lead managers with China Chengtong and VTB Capital. › RED
STAR MACALLINE EYES US$700M
RED STAR MACALLINE GROUP ,
rated BBB/BBB (S&P/Fitch), said its board had approved the issuance up to US$700m of US dollar notes, via wholly owned subsidiary Hong Kong Red Star Macalline Universal Home Furnishings.
The proposed notes would have a tenor of no longer than 10 years, it said in a stock exchange filing. Proceeds from the issue, which needs shareholder approval, will be used to finance construction of projects, investments or acquisitions in the home furnishing-related areas, as well as replenishment of working capital. Last September, the operator of Chinese shopping malls for home furnishings issued US$300m of 3.375% five-year bonds at 99.413 to yield 3.504%. › FANTASIA PRICES 364-DAY NOTES
FANTASIA HOLDINGS GROUP ,
rated B2/B+ (Moody’s/S&P), drew final orders of US$1.1bn from 94 accounts for US$300m of short-term US dollar senior bonds. The Chinese property developer offered the unrated 364-day Reg S notes at par to yield 7.25%, well inside initial price guidance of 7.5% area. Proceeds will be used for debt repayment. Asia took 99% of the notes and Europe
Two LGFVs print dollars despite conditions
Bonds Issues draw support from anchors amid heightened volatility in global market
Two Chinese local government financing vehicles braved the volatile market last Wednesday to print US dollar bonds for a combined US$500m, as anchor orders gave bookrunners the confidence to proceed. FUJIAN ZHANGLONG GROUP , based in Zhangzhou in Fujian province and rated BB+ (Fitch), priced US$300m 5.60% three-year notes at 99.321 to yield 5.85%, inside initial guidance of 6.0% area. Shangrao Investment Holding Group, based in Shangrao in Jiangxi province, priced US$200m 5.70% three-year notes at 98.116 to yield 6.40%, versus initial guidance of 6.5% area. People familiar with the issues said both were heavily anchored. The transactions came amid heightened volatility in global markets with stocks tumbling and the 10-year US Treasury yield spiking to a four-year high on expectation of faster rate hikes in the US in reaction to inflationary pressure. “Anchor investors’ interest in the deal was not affected by recent market volatility, which gave us confidence to launch the deal,” said a banker on the Zhanglong issue. However, he admitted that other investors had become more cautious and picky, and
had asked for more price concessions due to the poor overall sentiment. Zhanglong still has US$200m of offshore debt issuance quota available after the latest issue, according to another banker. Shangrao Investment has used up its entire US$500m quota after the latest issue, as one of its subsidiaries, SHANGRAO CITY CONSTRUCTION INVESTMENT DEVELOPMENT GROUP,
used part of it last December for US$300m of three-year bonds priced at par to yield 5.70%. Shangrao’s 5.70% 2020s were quoted at a cash price of 99.625/100.125 or a yield of 5.841%/5.650% in the secondary market late Thursday morning, according to Tradeweb. The notes have a BB+ rating from Fitch. Based on this, both newly priced notes from Zhanglong and Shangrao offered higher yields. Zhanglong’s new bonds were quoted at a cash price of 98.875/99.375 late Thursday morning, while Shangrao’s notes were quoted at 97.75/98.25, according to a trader. Zhanglong is involved in trading, water supply, real estate and construction businesses. Its bonds were issued via wholly owned unit Full Dragon (Hong Kong) International Development and Zhanglong serves as
International Financing Review Asia February 10 2018
guarantor. The Reg S notes have an expected rating of BB+ (Fitch). Proceeds will be used for domestic debt refinancing and project investments. Shangrao has assets in infrastructure construction, tourism, water supply and waste-water treatment, state-owned asset management and other businesses. Wholly owned subsidiary Shangrao Investment Holdings International is the issuer of the Reg S unrated notes and Shangrao Investment Holding Group is the guarantor. Proceeds will be used to finance existing projects, repay bank borrowings and meet general corporate needs. CEB International was sole global coordinator on Zhanglong’s issue. It was also joint bookrunner and joint lead manager with Mizuho Securities, Bank of China, China Industrial Securities International, Chiyu Banking, Fortune (HK) Securities, Industrial Bank , Hong Kong branch, SPDB International and Wing Lung Bank . SPDB International was sole global coordinator on Shangrao Investment’s deal. It was also joint bookrunner and joint lead manager with Shanghai Pudong Development Bank , Singapore branch, BOC International and Orient Securities (Hong Kong). CAROL CHAN
19
got 1%. In terms of investor types, a combined 76% were fund managers and asset managers, 10% were private banks, 8% were insurers, and 6% were banks. UBS, Guotai Junan International and Haitong International were joint bookrunners. ›
JUJIANG PLANS CORPORATE ISSUE
Chinese construction engineering company JUJIANG CONSTRUCTION GROUP aims to issue corporate bonds, with tenors of up to five years, to raise up to US$200m. The bonds will be issued in one or multiple tranches in either public or private offerings, according to a filing on the Stock Exchange of Hong Kong. The issuance is subject to shareholder approval. Proceeds are expected to be remitted back to China to repay domestic bank loans and for working capital. ›
SUNSHINE 100 ADDS TO 2020 LINE
SUNSHINE 100 CHINA HOLDINGS has added US$165m to its 8.50% US dollar senior notes bonds due 2022, which were priced last September. The Hong Kong-listed Chinese property developer sold the additional Reg S unrated notes at 99.983 or a reoffer yield of 8.50%. Proceeds will be used for debt refinancing and general corporate purposes. Guotai Junan International, China Industrial Securities International, Yue Xiu Securities, Orient Securities (Hong Kong), CCB International and Haitong International were joint global coordinators, joint lead managers and joint bookrunners. With the latest tap, the size of the 2022s went up to US$400m. On December 18, Fitch placed Sunshine 100 China’s B– issuer rating on rating watch negative. S&P has a CCC+ issuer rating on the company.
›
INDUSTRIAL BANK SETS UP MTN SCHEME
INDUSTRIAL BANK has
set up a US$5bn mediumterm notes programme, with its Hong Kong branch, Citigroup and Standard Chartered Bank as arrangers and dealers. The MTN programme is listed on the Stock Exchange of Hong Kong. Bank of American Merrill Lynch and BOC International are also dealers on the programme. ›
SHANDONG HI-SPEED HIRES TWO
SHANDONG HI-SPEED GROUP,
rated A3/A (Moody’s/ Fitch), hired Deutsche Bank , ICBC (Asia) and BOC International as joint global coordinators
20
to arrange investor calls in Hong Kong, starting February 5. An offering of Reg S US dollar senior bonds may follow, subject to market conditions. An advisory from one of the leads indicates that the issue is likely to have a tenor of 363 days. Coastal Emerald will be issuer of the proposed notes, while China Shandong HiSpeed Financial Group will be guarantor and Shandong Hi-Speed will provide a keepwell and liquidity support deed. Shandong Hi-Speed is a Chinese stateowned transport and infrastructure company. › JCIG
MULLS US DOLLAR ISSUE
JIANGYIN CHENGXING INDUSTRIAL GROUP,
rated B (Fitch), has hired ICBC (Asia) and Haitong International as joint global coordinators for a proposed offering of US dollar senior unsecured notes. The Chinese chemical producer held investor meetings in Hong Kong and conference calls with international investors from February 5. Wholly owned subsidiary Red Cloud Capital will issue the notes and Jiangyin Chengxing Industrial will be guarantor. The Reg S notes also have an expected B rating. › SINOCHEM
PRINTS DIM SUM NOTES
SINOCHEM HONG KONG (GROUP),
rated A3/A–/A–, has printed Rmb1bn (US$158m) three-year Dim Sum bonds at par to yield 4.40%, flat to final price guidance. The offering attracted orders of over Rmb2.2bn from 45 accounts. Asian investors took 91% of the notes and European investors 9%. In terms of investor type, fund managers were allocated 60% of the notes, banks 24%, insurers 14% and private banks 2%. Sinochem Offshore Capital is the issuer and Sinochem Hong Kong the guarantor. The issue is expected to score a A3 Moody’s rating. Standard Chartered Bank was arranger and lead manager. › SINO-OCEAN
PAYS UP FOR PANDAS
Property developer SINO-OCEAN GROUP HOLDING has paid up on its second visit to the Panda bond market in two weeks. The Hong Kong-incorporated developer priced Rmb3bn of three-year Pandas in the interbank bond market at par to yield 5.95%. On January 24, it printed Rmb3bn of three-year Panda notes at par to yield 5.87%. Market sources said the repeat issue,
International Financing Review Asia February 10 2018
within such a short time, was mainly to blame for the higher yield on the second offering. The proceeds will be used for debt repayment, capital replenishment, as well as for development of commercial properties. Sino-Ocean, in which China Life Insurance (Group) holds a 29.98% stake, is a domestic AAA credit to China Chengxin. Internationally, Sino-Ocean is rated Baa3/ BBB–(Moody’s/Fitch). With the latest issue, Sino-Ocean has used up its Rmb10bn Panda bond programme registered with the National Association of Financial Market Institutional Investors. China Citic Bank was lead underwriter and bookrunner for the offering with ICBC as joint lead underwriter. ›
AIR LIQUIDE PLANS PANDA DEBUT
French industrial gases company AIR LIQUIDE is planning to issue debut Panda bonds in China as early as this month, according to market sources. It is looking to privately place a Rmb2.2bn dual-tranche offering in the interbank bond market. The tenors of the notes are likely to be three years and five years. Air Liquide Finance will be the issuer and Air Liquide will be the guarantor of the notes, the sources said. If the deal goes ahead, it will make Air Liquide the second French issuer to tap the Panda bond market after water management company Veolia Environnement, which raised Rmb1bn from a private placement of three-year Panda bonds in September 2016. ICBC is lead underwriter on Air Liquide’s offering. BNP Paribas (China), Bank of Tokyo Mitsubishi UFJ (China) and Crédit Agricole CIB are financial advisers, according to the sources. Air Liquide previously tapped the offshore renminbi bond market. Following two Dim Sum note issues with total principal of Rmb2.6bn in Hong Kong in September 2011, the company printed Rmb500m Formosa bonds in Taiwan in January 2015. Proceeds were all used for business in mainland China. ›
GLP PRINTS RMB1.2BN PANDAS
Biggest Asian warehouse operator GLOBAL LOGISTIC PROPERTIES has sold Rmb1.2bn of Belt and Road Panda bonds on the Shenzhen Stock Exchange. The nine-year notes, which give investors rights for a sell-back at the end of years three and six, were priced at par to yield 5.65%.
COUNTRY REPORT CHINA
Joyson to fund Takata buy
Loans Deutsche Bank and ICBC arranging two separate facilities
Deutsche Bank and Industrial and Commercial Bank of China are arranging two separate
loans totalling US$1bn to help NINGBO JOYSON ELECTRONICS fund its US$1.6bn purchase of Japan’s Takata. Both loans, likely to have five-year maturities, are expected to be signed in the next few weeks as the acquisition is expected to be completed before the end of the first quarter. Joyson, a Shanghai-listed auto parts supplier, signed a definitive asset-purchase agreement with Takata on November 21 2017. Takata will use the proceeds to compensate automakers, injured people and relatives of people, who died because of the Japanese company’s defective airbags. Takata filed for bankruptcy last June after more than 100m of its airbags were recalled because they could inflate explosively and spray metal fragments. The transaction still needs approval from Takata’s creditors’ committee, courts in the US and Japan, as well as regulators in the two countries and China. Joyson is acquiring Takata’s viable
operations through Luxembourg-registered Joyson KSS Auto Safety, which owns 100% of Michigan-based parts supplier Key Safety Systems. The Chinese company acquired KSS in a US$920m deal in 2016 and raised US$554mequivalent through a five-year term loan in May that year to finance the acquisition. The Ningbo branch of Bank of China and ICBC were co-lead arrangers on the loan, split into a Rmb2.983bn (US$454m then) tranche A paying an interest margin of 100% of the PBoC rate and a US$100m tranche B with a margin of 150bp over three-month Libor. Ningbo-based Joyson set up fully owned subsidiary Joyson KSS Auto Safety Holdings on November 17 2017 and plans to sell a 15.15% stake for US$150m to Chinese state-backed private equity SDIC Fund Management. Joyson, meanwhile, will further inject US$250m to hold an eventual 84.85% stake in Joyson KSS Auto Safety Holdings, which owns 100% of Joyson KSS Auto Safety, according to a company stock filing on January 3. YAN JIANG
SYNDICATED LOANS › BOCOM UNIT INCREASES LOAN SIZE
BANK OF COMMUNICATIONS FINANCIAL LEASING has
signed a bigger-sized three-year onshore loan of US$430m, following commitments from six banks in general syndication. Mandated lead arrangers and bookrunners DBS Bank , HSBC, SMBC and Westpac each committed US$75m. The four launched the loan at a size of US$300m in early November, offering a top-level all-in pricing of 120bp, via an interest margin of 108bp over Libor and an average life of 2.76 years. On November 14, the borrower signed the US$300m loan with the four MLABs and drew down later that month. Six other banks joining in general syndication were transferred into the facility on January 15. In China’s syndicated loan market, banks are not allowed to sell down partial commitments. They can either sell down their entire exposure or hold on to it until maturity. BoCom Financial Leasing, rated A3/ A–/A, is a wholly owned unit of Bank of Communications, China’s fifth-largest listed bank in asset terms. For full allocations, see www.ifrasia.com. › HUARONG SHIFTS FOCUS ONSHORE
The issuer did not fully exercise an overallotment option. It initially intended to raise Rmb1bn from the offering with an over-allotment option of Rmb5bn. The proceeds will be used to repay debt linked to GLP’s acquisition of logistics assets in Europe. The notes were issued in the name of GLP subsidiary Iowa China Offshore Holdings (Hong Kong). Both GLP and the notes have AAA ratings from Shanghai Brilliance Credit Rating. China Merchants Securities was sole lead on the offering. With the new issue, GLP has sold notes in three venues of China’s domestic bond market. In October 2017, GLP printed Rmb1bn five-year notes in China’s interbank bond market at par to yield 4.99%. In July 2016, it launched debut Rmb1.5bn Panda bonds on the Shanghai Stock Exchange. › LEGEND RAISES FIVE-YEAR FUNDS
LEGEND HOLDINGS,
the controlling shareholder of computer maker Lenovo, has printed Rmb1bn five-year notes at par to yield 6.0% on the Shanghai Stock Exchange.
The proceeds are intended to repay bank loans. United Ratings sees both the issuer and the notes as AAA. China Galaxy Securities is sole lead on the offering.
Hong Kong-incorporated CHINA MERCHANTS PORT HOLDINGS has raised Rmb500m from an offering of Belt and Road Panda bonds on the Shenzhen Stock Exchange. The issuer priced the three-year notes at par to yield 5.15%. Investors have the right to sell them back at the end of years one and two. CMP intends to use the proceeds to pay for a 99-year lease on Hambantota port in Sri Lanka. Sri Lanka signed a US$1.1bn deal last July to lease its southern Hambantota port to China Merchants Port Holdings. The port is near the main shipping route from Asia to Europe and likely to play a role in China’s Belt and Road initiative. China Merchants Securities was lead underwriter on the offering. China Chengxin has assigned ratings of AAA to CMP and its notes.
State-owned China Huarong Asset Management is seeking a Rmb1bn (US$159m) two-year term loan through a subsidiary in its first syndicated borrowing in the onshore market. Hana Bank (China) is sole mandated lead arranger and bookrunner on the loan, with an average life of 1.8 years and paying an interest margin of 118% of the PBoC rate. The benchmark PBoC lending rate for tenors longer than one year and up to five years now stands at 4.75%. MLAs with Rmb150m earn a top-level all-in pricing of 121.51% of the PBoC rate, via a participation fee of 30bp, lead arrangers with Rmb100m–Rmb149m earn an all-in of 120.34% of the PBoC rate, via a 20bp fee, while arrangers with Rmb50m– Rmb99m earn an all-in of 119.17% of the PBoC rate, via a 10bp fee. HUARONG TIANZE INVESTMENT , a unit of Huarong AMC, is borrower on the new onshore amortising loan, while the parent is guarantor. Funds are for refinancing and working capital. The deadline for commitments is end-March. The country’s biggest distressed-debt manager was very active in the offshore loan markets last year, borrowing US$1.9bn
International Financing Review Asia February 10 2018
21
› CMP PRINTS RMB500M PANDA NOTES
in five deals through various units. The loans carried short maturities of two years or below, according to Thomson Reuters LPC data. These included a HK$3.8bn-equivalent (US$485m) 364-day financing and a HK$1.1bn one-year club loan signed in November, a HK$2.72bn 364-day facility in October, a US$800m 364-day borrowing in August, and a US$110m two-year ship funding in July. › MINSHENG FL GOING SHIBOR AGAIN
MINSHENG FINANCIAL LEASING is raising a one year term loan of Rmb500m in what will be China’s second syndicated facility to pay interest based on the Shibor benchmark. Hana Bank (China) is sole mandated lead arranger and bookrunner on the new loan, paying an interest margin of 80bp over one year Shibor. MLAs with Rmb200m or more get a toplevel all-in pricing of 95bp over Shibor, via a 15bp fee, lead arrangers with Rmb150m– Rmb199m get an all-in pricing of 90bp over Shibor, via a 10bp fee, and arrangers with Rmb100m–Rmb149m get an all-in of 85bp, via a 5bp fee. Commitments are due on or before March 23. Funds are for refinancing and working capital. This is the second Shibor-linked syndicated loan in the onshore market in less than six months. The first was in October, when Merchants Union Consumer Finance closed a Rmb1.15bn one-year loan, paying a top-level all-in of 115bp over Shibor, based on a margin of 100bp. Fubon Bank (China) was sole MLAB and the loan marked MUCF’s debut. Minsheng Financial Leasing last tapped the onshore market in September 2015 for a US$150m two-year bullet from 10 banks, including sole bookrunner Credit Suisse. The loan received a strong response even though the borrower revised the terms, including a reduced size, and a cut to the tenor and pricing. That facility ended up offering a top-level all-in of 200bp over Libor, based on an interest margin of 165bp. Its previous visit to the offshore market was last December for a US$140m 6.5-year ship financing. It was also in the market for a US$164m pre-delivery payment facility in October.
EQUITY CAPITAL MARKETS › LY.COM PLANS HONG KONG IPO
LY.COM, one of China’s largest travel booking websites, aims to list in Hong Kong this
22
year to raise up to US$800m, according to people close to the plans. They say the company plans to bring the IPO of US$600m–$800m to the market as early as the second half of the year through leads CMB International , JP Morgan and Morgan Stanley. LY.com attracted investments of more than Rmb6bn (US$954m) in 2015 from Wanda Culture Industry Group, the entertainment arm of Dalian Wanda Group, Tencent Industrial Capital, a unit of Tencent Holdings, and Citic Capital. As the lead investor, Wanda put in Rmb3.58bn. In late 2016, LY.com merged with Wanda Tourism, the travel arm of the Chinese conglomerate. Commenting on the merger, LY.com CEO Wu Zhixiang told mainland media at the time the company was forecast to post a 2018 net profit of Rmb2bn on revenue of Rmb50bn. › NEW PEAK WORKS ON US IPO
, a Chinese online pharmacy and health service platform, intends to raise US$100m–$200m from a US IPO this year, according to people close to the plans. New Peak mainly runs online drugstore 111.com.cn, which sells drugs and healthrelated products, such as supplements. It also runs a B2B online platform that allows hospitals and pharmacies to buy drugs directly from manufacturers. In addition, it runs health service portal Yizhen, which offers online doctor diagnosis to customers. According to New Peak’s website, 111. com.cn has 20 million registered users. JP Morgan and Morgan Stanley are leads on the float. NEW PEAK GROUP
› A-LIVING SERVICES COMPLETES IPO
Developer Agile Group Holdings’ A-LIVING SERVICES has raised HK$4.1bn (US$524m) from an IPO priced slightly below the midpoint of the indicative range. The China-focused provider of property management services sold 333.33m shares at HK$12.30 each, off a HK$10.80–$14.20 range. Agile will hold a stake of about 54% in A-Living on completion of the IPO. Proceeds will be used to fund investments, acquisitions and upgrade operations. Trading in the shares commenced on February 9. HSBC and Huatai Financial were joint sponsors on the global offering, as well as joint global coordinators and joint bookrunners with Morgan Stanley. The other bookrunners were ABC International, BNP Paribas, CCB International , China Securities International and ICBC International.
International Financing Review Asia February 10 2018
› GANFENG PLANS HK LISTING
has applied for China Securities Regulatory Commission approval to issue H-shares of about US$1bn on the main board of the Stock Exchange of Hong Kong. Citigroup is working on the transaction, according to people familiar with the situation. The Shenzhen-listed lithium producer plans to sell no more than 20% of its enlarged capital, or about 185m H-shares, based on its current total equity of 742m. The fundraising size may reach Rmb10.87bn, based on the February 2 close of Rmb58.78. There is also a greenshoe option of 15% of the base deal size. Proceeds will be used for mergers and acquisitions, output expansion, and research and development, among other things. GANFENG LITHIUM
› HUAMI COMPLETES US LISTING
, a maker of fitness trackers for Chinese smartphone company Xiaomi, has raised US$110m from a NYSE IPO. The company sold 10m American depositary shares at US$11 each, midpoint of the indicative price range of US$10–$12. The final price represents a 2018 P/E of 14.7 and a 2019 P/E of 10.5. The top 10 investors took 80% of the shares. Founded in 2014, Beijing-headquartered Huami manufactures under the Mi brand for Xiaomi and under its own Amazfit brand. Pre-IPO investors included Xiaomi and Shunwei Capital, a venture capital firm that Xiaomi CEO Lei Jun co-founded. Prior to the IPO, Xiaomi owned a 19.3% stake, while Shunwei had 20.4%, according to the prospectus. Credit Suisse, Citigroup and China Renaissance were joint bookrunners. HUAMI
› JINKOSOLAR COMPLETES FOLLOW-ON
, a Chinese maker of photovoltaic cells, has raised US$65m from a follow-on offering of 3.6m shares, priced at US$18.15 each, or a 10.8% discount to the February 6 close of US$20.35. JinkoSolar shares fell 10.8% to US$18.16 on February 7. There is a greenshoe of 15% of the base deal size. Concurrently, company chairman Xiande Li and CEO Kangping Chen have agreed to buy US$35m of shares t hrough a private placement. The New York Stock Exchange-listed company plans to use the proceeds for general corporate purposes. JINKOSOLAR
COUNTRY REPORT CHINA
Barclays and Credit Suisse are the joint bookrunners. › GANSU LENDER EXERCISES GREENSHOE
has exercised in full the greenshoe option of its recent Hong Kong IPO. The north-western Chinese bank raised an additional HK$893m from the sale of 332m shares at HK$2.69 each. Including the greenshoe, the bank raised HK$6.84bn from the IPO. BOC International, CCB International, CMB International, Guotai Junan International and Huatai Financial were joint sponsors on the float. The five banks were also joint global coordinators and joint bookrunners with Haitong International. ABC International, ICBC International and CSR International were the other joint bookrunners. BANK OF GANSU
› BOYA PUTS OFF PRIVATE PLACEMENT
has postponed bookbuilding for a proposed private share placement of up to Rmb1bn due to the recent stock-market turmoil. The ChiNext-listed producer of blood products, which launched the placement on February 5, decided to suspend the offering three days later because of the high volatility in the A-share market, according to a company filing. The Shanghai Composite Index fell 5.78% in the first four days of last week, following the massive sell-off in the US market on February 5, when both the S&P 500 index and the Dow Jones Industrial Average suffered their biggest single-day percentage drops since August 2011. Boya said in the filing that it would relaunch the placement at a proper time. “Although the deal has temporarily suspended, we are still confident to get it done later,” said a source familiar with the situation. “Actually, we have seen enough demand during soft marketing, but, under the current market conditions, investors prefer to wait until the stock market shows some signs of stabilisation.” Boya plans to offer not more than 37.50m shares at a floor price to be set on the first day of issuance. Proceeds will be used for a production project. Great Wall Securities has been named sole bookrunner. BOYA BIO-PHARMACEUTICAL GROUP
› KTK CONCLUDES SHANGHAI IPO
has raised Rmb1.37bn from a Shanghai IPO of 42m shares, or about 10% of its enlarged capital, at Rmb32.69 each. The IPO price was at a 52% discount to KTK GROUP
the average valuation of listed peers in the railway and other transport equipment manufacturing industry. The institutional tranche was about 565 times covered and the retail part 7,452 times covered before clawback. After clawback, 90% of the shares were sold to retail investors. China Securities was the sponsor. The manufacturer of railway equipment plans to use the proceeds for the production of railway equipment and for working capital. › JIANGSU LEASING COMPLETES IPO
has raised Rmb4bn from a Shanghai IPO of 640m shares, or about 21.4% of its enlarged capital, at Rmb6.25 each. It ranks as only the second listed financial-leasing company in the A-share market and the first to complete an IPO, opening a new source of funding for the fast-growing, capital-intensive sector. Bohai Capital, a unit of Chinese conglomerate HNA Group, went public in Shenzhen through a backdoor listing in 2011. Jiangsu Leasing’s IPO price was at a 31% discount to the average valuation of listed peers in the leasing industry. The institutional tranche was about 130 times covered and the retail part 1,375 times covered before clawback. After clawback, 90% of the shares were sold to retail investors. Huatai United Securities was the sponsor on the IPO, proceeds of which will be for working capital. JIANGSU FINANCIAL LEASING
› REGULATOR APPROVES FOUR FLOATS
The China Securities Regulatory Commission has approved four applications for listings to raise a combined Rmb5.1bn. HUABAO FLAVOURS AND FRAGRANCES, the largest of the four, is premarketing a ChiNext IPO of about Rmb2.38bn, with Zheshang Securities as sponsor. The spin-off of Hong Kong-listed Huabao International plans to offer not more than 61.59m shares, or about 10% of its enlarged capital. It will start bookbuilding on February 13. Proceeds will be used for flavours and food production projects, as well as working capital. CHINALIN SECURITIES cleared a CSRC hearing for a proposed Shenzhen IPO of 270m shares, or about 10% of its enlarged capital. The Tibet-based brokerage may raise about Rmb1.3bn from the IPO, based on its 2016 earnings per share of Rmb0.24 and the one-month average valuation of 22.57
International Financing Review Asia February 10 2018
times the historical earnings of the sector. China Merchants Securities is the sponsor. Proceeds will be used for working capital. The float still needs written CSRC approval. › CSRC CLEARS THREE FOLLOW-ONS
has cleared a China Securities Regulatory Commission hearing for a proposed private share placement of up to Rmb5bn. The power producer is looking to make available not more than 800m A-shares at a floor price to be set on the first day of issuance. Citic Securities is the sponsor. Proceeds will be used to fund wind and thermal power projects. The placement still needs written CSRC approval. HUANENG POWER INTERNATIONAL
TIANJIN CAPITAL ENVIRONMENTAL PROTECTION
has received written CSRC approval for a proposed private placement of A-shares of up to Rmb1.84bn. The company, listed in Hong Kong and Shanghai, plans to offer not more than 285m shares at a floor price to be set on the first day of issuance. Citic Securities is the sponsor. Proceeds will be used for sewage-processing, as well as energy-cooling and heating-supply, projects. SHAANXI INTERNATIONAL TRUST has cleared a CSRC hearing for a proposed rights issue of up to Rmb3bn. The trust company plans to offer up to 927m right shares on a 3-for-10 basis. Largest shareholder Shaanxi Coal and Chemical Industry Group, which owns 34.58% of SIT, will take up its full entitlement. China Securities is the sole bookrunner. Proceeds will be used for working capital. The company still needs written CSRC approval. GROUP
› CNPC COMPLETES RECORD EB ISSUE
has raised Rmb20bn from a public offering of five year exchangeable bonds, the largest such transaction in the Chinese domestic market. The securities can be exchanged for the A-shares of PETROCHINA after 12 months. Institutional investors bought 70% of the securities and retail investors purchased the rest. The retail tranche was about 31 times covered, according to an exchange filing. Being the first public EB issue of the year, the oil giant set more investor-fri endly terms than for its initial outing last year, in a sign that Chinese issuers have to work harder to woo investors after a flood of equity-linked offerings and an increase in onshore bond yields. CHINA NATIONAL PETROLEUM CORP
23
The coupon of the EB was set at the bottom of the guidance range of 1.4%–2.0%. The initial conversion price is Rmb9.38, a premium of 0.9% to PetroChina’s pre-deal spot. The initial conversion premium is the lowest of any public EB issue since at least the start of last year. For comparison, CNPC priced its debut Rmb10bn EB last July, with the same underlying stock, at a coupon of 1%. The initial conversion price was set at Rmb9, a premium of 15.5% to PetroChina’s predeal spot. Both CNPC and its latest EB received AAA ratings from China Chengxin. China Securities, Goldman Sachs Gao Hua Securities and CICC were joint leads on the offering. The three banks were also joint bookrunners with China Galaxy Securities, China Merchants Securities, Citic Securities and BOC International (China). Proceeds will be used for working capital. › HAN'S LASER CB RAISES RMB2.3BN
has raised Rmb2.3bn from an offering of six year convertible bonds, with the public tranche 511 times covered. Existing shareholders took about 50.92% HAN’S LASER TECHNOLOGY INDUSTRY GROUP
of the CBs, while the rest went to retail investors. The coupon for the CB is 0.20% in year one, stepping up to 2.00% in year six. The initial conversion price is Rmb52.70, or a premium of 7.6% to the pre-deal spot. The unsecured bonds received a AA+ rating from Dagong Global. The Chinese manufacturer will use the proceeds for production projects. Industrial Securities was the sponsor and joint bookrunner with Goldman Sachs Gao Hua Securities. › TWO BANKS MULL CB OFFERINGS
has obtained board approval to sell six-year convertible bonds to raise up to Rmb20bn, with Citic Securities and CICC as joint sponsors.. Proceeds will be used to strengthen the lender’s Core Tier 1 capital. The issue still needs approval from shareholders and regulators. CHINA CITIC BANK shareholders have agreed to extend the approval period for a proposed issue of six-year CBs of up to Rmb40bn. The approval will now expire on February 6 2019. The lender will use the proceeds to strengthen its CT1 capital. Existing holders BANK OF JIANGSU
of the company’s A-shares will have priority to subscribe to the CBs. The issue still needs regulatory approval. › TWO FILE FOR EB ISSUES
has applied for Shanghai Stock Exchange approval for a proposed private placement of three-year exchangeable bonds in JINZHOU PORT to raise up to Rmb1.2bn. Shanghai-listed Orient, mainly engaged in buying and selling grain and oil, holds 308m Jinzhou Port shares, or about 15.39% of the company’s total issued capital. Southwest Securities is the sole bookrunner. Proceeds will be used to repay debt and for working capital. ORIENT GROUP
XIAMEN CONTEMPORARY CULTURE DEVELOPMENT
has applied for approval to the Shenzhen Stock Exchange for a proposed private placement of three-year EBs in CONTEMPORARY EASTERN INVESTMENT to raise up to Rmb1.2bn. Xiamen Contemporary holds 188m Contemporary Eastern shares, representing about 23.72% of the company’s total issued capital. First Capital Investment Banking is the sole bookrunner. Contemporary Eastern is mainly engaged in the distribution of TV programmes.
REACH THE PEOPLE WHO MATTER ADVERTISING AND SPONSORSHIP OPPORTUNITIES IN IFR Asia
The most senior professionals in the world’s capital markets rely on IFR Asia for authoritative and independent news, data and analysis – and have done so for more than 14 years. IFRAsia provides an unrivalled opportunity for advertisers to reach the people who drive and shape the industry and gives them the chance to associate their company with the world’s number one source of global capital markets intelligence.
For more information on the various advertising and sponsorship opportunities available within IFR Asia, contact: Shahid Hamid: +65 9755 5031 or email
[email protected]
24
International Financing Review Asia February 10 2018
COUNTRY REPORT HONG KONG
HONG KONG DEBT CAPITAL MARKETS › ZH INTERNATIONAL PLANS US$200M NOTES
plans to raise US$200m from the sale of US dollar shortterm notes to meet general corporate needs. The Reg S notes, with a coupon of 7.50%, will be sold at par. The notes, expected to be issued on February 12, will mature on January 31 2019. Ever Diamond Global, the controlling shareholder of the Hong Kong-listed company, will be the guarantor on the notes. AMTD is the placing agent. ZH International is a Hong Kong-based investment holding firm involved in security investment, property investment and management, as well as hotels. ZH INTERNATIONAL HOLDINGS
SYNDICATED LOANS › ZHONGYU
GAS DOUBLES LOAN SIZE
ZHONGYU GAS HOLDINGS has doubled a three year term loan to US$400m-equivalent from the US$200m-equivalent target. Bank of China (Hong Kong) was the mandated lead arranger and bookrunner of the financing, which comprises tranches of US$236.5m and HK$1.2753bn (US$163m). The loan pays an interest margin of 210bp over Libor or Hibor and has an average life of 2.675 years. Banks were invited to commit in either US or Hong Kong dollars for an all-in pricing of 250bp, based on an upfront fee of 107bp. Funds are for refinancing and working capital. Signing was on January 29. The Hong Kong-listed borrower, a unit of China Gas Holdings, builds and manages gas pipelines and distributes natural gas in China. For full allocations, see www.ifrasia.com.
› AKBANK
SEEKS ASIA BORROWING
, rated Ba1/BB+ (Moody’s/Fitch), is in the Asian market for a new loan through three lead banks after having raised a US$1.15bn-equivalent facility last August. Bank of America Merrill Lynch, First Abu Dhabi Bank and Industrial and Commercial Bank of China are arranging the latest financing, which will comprise a one-year US dollar tranche A, a one-year euro tranche B and a two-year US dollar tranche C. The interest margins on tranches A and
C are expected to be 100bp and 180bp over Libor, respectively, while tranche B will offer a margin of 90bp over Euribor. Last August, Akbank raised the US$1.15bn-equivalent loan from 38 banks. Emirates NBD Capital, ICBC Turkey and Standard Chartered were the joint coordinators and bookrunners of the transaction, which comprised US$543m and €515m tranches, of which US$945mequivalent is for one year and US$205m is for two years. The one-year money offered a total cost of 135bp over Libor for US dollar drawings and 125bp over Euribor for euro drawings, while the two-year money pays a total cost of 220bp over Libor. Akbank is one of the largest privatesector lenders in Turkey. › COGARD
RESURFACES FOR HK$1.781BN
has launched a HK$1.781bn three-year term loan, barely four months after the real-estate developer signed a US$1.25bn facility. BNP Paribas is mandated lead arranger and bookrunner on the latest financing, which pays an interest margin of 230bp over Hibor and has a 2.5-year average life. MLAs joining with HK$200m or more get an all-in pricing of 290bp over Hibor, via a 150bp participation fee, while lead arrangers with HK$160m–$199m get an all-in of 284bp, via a 135bp fee, and arrangers with HK$80m–$159m get an all-in of 278bp, via a 120bp fee. The deadline for commitments is March 8. Funds are for the acquisition of a 15% stake in real-estate services provider E-House (China) Enterprise Holding. The target’s shares will be pledged as part of the security package. Last October, CoGard raised a US$1.249bn-equivalent four-year loan from 15 lenders. Bank of China (Hong Kong), China Construction Bank, Hong Kong, Hang Seng Bank, HSBC, ICBC (Asia), Shanghai Pudong Development Bank, Hong Kong and Standard Chartered were MLABs on that loan, denominated in US and HK dollars. Based on a margin of 249bp over Libor or Hibor and a 3.75-year average life, banks were offered a top-level all-in of 300bp via a 191bp fee. COUNTRY GARDEN HOLDINGS
in the high 100s over Hibor. IT FINANCE is the borrower, while Hong Kong-listed IT and three indirectly wholly owned subsidiaries are guarantors, the company says in a stock filing on January 31, the day of signing. Funds will refinance a Rmb894m (US$142m) 6.25% five-year bond due on May 15 2018 and also fund working capital requirements. › UA
FINANCE OPTS FOR MORE
has increased its four-year loan to HK$850m from HK$800m originally after commitments from three banks. Mandated lead arrangers and bookrunners Taipei Fubon Commercial Bank and Taishin International Bank launched the dual-tranche loan in early January at a toplevel all-in pricing of 222.9bp, based on an interest margin of 200bp over Hibor and a blended average life of 3.5 years. Funds are for refinancing and working capital purposes. Signing was scheduled to take place last Thursday. The latest borrowing follows a HK$1.6bn four-year facility UA Finance closed in February 2017. That loan paid a top-level all-in of 245bp, based on a margin of 215bp over Hibor and an average life of three years, according to Thomson Reuters LPC data. For full allocations, see www.ifrasia.com. UNITED ASIA FINANCE
INDIA DEBT CAPITAL MARKETS › RAJASTHAN
POWER TRIO PLANS BONDS
Fashion apparel and accessories retailer IT has signed with four banks a four-year club loan of HK$800m. BNP Paribas, CTBC Bank , Hang Seng Bank and MUFG committed HK$200m each. The amortising loan, which has semiannual repayments starting after an 18month grace period, paid an all-in pricing
Three Rajasthan state-owned power companies aim to raise up to Rs122bn (US$1.9bn) combined from rupee bonds and have sent requests for proposals to bankers, according to a source. Care has assigned A+ (structured obligation, stable) ratings to the longterm bonds of Rs40.13bn, Rs41.63bn and Rs40.3bn of JAIPUR VIDYUT VITRAN NIGAM, AJMER VIDYUT VITRAN NIGAM and JODHPUR VIDYUT VITRAN NIGAM, respectively. The notes will have credit enhancement in the form of a guarantee from the state government. There will be a trusteemonitored escrow account and structured payment mechanism, whereby half a year’s total debt-repayment obligation will be maintained in a debt-service-reserve account. Last December, UTTAR PRADESH POWER CORP
International Financing Review Asia February 10 2018
25
AKBANK
› IT
CLUBS HK$800M BORROWING
RBI sparks rupee issuance
Bonds Yields fall after policy m eeting cools inflati on fears
Indian state-owned issuers are lining up to issue rupee bonds after the Reserve Bank of India kept policy rates unchanged and retained its neutral stance. RURAL ELECTRIFICATION CORP asked investors last Friday to place bids for bonds, maturing on March 2021, to raise Rs5bn (US$77.7m), plus an undisclosed greenshoe. A day earlier, POWER FINANCE CORP sold a twotranche bond at 7.73% each to raise Rs18.3bn. The tranches mature in March 2021 and April 2021, respectively. Public-sector companies are returning to the market to sell bonds after the policy annoucement eased bond yields. The yield on India’s 10-year government securities fell to 7.46% on Friday afternoon after rising to a 17-month high of 7.61% earlier in the week on concerns of a hawkish policy statement and following a higher borrowing programme in the 2018/19 budget. The yield on 10-year AAA corporate bonds narrowed 5bp to 8.1% after the policy statement. The RBI kept the repo rate unchanged at 6% last Wednesday, in line with expectations, while also softening its inflation forecast for the second half of FY18 to 4.5%-4.6%, even
raised Rs30.26bn from nine series of rupee bonds of two to 10 years at 9.75% with credit enhancement and a government guarantee. UPPC is the holding company for Uttar Pradesh’s five power-distribution companies, or discoms. › SREI INFRA READIES PUBLIC ISSUE
SREI INFRASTRUCTURE FINANCE is
targeting a public issue of bonds to raise up to Rs20bn, according to an offer document. The infrastructure financier aims to raise Rs2bn, plus greenshoe amount of up to Rs15bn, from a secured piece and up to Rs5bn from a subordinated portion. It has fixed the coupons at 8.50% for a 400-day issue, 8.75% for a three-year piece and 9.00% for a five-year portion. It has also fixed the price for 10-year subordinated notes at 9.50%. All tranches have monthly, annual and cumulative coupon options, except for the 400-day tenor, which only has an annual and cumulative coupon option. Senior citizens, existing bondholders and shareholders of the company will get additional coupon incentive of 0.25% each. Brickwork has assigned a AA+ rating to the notes.
26
after oil and food prices pushed the consumer price index to a 17-month high of 5.21% in December. The RBI appeared mindful that a premature tightening could dent an economy seeing only a tentative recovery after growing at the slowest pace in about three years. “The market was slightly circumspect in light of fiscal slippage and was expecting a stern stance. In contrast, the RBI came with status quo accompanied by a milder stance. This came as a sigh of relief for an excessively bearish market,” said Lakshmi Iyer, chief investment officer of debt and head of products at Kotak Mutual Fund. Investors hope the RBI will increase the foreign portfolio investment limit for bonds in the coming days. “We believe any developments around a potential revision to the foreign portfolio investor framework and the RBI’s openmarket operation buybacks (which are more likely in the second half of FY19) should be keenly watched,” said Nomura in a February 7 note. PFC and REC have yet to announce officially their bond offerings. KRISHNA MERCHANT
The issue, which opened last Friday, closes on March 7. SPA Securities is the lead manager on the issue. › ADANI INFRA SELLS ZERO COUPON NOTES
ADANI INFRA has
sold Rs10bn of zero coupon bonds due in April 2019, according to a National Securities Depository filing. The redemption premium for the notes is fixed at 9.25%. There is a put/call option on January 21 2019. Brickwork has assigned a AA– (structured obligation) rating to the senior secured notes. Earlier this month, Adani Infra raised Rs5bn from zero coupon bonds due in April 2020. › NABARD RAISES 15-YEAR FUNDS
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (Nabard)
has raised Rs8.64bn from 15-year bonds priced at 8.19%, according to a National Securities Depository filing. Two week ago, Nabard sold Rs1.35bn of 15-year government of India-serviced bonds at 7.99%, payable semi-annually. The
International Financing Review Asia February 10 2018
government will pay the interest on the bonds. Crisil and India Ratings have both see the bonds as AAA. Separately, pipe manufacturer WELSPUN raised Rs2.5bn from six-year rupee bonds at 8.9%. The notes have AA– ratings from both Crisil and Care.
EQUITY CAPITAL MARKETS › VATIKA INVITES BIDS FOR RS6BN IPO
VATIKA HOSPITALITY has
invited bids from banks to manage its Rs5bn–Rs6bn (US$78m–$94m) IPO planned for later this year, according to people with knowledge of the process. The domestic IPO is likely to be a combination of primary and secondary shares. The funds from the IPO will be used to expand the hotel business. The company owns The Westin at Gurugram and The Westin resort at Sohna. It also owns restaurants like Coriander Leaf, 56Italiano, 56Fresca and Nukkadwala.
INDONESIA DEBT CAPITAL MARKETS › PANIN PLANS FIVE-YEAR RUPIAH ISSUE
PANIN BANK intends
to issue Rp3.9trn (US$285m) five-year rupiah bonds at 7.6% with the help of five lead arrangers, according to a source close to the plans. The five the Indonesian bank has appointed are Danareksa, Indo Premier, Evergreen, RHB and Trimegah Sekuritas. The issue opens on February 21 and closes the next day. Pefindo has assigned a AA rating to the notes, the proceeds of which will be used for working capital. › PEGADAIAN PLANS TRIPLE-TRANCHER
State-owned auction house PEGADAIAN plans to sell Rp3.5trn of rupiah bonds in three tranches, according to the offer document. The Indonesian issuer has put out indicative price ranges of 5.6%–6.15% for a 370-day tranche, 6.5%–7.25% for a three-year piece, and 7.0%–7.5% for a five-year portion. Bookbuilding, which began on February 7, will close on February 20. The pay-in will take place on March 15.
COUNTRY REPORT INDONESIA
Pegadaian has appointed Bahana, BNI, Danareksa and Mandiri Sekuritas as lead arrangers. The funds will be used for ref inancing of bank loans. Pefindo has assigned a AAA rating to the secured bonds. › EXIMBANK SELLS THREE-TRANCHER
INDONESIA EXIMBANK has
sold Rp2.46trn of three-tranche rupiah bonds, according to a source close to the transaction. The bank raised Rp610bn from a three-year at 6.35%, Rp1.65trn from a five-year at 6.7% and Rp206bn from a seven-year at 6.9%. Danareksa, DBS Vickers, CIMB and Indo Premier were lead arrangers on the issue, which has a AAA Pefindo rating. Indonesia Eximbank has yet to announce the issue officially. › BRI
RAISES TWO-TRANCHE FUNDS
raised Rp2.4trn from dual-tranche bonds, according to a source close to the sale. The Indonesian state lender issued a Rp1.77trn five-year portion at 6.65% and a Rp677bn seven-year piece at 6.9%. Bahana Securities, BCA Sekuritas, Danareksa Sekuritas, DBS Vickers Securities and Indo Premier Securities were lead arrangers. Pefindo rates the bonds AAA. BRI plans to issue Rp12trn–Rp15trn of bonds under a three-year programme starting in the second half of 2018, with a Rp5trn target for this year, Reuters reported last month, citing CFO Haru Koesmahargyo. BRI also plans to issue Rp5trn of bonds this year off an existing programme, he said.
SYNDICATED LOANS › TIPHONE LAUNCHES US$186M LOAN
TIPHONE MOBILE INDONESIA has launched a US$186m-equivalent three-year loan through mandated lead arrangers and bookrunners Bank Central Asia, Bank CIMB Niaga and Standard Chartered. The loan is split into tranches of Rp1.25trn (US$92m) and US$94m. The interest margin is 300bp over Jibor for the onshore portion and 200bp over Libor for the offshore piece. Based on a 2.75-year remaining life and an early-bird fee of 5bp, lenders can join the offshore tranche for a top-level all-in pricing of 218.2bp and the lead arranger title, through a 45bp management fee, for US$20m or more, or an all-in pricing of 212.7bp and the arranger title, via a 30bp fee, for US$10m–$19m. The deadline to commit for the early-bird fee is February 21.
Funds are for refinancing purposes. The borrower last tapped the loan market with a US$184m-equivalent three year revolving credit facility in December 2015. BCA, CIMB, HSBC and StanChart were the MLABs on that loan, comprising a Rp1.875trn tranche and a Rp625bnequivalent tranche in US dollars. Based on a 2.75-year remaining life, the all-in pricing was 241.8bp (onshore) and 221.8bp (offshore) via margins of 220bp and 200bp, respectively. The Jakarta-listed borrower sells mobile phones, SIM cards, accessories, spare parts and offers phone repair services. › INDORENT
WORKS ON US$100M LOAN
Car rental company CSM CORPORATAMA, also known as Indorent, is about to launch a US$100m financing into general syndication with six banks at the top. ANZ , CIMB, CTBC Bank , DBS , Standard Chartered and SMBC are mandated
BANK RAKYAT INDONESIA has
› ADIRA
TARGETS RP1.5TRN VIA BONDS
ADIRA FINANCE aims
to raise Rp1.5trn from five-tranche bonds with rupiah and sukuk portions, according to an offer document. The Indonesian consumer finance firm has put out indicative price ranges of 5.85%–6.25% for rupiah bonds of 370 days, 6.25%–6.75% for those of two years, 6.95%– 7.45% for those of three years, 7.00%–7.50% for those of four years and 7.05%–7.55% for those seven years to raise Rp1.3trn. The remainder will come from Islamic paper with similar maturities and prices. Bookbuilding began on February 8 and will close on February 23. Mandiri, DBS Vickers, RHB, Indo Premier Sekuritas and Trimegah Sekuritas are lead arrangers for the issue, rated AAA (Pefindo). The funds will be used for consumer financing activities.
Poor response to Vedanta refi
Loans Five-year facility of US$575m attracts just two banks in general syndication
A five-year amortising loan of US$575m for London-listed VEDANTA RESOURCES met with a poor response before closing in December after just two banks joined in general syndication. Federal Bank and Punjab National Bank were the lenders, with a combined US$80m, in general syndication, meaning mandated lead arrangers, bookrunners and underwriters Barclays, Credit Suisse, DBS Bank , First Abu Dhabi Bank and Standard Chartered took US$99m each. The outcome was not surprising due to the timing of the loan, which was signed in December after having been launched into syndication in mid-September. It followed a US$651m four-tranche loan for Cairn India Holdings, which merged with Vedanta last year. Cairn India’s loan refinanced all debt at Vedanta wholly owned unit Twin Star Holdings, also the borrower on the latest borrowing. The US$651m four-tranche loan for Cairn India comprises a US$155.125m three-year facility A, a US$93m five-year facility B, a US$309.875m five-year facility C and a US$93m five-year facility D. Only facilities A and C were syndicated to foreign lenders, while Indian banks took up tranches B and D. Seven banks joined tranches A and C, while one Indian lender came forward for tranches
International Financing Review Asia February 10 2018
B and D. Axis, Barclays, Citigroup, Credit Suisse, First Abu Dhabi Bank, ICICI Bank and StanChart were the MLABs on the entire financing. Interestingly, Barclays and Credit Suisse ended up with zero final holds, a rarity in Asia syndicated loans. Axis Bank and ICICI underwrote tranches B and D. Banks joining both facilities A and C as MLAs on a pro-rata basis were offered a blended top-level all-in of 233.4bp. The blended interest margin is 205bp and the blended remaining average life is 3.17 years. On the other hand, Vedanta’s US$575m loan did not attract lenders, despite offering a richer top-level all-in of 345.46bp based on a margin of 310bp over Libor and a remaining average life of 4.23 years. Vedanta’s loan complemented US$1bn of seven-year non-call four senior unsecured bonds it completed in early August. The bonds were priced at 6.125%, inside initial guidance of 6.375%. The five leads on the loan, along with JP Morgan, were joint global coordinators, joint lead managers and joint bookrunners on the bonds. Proceeds from the loan and the bonds were used to refinance debt, including a tender offer Vedanta announced in late July for two outstanding bonds – US$774.8m of 6.0% 2019s and US$900m of 8.25% 2021s. PRAKASH CHAKRAVARTI, CHIEN MI WONG
27
Tax change to spur Indian ECM activity
Equities New capital gains tax seen speeding up disposals of stakes through IPOs and block trades
Promoters and private-equity investors are expected to speed up plans to sell stakes through IPOs and block trades with the new 10% long capital gains tax to kick in on April 1. The LCGT, proposed in the federal budget, will require any investor selling shares in the stock market to pay tax on the difference between the issue price and the net asset value of the company on January 31 2018. Bankers say that will give major investors an incentive to sell sooner rather than later. But the rules are also likely to raise valuation expectations as the exit prices will have to compensate for the new tax. “Promoters waiting for better valuations will give in as the new tax will eat into their gains after April,” said a Mumbai-based ECM banker. “We’re just hoping the markets will be back in positive territory after the recent sell-off.”
lead arrangers and bookrunners on the facility, which has an unspecified greenshoe option. A preliminary invitation has been sent to participants for a roadshow to be held in Singapore on February 7. The tenor and pricing terms have yet to be released. Funds will be used for refinancing and general corporate purposes. The borrower last completed a US$100m three-year loan in January 2016. CTBC, DBS, StanChart and SMBC were lenders. The loan, which attracted six others in general syndication, offered a top-level all-in prices of 305.68bp or 275.68bp for the offshore and onshore tranches, based on margins of 280bp and 250bp over Libor, respectively. The average life is 2.29 years. Indorent, an affiliate of Indomobil Finance Indonesia, provides vehicle and heavy-duty equipment financing services. Indorent and Indomobil Finance are units of Indomobil Multi Jasa, which under the control of conglomerate Salim Group.
JAPAN SYNDICATED LOANS
Since the budget on February 1, the benchmark S&P BSE Sensex Index has lost some of its lustre. For the month to last Thursday, it was down 5.7% as the budget and the global share volatility heightened selling. In the past, there was no LCGT on stockmarket exits. However, exits in the private market attracted a 20% LCGT for resident investors and 10% for foreigners. Bankers see a booming public market as the best option for promoters and PE players to monetise their assets. Equity issues from Indian companies totalled US$25bn in 2017, versus US$9.2bn in 2016, according to Thomson Reuters data. IPOs raised US$11.1bn, up 176% year on year and the highest since 2007. A majority of these IPOs involved stake sales from controlling shareholders. For example, the IPOs of close to US$1bn and
its president, who failed in an attempt last month. KK Ocean, president Hirofumi Kawai’s special-purpose company, reached an agreement with Toei Reefer Line’s top shareholders Reno and Office Support, investment funds related to Japanese activist investor Yoshiaki Murakami, with a revised offer of ¥800 (US$7.34) per share, up from the earlier ¥600. The revised offer for Jasdaq-listed Toei Reefer Line would be launched on Thursday and end on March 23, the frozen tuna shipping company said on Wednesday. MUFJ had committed a five-year senior loan of ¥7.2bn to back the MBO before increasing it to ¥9.3bn. Tokio Marine Mezzanine also doubled its mezzanine investment in preferred stock to ¥2bn from ¥1bn. Last month, Kawai withdrew his bid for Toei Reefer Line after failing to buy the minimum 3,689,400 shares, or 66.7% of the company, required for the purchase to proceed. He ended up with 2,520,429 shares, or a 45.5% stake. Since the announcement of the MBO in early November, the investment funds had increased their stakes in Toei Reefer Line to 16.7%, according to their January 15 filing to the Tokyo Stock Exchange. › SKYLARK GETS ¥107BN FOR REFINANCING
› TOEI REEFER MBO BACK ON TABLE
TOEI REEFER LINE ’s
management buyout is back in the limelight after a revised bid from
Tokyo Stock Exchange-listed restaurant chain operator SKYLARK signed a ¥107bn amortising term loan for refinancing.
28
International Financing Review Asia February 10 2018
above each of ICICI Lombard, SBI Life Insurance and HDFC Standard Life Insurance comprised only secondary shares. The IPOs of over US$1bn each of General Insurance Corp of India and New India Assurance had only a small primary component. “Promoters and PEs have had it so good that it was only natural someone would tax them,” said another ECM banker. For now, the Indian IPO pipeline looks good and the market is awaiting the floats of ICICI Securities, Bandhan Bank, Reliance General Insurance, Lemon Tree Hotels and Sandhar Technologies in the first quarter. The Rs45bn (US$700m) ICICI Securities and Rs13bn Lemon Tree IPOs comprise only secondary components, while those of Bandhan, Sandhar and Reliance General involve a mix of primary and secondary shares. S ANURADHA
The loan, signed on February 2, is split into an ¥8bn tranche A, maturing on December 31 2024, and a ¥99bn tranche B, due on December 31 2027. Tranche A will be repaid in 10 semiannual instalments of ¥411m each, with a balloon payment of ¥3.89bn to follow, while tranche B will be repaid in 16 semiannual instalments of ¥5.089bn apiece, with a balloon payment of ¥17.576bn to follow. The first instalment on both tranches is on December 31 2019. Mizuho Bank was the arranger and agent, MUFG and SMBC came in as co-arrangers, while Development Bank of Japan, Norinchukin Bank and Sumitomo Mitsui Trust Bank joined as lenders. Skylark Restaurants, a unit of Skylark, is the guarantor. Financial covenants are net assets must be maintained at a minimum of 75% of the highest amount of net assets as shown on the consolidated balance sheet as at December 31 for the fiscal years 2016, 2017 or 2018; the borrower must not record loss in its financial statements for two consecutive fiscal years; and the net leverage ratio should be less than or equal to: 4.00x for every quarter from April 1 2019 to March 31 2021, 3.75x for every quarter from April 1 2021 to March 31 2023, 3.50x for every quarter from April 1 2023 to March 31 2025, 3.25x for every quarter from April 1 2025 to March 31 2027, and 3.00x for every quarter from April 1 2027. Funds are to refinance a ¥107.1bn loan due on June 24 2019. Skylark, which, as of December 31,
COUNTRY REPORT MALAYSIA
operated 3,144 restaurants worldwide last tapped the syndicated loan market in February 2017 for a ¥30bn three year amortising term loan for capital expenditure. › CRE
LOGISTICS RAISES ¥12.37BN
CRE LOGISTICS REIT signed
a ¥12.37bn bullet term loan last Monday for property acquisitions. The loan comprises a ¥3.68bn four-year tranche, with an interest margin of 40bp over three-month Tibor, a ¥3.68bn five-year tranche, with a margin of 45bp over threemonth Tibor, a ¥3.68bn six-year tranche, with a margin of 50bp over three-month Tibor, and a ¥1.33bn one-year tranche, with a margin of 35bp over one-month Tibor. SMBC was the mandated lead arranger, Mizuho Bank and MUFG came in as coarrangers, while Development Bank of Japan, Nishi-Nippon City Bank and Resona Bank joined as lenders. Funds, drawn last Wednesday, are to buy four logistics facilities. The REIT, which invests solely in logistics facilities, was listed on the TSE last Wednesday.
EQUITY CAPITAL MARKETS › SOFTBANK
SET TO LIST MOBILE UNIT
Japanese conglomerate SOFTBANK GROUP has started preparations to list mobile phone unit SOFTBANK CORP.
SoftBank Group CEO Masayoshi Son told reporters last week that the company wanted to list the unit this year. According to last Wednesday’s press release from SoftBank Group, the company is currently accelerating its global investment activities through the SoftBank Vision Fund and other vehicles to drive overall growth. With the proposed spin-off, the respective roles and valuations of the group company and the mobile unit will be clear, making it possible to communicate information on the group’s businesses to the market with greater clarity. SoftBank Corp will remain a major consolidated subsidiary of the SoftBank Group’s telecommunications business, even after being listed, according to the press release. Last month, SoftBank Group was reportedly planning to list its mobile phone unit in Tokyo and overseas, possibly London, to raise as much as ¥2trn (US$18bn). › GLP
J-REIT LAUNCHES FOLLOW-ON
launched a global offering of new investment units to raise up to ¥70.4bn, based on the company’s closing price of ¥124,800 last Monday, according to a deal term-sheet. The base deal comprises 524,804 units, while there is an over-allotment option of up to 39,361 units. The over-allotment option represents 7.5% of the base size. Half of the offer is being offered to
international investors, while the other 50% is going to domestic buyers. Of the domestic tranche, 25% is earmarked for institutional investors, while the rest is for retail buyers. The units are marketed at a discount of 2.0%–4.5% to the market prices. The units will price on any day between February 14 and February 20. There is a 90-day lock-up period for the issuer and a 180-day lock-up spell for GLP Capital. Books for the international offering opened last Thursday and will close on February 13. The company will use the proceeds mainly as part payment towards the purchase of six logistics properties and the solar panels installed at 13 existing properties. Citigroup, Mizuho, Nomura and SMBC Nikko are the joint global coordinators. The four banks are also joint bookrunners on the international offering.
MALAYSIA
GLP J-REIT has
DEBT CAPITAL MARKETS › DANAINFRA
SELLS M$4BN SUKUK
State-owned DANAINFRA NASIONAL sold M$4bn (US$1.03bn) of Islamic bonds in a multitranche transaction last week through five joint lead managers.
China Eastern adds Japanese debt route
Bonds Chinese carrier to offer unfamiliar structures in yen debut
CHINA EASTERN AIRLINES will give Japanese
investors a taste of unfamiliar bond structures as it makes its yen market debut. The Chinese state-owned carrier spent three days briefing investors last week for a three-pronged offering, including bank guarantees and standby letters of credit. One piece will carry a guarantee from Sumitomo Mitsui Banking Corp, Hong Kong branch, and have an expected rating of AA from JCR. SMBC Nikko is a sole global coordinator and joint bookrunner, while DBJ Securities is a joint bookrunner. Two other pieces will have standby letters of credit from Bank of China, Tokyo branch, and Industrial Commercial Bank of China, Shanghai Municipal branch, respectively. Both bonds have expected ratings of A1 from Moody’s.
BoC , Mizuho and SMBC Nikko are joint global coordinators and joint bookrunners on the latter two structures, with Daiwa, Morgan Stanley and Nomura as joint bookrunners. The issuer is not expected to come quickly to market after last week’s roadshow, so as to give some time for Japanese investors to familiarise themselves with the structures. Although the proposed features are quite common in China, they are not in Japan – especially the SBLC – and investors need to secure internal approvals first. “China Eastern Airlines does not have credit ratings, but can become an investment target as the standby letter of credit is used for credit enhancement, but, because this is a bit different from a guarantee and because investors didn’t anticipate something
International Financing Review Asia February 10 2018
like this, they apparently need internal approvals,” said a banker on the deal. As the structures are also new to Japanese bankers, they are not fully certain if the schemes will be well received. However, at the same time, they hope that there will be more yen issuance from Chinese borrowers, even ones with lower credit ratings, if Japanese investors become familiar with such schemes. CEA filed information on the programme to the Tokyo Pro-bond market on February 2, registering to issue up to ¥50bn (US$456m). The bonds will be marketed under the pot system, not the traditional retention system, and are likely to have short maturities. The pricing date is not set yet. TAKAHIRO OKAMOTO
29
A total of M$3bn of long-dated notes was privately placed to institutional investors while the remaining M$1bn in shorter tenors was sold via a bookbuilding exercise. The private placement on Tuesday saw pricing on the M$1.5bn 20-year piece fixed at 5.11%, that on the M$1bn 25-year tranche at 5.24% and that on the M$500m 30-year portion at 5.36%. On Wednesday, pricing on the M$700m seven-year piece was fixed at 4.37%, while that on the M$500m 15-year was fixed at 4.90%. A 10-year tranche was scrapped because investors dropped out after DanaInfra revised price guidance to 4.50%. The seven-year tranche, however, proved to be a sweet spot, drawing a book of over M$2.5bn even after pricing was tightened. Pricing was at a spread of 44bp over Malaysian government securities. Initial price talk on the three tranches was 4.33%–4.43%, 4.50%–4.60% and 4.82%– 4.92%, respectively. All the Islamic bonds carry an irrevocable and unconditional guarantee from the federal government of Malaysia. DanaInfra, the government’s funding vehicle for mass transport projects, will settle the bonds on February 21, off a M$46bn sukuk murabahah programme. The five JLMs were AmInvestment Bank , CIMB, HSBC Amanah Malaysia, Maybank and RHB.
Food and beverage company Del Monte Pacific plans to list unit DEL MONTE PHILIPPINES on the Philippine Stock Exchange via an IPO of up to Ps16.7bn (US$324m). Del Monte Pacific said around 20% of the share capital, or 559.4m shares, would be sold at a maximum price of Ps29.88. After the IPO, it will still own at least 67% of the subsidiary for five years. BDO Capital is the sole global coordinator. The funds will be used for debt repayment and general corporate purposes. The shares of Del Monte Philippines, which makes canned pineapple and tropical mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup, are listed on the Singapore Exchange and PSE.
NEW ZEALAND
SINGAPORE
SYNDICATED LOANS
DEBT CAPITAL MARKETS
›
FLETCHER BUILDING EXPECTS BREACH
is reviewing key projects of its building and interiors division as it expects to post losses on breaches of one or more of its loan covenants. “Once the extent of those further losses is determined and provided for, it is expected that this would result in a breach of one or more covenants in the group’s financing arrangements,” the New Zealand construction company said in a statement. Last October, Fletcher had flagged a full-year loss of NZ$160m (US$116m) at the troubled unit due to difficulties in the construction of projects, such as the Convention Centre and Justice Precinct in Christchurch. Fletcher has requested a trading halt of its shares until Monday, when further details of the review will be released. It has outstanding syndicated loans of NZ$725m, with maturities in November 2020 and FLETCHER BUILDING
30
November 2022, according to Thomson Reuters LPC data. The lenders are ANZ, Bank of New Zealand, Bank of China, China Construction Bank, Citigroup, CBA, HSBC, MUFG and Westpac.
PHILIPPINES EQUITY CAPITAL MARKETS › DEL
MONTE PHILIPPINES PLANS IPO
› GUOCOLAND TAPS 4.6% PERPETUALS
raised S$50m (US$38m) from a tap of its existing 4.6% perpetual non-call five bonds, priced at par with a spread of 260.9bp over Singapore dollar SOR. The additional unsecured subordinated notes, which settled on Thursday and became fungible with the original perps, raised the outstanding issue size to S$400m. Proceeds will be used for general working capital needs and capital expenditure. GLL IHT is the issuer and parent GuocoLand is the guarantor of the notes, which come off a S$3bn multi-currency MTN programme. OCBC was sole lead manager and bookrunner. GUOCOLAND
› SING
POST SETS UP DEBT PROGRAMME
has established a S$1bn multi-currency debt-issuance programme SINGAPORE POST
International Financing Review Asia February 10 2018
with Credit Suisse and DBS Ban k as joint arrangers. Notes sold under the programme will pay fixed, floating or variable rates and can be in the form of senior or perpetual securities. The issuer is a private operator and provider of postal, e-commerce logistics and retail services. It has two outstanding bonds – a S$200m 3.5% note due in 2020 and a S$350m 4.25% perpetual callable in 2022. Singapore Telecommunications has a 21.7% stake in the company and Alibaba Investments has a 14.4% interest.
SYNDICATED LOANS ›
GRAB DRIVES IN FOR MAIDEN LOAN
Ride-hailing company GRAB is making its loan market debut with a S$400m–$500m (US$300m–$375m) three-year borrowing, which has been launched into general syndication. HSBC is coordinating the financing, whic h has an ave rage l ife of 2. 5 yea rs an d pays an interest margin of 225bp over SOR. Banks can join as lead arrangers with S$75m or more to earn upfront fees of 92.5bp, including for early-bird commitments, for a top-level all-in of 262bp, or as arrangers with S$50m–$74m to earn fees of 85bp for an all-in of 259bp, or as managers with S$25m–$49m to earn 70bp for an all-in of 253bp. The final deadline for responses is February 28. Grab was founded in Singapore in June 2012 and has quickly expanded to 55 cities across South-East Asia. It has up to 2.5m rides daily and more than 930,000 driver partners. Last July, Chinese ride-sharing giant Didi Chuxing and Japanese technology behemoth SoftBank Group agreed to invest US$2bn in Grab, which operates in Singapore, Malaysia, Indonesia, the Philippines, Thailand, Vietnam, Myanmar and Cambodia.
EQUITY CAPITAL MARKETS ›
ASCENDAS PLACEMENT BRINGS S$100M
Singapore-listed ASCENDAS INDIA TRUST has raised S$100m (US$76m) through the sale of 97.4m units at the bottom of a S$1.027– $1.083 price range. The number of shares put up for sale was increased to 97.4m from 73m. Books were covered twice and the
COUNTRY REPORT SOUTH
KOREA
GLP sponsors seek US$3.38bn funding
Loans Private-equity pair raising financing for equity contributions to acquiring consortium
Private-equity firms Hopu Investment Management and Vanke Real Estate (Hong Kong) are raising a US$3.38bn loan to back their equity contributions to a consortium that acquired Global Logistic Properties. China Construction Bank (Asia) and Industrial and Commercial Bank of China
are the mandated lead arrangers and bookrunners. Special-purpose vehicles NESTA INVESTMENT PARTNERS II and NESTA INVESTMENT PARTNERS III are the borrowers on the loan. NIP II’s facility comprises a US$1.817bn term loan and a US$223m revolving credit, while NIP III’s borrowing is split into a US1.23bn term loan and a US$110m revolver. The blended interest margin is 275bp over Libor, while the blended tenor is 4.68 years. Lenders receive a top-level blended all-in pricing of 290bp and the mandated lead arranger title for US$200m and above, based on a blended participation fee of 70.2bp, an all-in of 285bp and the lead arranger title for US$100m–$199m, via a fee of 46.8bp, and an all-in of 280bp and the arranger title for US$50m–$99m, via a fee of 23.4bp. The deadline for commitments is February 9. In December, GLP closed a US$4.108bn leveraged buyout loan to support the acquisition. Citigroup, DBS Bank, Goldman Sachs, MUFG and Mizuho Bank were original mandated lead arrangers and bookrunners, while Bank of China, Bank of Communications, China Merchants Bank and Industrial & Commercial Bank of China joined for the same title. That loan offered a top-level blended
final price represented an 8.3% discount to the pre-deal close of S$1.12. Close to 40 accounts took part in the sale and allocation was mostly skewed towards long-only institutional investors, real-estate specialists and existing unitholders. The top 10 investors were allocated more than 80% of the shares. There is a 90-day lock-up period on the issuer. Proceeds will be used to refinance the acquisition of warehouses at the Arshiya Free Trade Warehousing Zone located at Panvel near Mumbai. Citigroup and DBS were the bookrunners.
all-in of 135.4bp, based on a blended interest margin of 124.06bp over Libor and blended tenor of 3.095 years. The opening margins are 135bp, 120bp, 110bp and 135bp for tranches A1, A2, B and the revolver, respectively. SPV Nesta Investment Holdings is the borrower. The loan, among the largest LBO financings from Asia, will add to the debt of US$5.1bn at the operating subsidiaries of GLP, which existing lenders could roll over. Last July, GLP, together with its subsidiaries and Cayman Islandsincorporate NIH jointly said that the SPV would acquire all the shares of Asia’s biggest warehouse operator for a cash consideration of S$3.38 per share, valuing the company’s equity at about S$16bn (US$11.9bn). China Vanke, the parent of Vanke Real Estate, is the largest shareholder in NIH with a 21.4% stake and contributed around US$2.45bn, according to its filing with the Hong Kong stock exchange on January 22. Other members of the buying consortium are Hillhouse Capital Group and SMG Eastern, an entity under the full control of GLP CEO Ming Zhi Mei, as well as Bank of China Group Investment. GLP was delisted from Singapore Exchange on January 22. On February 2, Fitch downgraded GLP’s credit ratings to BBB from BBB+, on its expectations that the holding company’s leverage would increase sharply to over 70% after it drew down additional loans in January. Fitch calculates the leverage as the ratio of holding company net debt less net working capital to holding company liquid investment.
SOUTH KOREA DEBT CAPITAL MARKETS › DAEGU BANK DOES 5.5-YEAR PRINT
DAEGU BANK,
rated A2/A– (Moody’s/S&P), drew final orders of US$2.3bn from 138 accounts for US$300m of US dollar senior unsecured bonds. It priced the 3.75% 5.5-year notes at 99.479 to yield 3.856%, or five-year Treasuries plus 135bp, the tight end of final
International Financing Review Asia February 10 2018
Fitch has said it believes leverage will gradually decline, but that it may take more than 24 months for GLP to deleverage below 50%. GLP’s leverage increased from below 25% at end-March 2017 after it took on debt to provide financing to its new shareholders to fund its buyout. Fitch expects the holding company’s interest coverage ratio, which is the ratio of holding company’s recurring Ebitda to interest paid, to be healthy at above 2x, despite the increase in its loans. The agency expects GLP’s recurring Ebitda interest coverage to be 2.5x for the year ending March 2018. The company has put in place a deleveraging plan, but its successful execution within the next 24 months may not be within GLP’s control. GLP’s deleveraging plan includes asset recycling initiatives in China and Japan to take advantage of the low interest rates there. In December, GLP announced that it had obtained approval from the China Securities Regulatory Commission to issue up to Rmb12bn (US$1.88bn) of bonds in Shenzhen for projects related to China’s Belt and Road Initiative. Fitch has said the issuance will take advantage of the low leverage of GLP’s Chinese operating company. GLP’s US$46bn of globally diversified logistic assets were located in China (34%), the US (33%), Japan (23%), Brazil (6%) and Europe (4%) at December 2017. GLP is the largest logistic asset owner in China, Japan and Brazil. GLP counts several of the world’s leading retailers and manufacturers among its clients. EVELYNN LIN
guidance of Treasuries plus 135bp–140bp and well inside the initial 155bp area. Asia took 84% of the notes and Europe got 16%. In terms of investor types, 80% were fund managers and asset managers, 9% were banks, 8% were sovereign wealth funds and insurers, 3% were private banks and others. The Reg S notes have expected ratings of A2/A– (Moody’s/S&P). Citigroup, Credit Agricole and HSBC were joint bookrunners. Last November, Moody’s placed the issuer’s long-term and short-term ratings on review for downgrades after parent company bought a controlling stake in Hi Investment and Securities.
31
Moody’s said the W450bn ($416.4m) purchase would increase parent DGB Financial Group’s debts, raising the possibility that key subsidiary Daegu Bank might need to service the debt.
TAIWAN
SYNDICATED LOANS
DEBT CAPITAL MARKETS ›
yield 4.66%. Deutsche Bank handled both trades. BANK OF TOKYO-MITSUBISHI UFJ sold US$150m of 30-year zero-coupon notes, callable in January 2023 and every third anniversary thereafter. The notes, rated A1/A (Moody’s/ S&P), pay an IRR of 4.10%. MasterLink Securities and E Sun Commercial Bank were underwriters.
ASIAN ISSUERS PRINT FORMOSAS
The Taiwan Formosa bond market continued to provide ample fundraising opportunities for Asian issuers in the first five weeks of the year. DBS BANK sold US$250m 30-year zerocoupon bonds non-callable for the first five years. The notes, which can be called annually thereafter, pay an internal rate of return of 4.02%. SinoPac Securities and Yuanta Securities were leads on the trade. EXPORT-IMPORT BANK OF KOREA, rated Aa2/AA/ AA–, visited the Taiwan market twice to raise renminbi. It priced a Rmb300m (US$48m) six-year issue at par to yield 4.69% and a Rmb270m three-year trade priced at par to
› SMBC
AVIATION LAUNCHES LOAN
Aircraft-leasing company SMBC AVIATION CAPITAL has launched a five-year borrowing of US$600m, split into a US$200m term loan and a US$400m revolving credit. ANZ, Apple Bank for Savings, Bank of China, Singapore branch, Cathay United Bank , Citigroup, Maybank , OCBC Bank and Westpac, Singapore branch, are mandated lead arrangers and bookrunners on the unsecured facility. Citigroup is the global coordinator. The respective interest margins for the term loan and revolver are 97bp and 102bp over Libor. Based on a blended average life of 4.67 years, banks can join on a pro-rata basis for a top-level all-in of 112.1bp and the lead manager title, through a 55bp management fee, for US$20m or more. A bank meeting
AWARDS FOR EXCELLENCE
THE 21 ANNUAL IFR ASIA AWARDS DINNER ST
TUESDAY 27TH FEBRUARY 2018 FOUR SEASONS HOTEL, HONG KONG
IFRAsiaAwards.com #ifrawards
32
International Financing Review Asia February 10 2018
will be held in Taipei on February 7. Commitments are due on March 2. SMBC Aviation Capital Netherlands is the borrower, while Ireland-based SMBC Aviation Capital is guarantor. Funds will be used for general corporate purposes. In August 2015, SMBC Aviation Capital raised a US$600m four-year club loan from Citigroup, Credit Agricole, Goldman Sachs, Royal Bank of Canada and JP Morgan. SMBC Aviation Capital, rated A–/BBB+ (Fitch/S&P), is the fourth-largest aircraft lessor worldwide with 255 owned, 197 managed and 214 committed aircraft as of September 30 2017. Sumitomo Mitsui Financial Group controls 66% of SMBC Aviation Capital, while Sumitomo Corp owns 34%. ›
TPK SEEKS LOAN OF UP TO US$200M
has launched a three-year refinancing loan of up to US$200m through mandated lead arranger and bookrunner Mega International Commercial Bank. The touch-panel maker’s facility carries an interest margin of 120bp over Libor. The borrower will pay any excess interest rate beyond a 40bp difference between TAIFX and Libor. Banks can join as MLAs with US$25m or more for an upfront fee of 25bp, or as lead arrangers with US$20m–$24m for a 20bp TPK HOLDING
COUNTRY REPORT THAILAND
fee, or as managers with US$10m–$19m for a 10bp fee. The deadline for responses is March 30. In July 2011, TPK Universal Solutions, a unit of TPK Holding, raised a US$200m three-year loan. Citigroup led that loan, which offered a margin of 80bp over Libor. TPK Holding, a supplier to Apple, operates in Taiwan and internationally. › TWO
WIN TOP ROLE FOR ASE
has named two banks for top roles on a NT$90bn (US$3bn) five-year term loan to back its merger with peer Siliconware Precision Industries. Bank of Taiwan and Mega International Commercial Bank have been named facility agents for the loan, which has already received total commitments of NT$200bn with syndication expected to close soon. Coordinator Citigroup launched the loan in late December, offering an interest margin of 55bp over Taibor, with a pre-tax interest rate floor set at 1.7%. Mandated lead arrangers and bookrunners committing NT$7bn or more or NT$5bn–$6.9bn will get respective upfront fees of 30bp or 25bp, while MLAs with NT$3bn–$4.9bn will get a 20bp fee, lead managers with NT$2bn–$2.9bn will get a 15bp fee and managers with NT$1bn– $1.9bn will get a 10bp fee. Last November, China’s Anti-Monopoly Bureau said it had approved the merger conditionally, requiring both to operate separately for the next 24 months. ASE plans to create a new holding company, ASE Industrial Holding, before the end of May after ASE and SPIL shareholders vote on the merger at a meeting scheduled for this month. ASE Industrial will be the borrower on the NT$90bn loan and ASE will be the guarantor. ADVANCED SEMICONDUCTOR ENGINEERING
THAILAND
settlement scheduled for month-end. Bangkok Bank , Bank of Ayudhya and UOB Thailand are joint lead managers and underwriters. Frasers Property is a unit of Singaporebased property developer Frasers Property (formerly Frasers Centrepoint), which is ultimately under the control of Thai tycoon Charoen Sirivadhanabhakdi’s TCC Group. It sold seven-year bonds at 2.94% in December. › MUANGTHAI
READIES BT3BN ISSUE
will offer bonds of up to Bt3bn at maturities of three and four years to institutional and high-net-worth investors at the end of the month. The Bt2.5bn three-year piece will pay 3.7%, while the Bt1.5bn four-year portion pays 3.95%. Investors can subscribe to the bonds on February 23-27. The Thai auto-financing company, which Tris rates BBB, will use the proceeds for working capital and business expansion. Bangkok Bank , Krungthai Bank and Phatra Securities are joint lead managers and underwriters. MUANGTHAI LEASING
› QUALITY
LIFTS DUAL-TRANCHER TO BT2.25BN
priced dual-tranche bonds of five and 10 years to raise Bt2.25bn, lifting the issue size from an original Bt1.5bn. The Bt1bn five-year piece will pay 2.35% and the Bt1.25bn 10-year portion will pay 3.43% with respective spreads at 53bp and 88bp over Thai government bonds. Institutional and high-net-worth investors can subscribe to the notes on February 13-15. The Thai credit card services provider, with a A+ Tris rating, will use the proceeds for working capital and business expansion. Krungthai Bank and UOB Thailand were joint lead managers and underwriters. KRUNGTHAI CARD
DEBT CAPITAL MARKETS › FRASERS
PROP PLANS RETURN
will sell bonds of up to Bt5bn (US$159m) at endFebruary on its market return after a Bt2.5bn maiden issue late last year. The Thai real-estate company is expected to offer tenors of three, five and 10 years to raise a targeted minimum of Bt3.2bn, with a greenshoe option of Bt1.75bn. Bookbuilding is expected to be carried out in the week of February 19 with FRASERS PROPERTY HOLDINGS THAILAND
PLANS CGIF BONDS
plans to issue up to Bt2bn of five-year bonds with a partial guarantee from the Credit Guarantee Investment Facility of the Asian Development Bank. Kasikornbank , Krungthai Bank and UOB Thailand are joint lead managers and underwriters on the issue. The liquefied petroleum gas distributor’s issue will be the first baht notes from a Thai company to come with the CGIF wrap. There were two baht-denominated CGIF-guaranteed notes in the past but these were from foreign issuers Noble Group and KNM Group. Under the guarantee, the CGIF will provide unconditional and irrevocable guarantee for up to 85% of the principal amount and of unpaid interest. As a result of the wrap, the unsecured bonds scored a A rating from Tris, one notch above Siamgas’s corporate BBB. The guarantee will improve Siamgas’s credit profile in addition to cutting funding costs and allowing it to extend its maturity curve. Proceeds will be used for working capital needs. SIAMGAS AND PETROCHEMICALS
HOUSES PLANS BT3BN PRINT
Thai property owner and developer QUALITY HOUSES plans to raise up to Bt3bn from the sale of three-year bonds later this month. Preliminary price talk is at a spread range of 55bp–59bp over Thai government bonds, but this may change when bookbuilding kicks off on February 20. The issuer, with a A– Tris rating, is targeting minimum proceeds of Bt2.5bn, plus a Bt500m greenshoe. Bangkok Bank , Krungthai Bank and UOB Thailand are joint lead managers and underwriters. Proceeds are likely to refinance a Bt4bn 3.18% bond due on February 20. › KTC
› SIAMGAS
International Financing Review Asia February 10 2018
VIETNAM SYNDICATED LOANS › SIX
JOIN VIETINBANK FACILITY
A US$1 00m te rm loan for
VIETNAM JOINT
STOCK COMMERCIAL BANK FOR INDUSTRY AND
has seen six lenders join in general syndication. Mitsubishi UFJ Financial Group is sole mandated lead arranger and bookrunner on the loan, which has already received commitments of over US$90m. More banks are expected to join the loan, which will close before the Lunar New Year. The loan, which the borrower and the MLAB signed on December 29, pays a toplevel all-in pricing of 135bp, based on an interest margin of 115bp and a two-year average life. Funds are for on-lending purposes. The borrower last raised a US$100m three-year bullet loan in February 2017. Deutsche Bank was the sole MLAB of the facility, which attracted seven other lenders. The loan offered a top-level all-in of 170bp, based on an interest margin of 140bp over Libor. VietinBank, one of the four largest stateowned commercial banks in the country, is rated B1/BB–/B+. TRADE
33
ASIA DATA ASIAN SYNDICATED LOAN PIPELINE UPDATES WEEK OF 5 FEBRUARY
Company
Currency
Size (m) Margin (All-in)
Tenor (mths) Facility
Arrangers
Hong Kong
China SCE Property Holdings
US$
300
330 (390)
42
Term Loan
HSBC, Hang Seng Bank, BoC
Far East Horizon
US$
800
130 (155)
36
Term Loan
Taishin Financial Holding, E Sun Commercial Bank, CCB, China Merchants Bank, BTMU
Hong Kong Tiancheng Investment & Trading US$
200
Trimco International Holdings
US$
150
US$
200
128 (165)
36
Term Loan
SCB, ANZ
60
Term Loan
CTBC, Cathay Financial Holdings
60
Revolver/Term Loan
State Bank of India, BTMU
India
Indiabulls Housing Finance
120 (143)
Power Finance Corp
US$
250
60
Revolver/Term Loan
Rural Electrification Corp
US$
400
36
Revolver/Term Loan
US$
100
Indonesia
CSM Corporatama Tiphone Mobile Indonesia
Rp US$
190 (211)
1,250,000 94
Term Loan
ANZ, CTBC, DBS, SCB, CIMB
300
36
Term Loan
Bank Central Asia, CIMB, SCB
200 (218)
36
Term Loan
Bank Central Asia, CIMB, SCB
12
Term Loan
Japan
Japan Oil Gas & Metals National Corp
¥
36,818
Taiwan
ChipMos Technologies Inc
NT$
10,000
Revolver/Term Loan
Pou Chen Corp
NT$
30,000
60
Revolver/Term Loan
Source: Thomson Reuters LPC
LAST WEEK’S ECM DEALS
Stock
Country
A-Living Services
China
Date
02/02/18
Amount
Price
HK$4.1bn
HK$12.30
Deal type
Bookrunner(s)
IPO (Primary)
HSBC, Huatai Financial, Morgan Stanley, ABC International, BNP Paribas, CCB International, China Sec International, ICBC International
Land & Houses
Thailand
04/02/18
Bt10.6bn
Bt10.90
Follow-on (Secondary)
BAML, Phatra
Vincom Retail
Vietnam
05/02/18
D4.51trn
D47,750
Follow-on (Secondary)
Citigroup, Credit Suisse, Deutsche Bank, Maybank
Ascendas Retail Trust
Singapore
05/02/18
S$100m
$1.027
Follow-on (Primary)
Citigroup, DBS
Bank of Gansu
China
06/02/18
HK$893m
HK$2.69
IPO Greenshoe (Primary)
BOC International, CCB International, CMB International,
China Overseas Grand Oceans
China
06/02/18 HK$4.65bn
HK$4.08
Follow-on (Primary)
China Overseas Land & Investment
Huami
China
07/02/18
US$110m
US$11
IPO (Primary)
Credit Suisse, Citigroup, China Renaissance
JinkoSolar
China
07/02/18
US$65m
US$18.15
Follow-on (Primary)
Barclays, Credit Suisse
Guotai Junan International, Huatai Financial
Source: IFR Asia
MERRILL LYNCH ASIAN DOLLAR INDEX
Index
Description
Index level
1 week total return
ADIG ADHY AGIG AGHY ACIG ACHY
1 month total return
3 months total return
Asian-dollar high-grade index
385.904
–0.469
–1.302
–1.539
113
Asian-dollar high-yield index
613.834
–0.542
–0.529
–0.012
375
Asian-dollar government high-grade index
359.200
–0.767
–1.706
–1.527
99
Asian-dollar government high-yield index
725.145
–1.308
–1.391
–0.333
289
Asian-dollar corporate high-grade index
411.124
–0.365
–1.161
–1.555
119
Asian-dollar corporate high-yield index
504.315
–0.383
–0.348
0.062
392
Source: Merrill Lynch
IS YOUR COMPANY BREAKING THE LAW ? If you or your colleagues are photocopying articles from IFR Asia, then your company is breaking the law. For information on a company-wide subscription to IFR Asia or www.ifrasia.com, Please email
[email protected].
34
International Financing Review Asia February 10 2018
OAS
ASIA DATA
ASIAN CURRENCY BOND ISSUANCE (1) Issuer
AJ Networks AJ Rent A Car
Currency
Amount
Maturity
Pay date
Leads
05/02/18
100
Senior Bonds
IBK Sec
W
25bn
2y
05/02/18
100
Senior Bonds
IBK Sec
W
45bn
3y
05/02/18
100
Senior Bonds
Korea Investment & Sec
W
35bn
2y
05/02/18
100
Senior Bonds
Korea Investment & Sec
Rmb
1.3bn
3y
02/02/18
HK$
764m
1y
09/02/18
W
30bn
3y
W
10bn
3y
CCB (Sydney)
Product
1y
Bank of China (Macau)
Busan Port Authority
Issue price
15bn
AVIC Leasing BS Capital
Coupon
W
100
Medium-Term Nts
Bank of Shanghai, Haitong Sec
100
Fxd Rte CDs
Standard Chartered (HK)
06/02/18
100
Senior Bonds
Korea Asset Investment Sec
06/02/18
100
Senior Bonds
Korea Asset Investment Sec
1.95
W
10bn
4y
06/02/18
100
Senior Bonds
Korea Asset Investment Sec
W
40bn
5y
06/02/18
100
Senior Bonds
Korea Asset Investment Sec
W
200bn
10y
05/02/18
100
Senior Bonds
Kyobo Sec
W
150bn
20y
05/02/18
100
Senior Bonds
NH Investment & Sec
A$
100.112m
3y
09/02/18
Transfer CD
National Australia Bank
Bank Bill
100.112
Swap Rate+91bp China Construction Sixth
Rmb
1bn
5y
06/02/18
100
Gtd Secured Nts
Ping An Sec
Citic Capital Eq Invest
Rmb
1bn
3y
08/02/18
100
Medium-Term Nts
China Citic
Citigroup Capital Korea Dgb Finl Doosan Infracore
Emirates NBD Bank PJSC Export Development Canada
W
3.5bn
2y
05/02/18
100
Senior Bonds
KTB Investment & Sec
W
14bn
1y
06/02/18
100
Senior Bonds
HI Investment & Sec
W
150bn
08/02/18
100
Subord Bonds
KBI Sec
W
20bn
1y
02/02/18
100
Senior Bonds
Kumho Investment Bank
W
10bn
1y
02/02/18
100
Senior Bonds
Korea Investment & Sec
W
10bn
1y
02/02/18
Senior Bonds
Korea Investment & Sec
A$
448.407m
10y
09/02/18
4.75
99.646
Medium-Term Nts
ANZ Banking Group, Nomura Sec, Emirates NBD Capital
A$
124.793m
5y
13/02/18
2.7
99.834
Gtd Mdm-Trm Nts Nomura Australia
2bn
3y
08/02/18
5.8
100
Sr Med Term Nts
1bn
3y
06/02/18
100
Medium-Term Nts
Industrial Bank
40bn
1y
05/02/18
100
Senior Bonds
Samsung Sec
Finance Department of Sharjah
Rmb
Galaxy Ind Shenzhen
Rmb
Gangwondo Development Guangxi Invest
6.55
W
100
Bank of China, ICBC, HSBC, Standard Chartered
Rmb
500m
3y
07/02/18
100
Unsecured Bond
Haitong Sec, Sealand Sec, Huarong Sec
Rmb
500m
5y
07/02/18
100
Unsecured Bond
Haitong Sec, Sealand Sec, Huarong Sec
Guangzhou Metro
Rmb
3bn
5y
07/02/18
100
Medium-Term Nts
ABC, ICBC
Guizhou Hongguo Econ
Rmb
350m
7y
08/02/18
100
St Enterprise
Xiangcai Sec
GX Xijiang Group
Rmb
500m
5y
08/02/18
100
Medium-Term Nts
BoCom
Hailiang Group
Rmb
500m
1y
07/02/18
100
CP
Bohai Bank
Haitong Intl Sec
HK$
200m
1y
12/02/18
100
Medium-Term Nts
Standard Chartered (HK)
2.65
Halla Corp
W
5bn
1y
06/02/18
100
Senior Bonds
CAPE Investment & Sec
Hanjin Transportation
W
78bn
1y
07/02/18
100
Senior Bonds
Kiwoom Sec
W
100bn
3y
06/02/18
100
Senior Bonds
Mirae Asset Daewoo
1bn
1y
08/02/18
100
CP
China Guangfa Bank
Hansol Paper Hengyang Urban Constr Invest Hotel Lotte
Rmb W
140bn
3y
08/02/18
100
Senior Bonds
KBI Sec
W
110bn
5y
08/02/18
100
Senior Bonds
KBI Sec
W
100bn
2y
06/02/18
100
Senior Bonds
Shinhan Investment Corp
Huaian Dvlp Holdings
Rmb
800m
5y
06/02/18
100
Medium-Term Nts
Everbright Sec, CMB
Huayuan Industry & Trade Group
Rmb
500m
1y
07/02/18
100
CP
Haitong Sec, China Citic, ABC
W
30bn
2y
02/02/18
100
Senior Bonds
KBI Sec
W
30bn
3y
06/02/18
100
Flt Rt Sr Bonds
Mirae Asset Daewoo
W
10bn
2y
06/02/18
100
Senior Bonds
Mirae Asset Daewoo
Hyundai Capital Services Inc
Hyundai Card
W
30bn
5y
01/02/18
100
Flt Rt Sr Bonds
SK Sec
Hyundai Commercial Inc
W
20bn
3y
05/02/18
100
Senior Bonds
KBI Sec
W
20bn
5y
05/02/18
100
Senior Bonds
KBI Sec
Hyundai Engineering & Constr
W
180bn
5y
08/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
120bn
3y
08/02/18
100
Senior Bonds
Mirae Asset Daewoo
Rs
3.15bn
3y
06/02/18
1bn
5y
07/02/18
Indiabulls Housing Finance
7.8
100
Medium-Term Nts
HSBC
100
Medium-Term Nts
Industrial Bank
Inner Mongolia Highway Constr
Rmb
Jiangxi Railway Invest
Rmb
1bn
3y
02/02/18
5.82
100
Medium-Term Nts
CMB, CCB
Jining City Urban Constr
Rmb
900m
5y
05/02/18
6.25
100
Medium-Term Nts
CCB, CMBC
International Financing Review Asia February 10 2018
35
ASIAN CURRENCY BOND ISSUANCE (2) Issuer
Jinke Ppty KB Capital
KEB Hana Bank
Currency
Maturity
Pay date
Product
Leads
Rmb
Amount
500m
2y
08/02/18
Coupon
Issue price
100
Unsecured Bond
Zhongshan Sec, Guotong Sec
Rmb
500m
3y
08/02/18
100
Unsecured Bond
Zhongshan Sec, Guotong Sec
W
50bn
3y
01/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
30bn
2y
01/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
70bn
3y
01/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
10bn
3y
01/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
200bn
1y
01/02/18
100
Flt Rt Sr Bonds
KTB Investment & Sec
W
98.08bn
1y
02/02/18
98.08
Senior Bonds
Eugene Invest & Sec
Senior Bonds
Kumho Investment Bank
Kolon Global Corp
W
10bn
1y
05/02/18
Kommunalbanken AS
A$
49.717m
10y
09/02/18
100 3.4
99.433
3.25
100.34
Korea Investment Holdings
W
200bn
3y
05/02/18
Landwirtschaftliche Rentenbank
A$
50.17m
10y
09/02/18
5y
06/02/18
100
Senior Bonds
08/02/18
100
Medium-Term Nts Huaxia Bank, China Galaxy Sec
LG Card LiuZhou Invest Hldg Lotte Capital
LS Cable & System
100
Medium-Term Nts RBC Capital Markets Senior Bonds
HMC Investment Sec
Gtd Mdm-Trm Nts Deutsche (Australia)
W
50bn
Rmb
1.5bn
Kyobo Sec
W
20bn
3y
05/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
20bn
3y
05/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
10bn
5y
05/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
20bn
2y
05/02/18
100
Senior Bonds
Mirae Asset Daewoo
W
100bn
3y
09/02/18
100
Senior Bonds
NH Investment & Sec
W
30bn
5y
09/02/18
100
Senior Bonds
NH Investment & Sec
Mercedes-Benz Fin Svcs Korea
W
130bn
2y
07/02/18
100
Senior Bonds
Korea Investment & Sec
NABARD
Rs
1.35bn
15y
02/02/18
100
Bonds
ICICI Bank, AK Capital Services, Trust Investment Advisors,
7.99
HDFC Nanjing Liuhe Econ
Rmb
500m
Nantong High and New Tech
Rmb
700m
NH Capital
1y
05/02/18
100
Medium-Term Nts Shanghai Pudong
07/02/18
100
CP
China Citic, CSC Financial
W
30bn
3y
31/01/18
100
Senior Bonds
IBK Sec
W
30bn
3y
31/01/18
100
Senior Bonds
IBK Sec
W
20bn
4y
31/01/18
100
Senior Bonds
IBK Sec
Palm Eco-Town Development
Rmb
200m
2y
06/02/18
6.48
100
Gtd Secured Nts
G uotai Junan Sec
Rmb
100m
2y
06/02/18
6.26
100
Gtd Secured Nts
Guotai Junan Sec
Quanzhou Taiwanese Invest
Rmb
500m
3y
08/02/18
100
Medium-Term Nts GF Sec, CCB
Shandong Hongqiao New
Rmb
1bn
1y
05/02/18
100
CP
Shanghai Fosun High Tech
Rmb
2bn
2y
05/02/18
100
Medium-Term Nts Postal Savings Bank Of China, CMB
Shanghai Shimao
Rmb
800m
3y
06/02/18
100
Medium-Term Nts CMBC
Shangrao City State-owned
Rmb
1.2bn
3y
06/02/18
100
Medium-Term Nts Haitong Sec, CMBC
Shenzhen Baiyeyuan Invest
Rmb
550m
3y
08/02/18
100
Medium-Term Nts Industrial Bank
Shenzhen Overseas Chinese Town Shinsegae Chosun Hotel Sichuan Commun Invest Suhyup Bank
China Citic
Rmb
3bn
5y
05/02/18
5.74
100
Unsecured Bond
CITIC Sec
Rmb
2bn
3y
05/02/18
5.54
100
Unsecured Bond
CITIC Sec
W
10bn
5y
05/02/18
100
Senior Bonds
HI Investment & Sec
W
10bn
3y
05/02/18
100
Senior Bonds
Mirae Asset Daewoo
Rmb W
2bn
3y
08/02/18
100
Medium-Term Nts China Everbright Bank, ICBC
150bn
2y
01/02/18
100
Senior Bonds
100
Medium-Term Nts China Everbright Bank
100
Medium-Term Nts Huatai Sec, China Citic
100
Subord Debs
Suzhou Electrical Apparatus
Rmb
230m
3y
02/02/18
Taizhou Gaojiao Invest
Rmb
600m
3y
06/02/18
United India Insurance
Rs
9bn
10y
02/02/18
7 8.25
KTB Investment & Sec
Axis Bank, Edelweiss Financial Svcs, ICICI Bank, LKP Shares & Sec, Tipsons
Wanda Group Share
Rmb
500m
1y
07/02/18
100
CP
Bank of China
Wanzhou Commercial Bank
Rmb
1bn
10y
08/02/18
100
St Enterprise
ICBC, Everbright Sec, Essence Sec
Wharf Reic Fin Bvi
HK$
499.375m
7y
05/02/18
2.95
99.875
Gtd Sr Notes
Mizuho Sec
World Bank
A$
499.23m
11y
14/02/18
3.3
99.846
Medium-Term Nts Deutsche (Australia), Nomura Australia
Rmb
400m
1y
02/02/18
5.61
Xinjiang Runsheng Invest
Rmb
300m
1y
05/02/18
100
CP
CDB
Xinjiang Xinye State-Owned
Rmb
100m
5y
07/02/18
100
Unsecured Bond
Xiangcai Sec
Rmb
200m
3y
07/02/18
100
Unsecured Bond
Xiangcai Sec
Rmb
1bn
3y
07/02/18
100
Medium-Term Nts Industrial Bank
Yan Kuang Group
Rmb
2bn
3y
07/02/18
Yang Quan Coal Industry
Rmb
1bn
1y
05/02/18
Zigui County Investment
Rmb
200m
10y
12/02/18
xiaogan Urban Construction
Xuancheng State-Owned Asts
5.47
100
CP
100
Medium-Term Nts Ping An Bank
100
CP
China Everbright Bank
100
St Enterprise
Changjiang Sec
Source: IFR Asia
36
China Citic, BoCom
International Financing Review Asia February 10 2018
WANT A GLOBAL PERSPECTIVE ON THE SYNDICATED LOAN MARKET? FIND IT WITH THOMSON REUTERS LPC Thomson Reuters LPC is the premier global provider of information on the syndicated loan and high yield bond markets. Our first-to-the-market news and comprehensive real-time and historical data help industry players stay informed about market trends and facilitate trading and investment decisions. LPC’s publications, end-of-day valuations, online news, analysis, and interactive databases are used every day by banks, asset managers, law firms, regulators, corporations and others to drive valuation, syndication, trading, research and por tfolio management activities. CONNECT TO THE GLOBAL SYNDICATED LOAN MARKET WITH THOMSON REUTERS LPC.
www.loanpricing.com
[email protected]
