IFR ASIAdl.magazinedl.com/magazinedl/IFR Asia/2019/IFR Asia – July 6, 2019... · IFR ASIA INTERNATIONAL FINANCING REVIEW ASIA JULY 6 2019 1097 BONDS Malaysia adds debt to cut tolls

IFRASIAI N T E R N A T I O N A L F I N A N C I N G R E V I E W A S I A

JULY 6 2019 ISSUE 1097 www.ifrasia.com

BONDS

Malaysia adds debt to cut tolls with M$6.2bn highway acquisition deal06

EQUITIES

Four beat IPO targets on China’s tech board as new bourse takes off08

BONDS

Investors shun HNA bond auction in setback for onshore repo market 10

PEOPLE & MARKETS

DCM dominant as Q2 investment banking fees slip to three-year low15

China ramps up overseas bond push.First Macau, then on to Europe

No cornerstone added: Budweiser APACbrews year’s largest IPO in Hong Kong

Belt & Road loans feel trade war chillas lenders cherry-pick ‘safe’ projects

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International Financing Review Asia July 6 2019 1

Upfront OPINION INTERNATIONAL FINANCING REVIEW ASIA

Wassup, Hong Kong?

When it comes to a Hong Kong IPO, AB InBev’s

looking like the genuine article, to borrow one of the company’s old slogans.

Budweiser opened books last week on a Hong Kong listing that will raise up to US$9.8bn. As well as helping the parent

the growing Chinese consumer sector.That alone is enough to warrant careful attention, after

an onslaught of technology IPOs that have failed to perform.

for the wider market. Budweiser is selling shares without a single cornerstone investor. That is a big break from tradition in Hong Kong, where issuers and underwriters

have been far too keen to lock away stock in return for a little less risk of a failed deal.

The cornerstone concept remains popular with Chinese companies that want to show off their strategic connections, or with biotechnology companies looking for specialist investors to validate the science behind their products.

But Hong Kong no longer needs to rely on a handful of big-name investors to price an IPO for a classic, cash-generating business such as Budweiser. Many bankers argue the practice has outlived its usefulness, with some calling for the exchange to scrap the lock-up requirement altogether.

The main problem with locking up cornerstone investors is the overhang it creates in the secondary market. Meituan Dianping, the Chinese online delivery service, is a case in point: already languishing below its IPO price, the stock

when six-month lock-ups for its IPO cornerstones expired. Meituan only recovered to its IPO price last week, for the

For all its recent reforms, Hong Kong still needs to convince global investors that it can offer the liquidity to rival the US exchanges. A major, index-eligible offering from Budweiser is a far better recipe.

Bond market politics

India and Malaysia are realising the value of a deep local bond market, even if it is only in forestalling a hit to the national budget.

India’s government is preparing a massive bond programme to take on some of Air India’s less attractive assets and liabilities ahead of a planned sale. Malaysian leaders are working on something similar to take over four highways so they can meet a pre-election pledge to scrap tolls.

The motivations may be different – one is privatising, one is nationalising – but in both cases the governments are turning to the local bond markets to meet policy objectives. They both also appear set to use SPV structures to keep the liabilities at arm’s length.

The generous interpretation is that these deals show Asia’s local currency bond markets are versatile enough to

In reality, however, the capital markets do not exist

than committing to years of interest payments, both governments would be better off in the long run by paying more upfront rather than spreading the burden over years to come.

The greater, often overlooked, risk is that large deals like these divert valuable capital from more productive uses.

compliant state investors: Air India’s last bond issue in 2012 was bought entirely by Employees’ Provident Fund Organisation and Life Insurance Corp of India, both controlled by the government.

To avoid distorting the market, India and Malaysia will need to resist the temptation of relying only on these friendly institutions and offer real, market-driven pricing.

own objectives, too, that really would be a valuable policy.

The main problem with locking up cornerstone investors is the overhang it creates in the secondary market.

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EMAIL ADDRESSES

Advanced Micro-Fabrication Equipment 30

Air India 7

Air India Asset Holdings Limited 7

Allied Machinery 29

Anji Microelectronics

Technology Shanghai 30

Appotronics Corporation 30

ArcSoft Corporation 30

Auckland Council 38

Australian Business Securitisation Fund 23

Avolon Holdings 40

Axelum Resources 39

Bangkok Commercial Asset Management 42

Bank of China 9

Bank of Communications 9

Bank of Hangzhou 27

Beidahuang KenFeng Seed 29

Beijing ABT Networks 30

Beijing Enterprises Clean Energy Group 32

Beijing Piesat Information Technology 30

Beijing Tianyishangjia New Material 30

Beijing Worldia Diamond Tools 30

Beijing Zeho Waterfront Ecological

Environment Treatment 29

Bharat Oman Refineries 34

BNP Paribas 22

BOC Aviation 22

Budweiser Brewing Company APAC 4

Bunge 37

Chandra Sakti Utama Leasing 35

China Construction Bank 9

China Feihe 29

China National Bluestar (Group) 24

China National Gold Group

Gold Jewellery 29

China Orient Asset Management 27

China Railway Signal and

Communication 29, 30

China Resources Land 27

China Three Gorges Corporation 27

Chong Hing Bank 30

CIMC Vehicles 29

Cnano Technology 30

Cromwell Property Group 24

Cross River Rail 24

Ctrip.com International 27

Dafa Properties Group 24

Dionysus Aviation 31

DouYu International Holdings 28

East Japan Railway 36

Edvantage Group 29

Energy Absolute 42

Equitativa Group 40

Espressif Systems Shanghai 30

Eversec Technology 30

Export-Import Bank of India 34

Fantawild Holdings 29

FlexiGroup 38

Fosun International 24

Frasers Hospitality Real Estate

Investment Trust 40

Fujian Forecam Optics 30

Future Land Development Holdings 11

FWD Group 31

Gamuda 6

Goodfarmer Foods Holding Group 29

GPT Funds Management 22

Guangdong Jia Yuan Technology Shares 30

Guangzhou Development District

Financial Holdings Group 24

Guangzhou Fangbang Electronics 30

Guangzhou R&F Properties 24

Harbin Xinguang Optic-Electronics

Technology 30

Housing Development Finance Corp 33

Housing New Zealand 38

Indiabulls Housing Finance 33

Industrial and Commercial Bank of China 9

Invincible Investment Corp 38

Japan Arctic LNG 37

Jiangsu Boqian New Materials Stock 29

Jiangsu Sword Agrochemical 29

Jiayuan International 25

Kemai Chemical 29

Kesas 6

Korea Development Bank 41

Kosamattam Finance 33

Lao People’s Democratic Republic 8

Legend Financial Leasing (Shanghai) 27

Lendlease Group 41

Lingkaran Trans Kota 6

Louis Dreyfus 38

Macrolink Holding 25

Maguey Dutch Aviation 31

ManpowerGroup Greater China 29

Maxi-Cash Financial Services 39

Mega Auto Finance 35

Mega Central Finance 35

Members Equity Bank 21

Metro 2019-1 23

Metro Finance 23

Metropolitan Bank & Trust 38

Micro-Tech (Nanjing) 30

Montage Technology 8

Motor Trade Finance 38

Nanjing Runmao Property 28

New Town Construction Investment

(Jizhou, Tianjin) 25

Nine Dragons Paper (Holdings) 31

Ningbo Deye Technology 29

Ningbo Huatai Shengfu

Polymeric Material 28

Ningbo Ronbaymat New

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No Va Land Investment Group 43

Nomura Research Institute 37

Panasonic 36

Pepper Group 22

Pepper SPARKZ Trust No.1 22

Perusahaan Listrik Negara 35

Philippine Savings Bank 39

Pingdingshan Tianan Coal Mining 26

Plaza Indonesia 36

Postal Savings Bank of China 29, 30

Power Finance Corp 33

Projek Smart Holdings 6

PTT Global Chemical 43

Q Card Trust 38

Rabobank Australia branch 21

REC 33

Reliance Home Finance 33

Risen Energy 30

Santander Consumer Finance 36

Seazen Holdings 11

SF Holding 32

Shandong Guohui Investment 25

Shanghai Haohai Biological Technology 30

Shanghai MicroPort

Endovascular MedTech 30

Shriram Transport Finance 33

ShunSin Technology Holdings 41

Sistem Penyuraian Trafik KL Barat 6

State Bank of India 33

Sterling and Wilson 34

Sumitomo 36

Suzhou Harmontronics

Automation Technology 30

Suzhou HYC Technology 30

Suzhou TZTEK Technology 8

Tahoe Group 26

Tata Sponge Iron 34

Tehri Hydro Development Corp 33

Thomson Medical Group 39

Tianjin Airlines 10

Tianjin Binhai New Area

Construction & Investment Group 26

Tien Phong Commercial Joint Stock Bank 43

Toronto-Dominion Bank 21

Tower Bersama Infrastructure 35

Traffic Control Technology 30

Tsinghua Tongfang 26

Vietnam Prosperity Joint

Stock Commercial Bank 43

Well Faith Management 28

Western Superconducting Technologies 30

Wolong Electric Group 28

XiAn Bright Laser Technologies 30

Xinjiang Investment Development Group 27

Xinyaqiang Silicon Chemistry 29

Yantai Raytron Technology 8

Yuzhou Properties 27

Zhejiang HangKe Technology 8

COMPANY INDEX


ContentsINTERNATIONAL FINANCING REVIEW ASIA

JULY 6 2019 ISSUE 1097

COVER STORIES

EQUITIES

04 Budweiser serves up King of IPOsBudweiser Brewing Company APAC is looking to raise up to HK$76.6bn from a Hong Kong IPO that could be the world’s largest this year.

BONDS

04 China woos overseas bond buyersChina is expanding its footprint in international bond markets as it looks to enhance its profile as global attention is focused on trade tensions with the US.

LOANS

06 Trade war hits BRI financingsThe trade war between the US and China is forcing lenders to reassess, or even reject, financings linked to China’s massive US$1trn Belt and Road Initiative.

NEWS

06 Malaysia adds debt to cut tollsThe government’s offer to acquire the holders of four highway concessions will help its pledge to remove toll charges, but will add to an already high federal debt.

07 Air India plans jumbo bond sale India is counting on a jumbo Rs220bn

bond sale to revive efforts to privatise debt-ridden national carrier Air India.

08 Four beat tech board targets Four companies priced IPOs on the

Shanghai tech board last week at a premium to average industry valuations.

08 Downgrade dents Laos bond plan Laos is considering its options after a

rating downgrade threatened to push up pricing for planned baht bonds.

PEOPLE & MARKETS

15 Asia IB Q2 fees hit three-year lowAsian investment banking continued its moribund start to the year with the worst second quarter for three years as activity fell across all asset classes bar DCMs.

16 Singapore reviews REIT gearing rules Singapore may relax the 45%

gearing limit on REITs to give them more flexibility to acquire assets.

16 Morgan Stanley nears China JV control Morgan Stanley’s Chinese JV

partner put a 2% stake up for sale, allowing MS to take majority control.

16 Who’s moving where... Bank of America Merrill Lynch has appointed

Peter Guenthardt co-head of Asia Pacific investment banking.

20 In Brief Hong Kong’s SFC has issued a lifetime ban to Tim Leissner, ex-

Goldman Sachs banker embroiled in the 1MDB money-laundering scandal.

ASIA DATA

44 This week’s figures

21 AUSTRALIA

Toronto-Dominion raised

A$1.25bn as the first Canadian

bank to offer TLAC Kangaroo

bonds. Copycat trades may

occur if pricing stacks up.

25 CHINA

Guangzhou R&F Properties

priced a US$450m five-year

non-call three senior notes

offering at par to yield 8.125%,

inside initial guidance.

30 HONG KONG

Chong Hing Bank is planning

dollar-denominated Basel III-

compliant AT1 capital securities

off a newly set-up US$2bn

MTN programme.

33 INDIA

REC, formerly known as Rural

Electrification Corporation,

will seek board approval on

July 10 to raise up to Rs750bn

from bonds.

35 INDONESIA

Perusahaan Listrik Negara has

picked six banks for a proposed

offering of 144A/Reg S US

dollar bonds, subject to market

conditions.

36 JAPAN

Santander Consumer Finance,

rated A2/A–/A–, has raised

¥50bn from a dual-tranche

euroyen bond offering that

marks its biggest deal in yen.

38 NEW ZEALAND

Auckland Council raised the

maximum NZ$150m from its

second Green bond offering

2bp inside the municipality’s

standard local secondary curve.

38 PHILIPPINES

Metropolitan Bank & Trust has

raised Ps11.25bn from two-year

bonds at 5.5%. It increased the

issue size from its initial target

of Ps5bn due to demand.

39 SINGAPORE

Thomson Medical Group has

mandated three for a potential

Singapore dollar bond offering.

This will be a debut issue from

the healthcare company.

41 SOUTH KOREA

KDB priced its first Green

euro-currency bond, a €500m

five-year offering that drew

more than €2bn of orders from

104 accounts.

41 TAIWAN

ShunSin Technology Holdings

has increased a three-year loan

to NT$3.9bn-equivalent from a

NT$3bn-equivalent target after

attracting a dozen banks.

42 THAILAND

State-owned financial

institution Bangkok Commercial

Asset Management has

mandated two to lead a bond

offering of up to Bt15bn.

43 VIETNAM

Tien Phong Commercial Joint

Stock Bank has mandated

MUFG as sole bookrunner to

arrange investor meetings in

Singapore and Hong Kong.

COUNTRY REPORT

News

Budweiser serves up King of IPOs Equities Jumbo offering comes with no cornerstone tranche

BY FIONA LAU

BUDWEISER BREWING COMPANY

APAC, the Asia-Pacific business of Anheuser-Busch InBev, is looking to raise up to HK$76.6bn (US$9.8bn) from a Hong Kong IPO that could be the world’s largest this year.

The maker of Foster’s and Stella Artois is marketing 15.4% of its enlarged share capital at a pre-shoe valuation of around US$54.3bn–$63.7bn and a post-shoe valuation of around US$55.5bn–$65.2bn. It will sell about 1.63bn shares at an indicative price range of HK$40.00–$47.00 a share.

“The bottom of the price range reflects feedback during pre-marketing. Earlier reports were talking about a valuation of US$70bn, and that isn’t even in the range,” one ECM banker said.

Even at the bottom of the price range, the US$8.3bn deal size will overtake the US$8.1bn US IPO of ride-hailing giant Uber Technologies in

May and stand as the largest globally since SoftBank Corp’s US$23.3bn-equivalent Tokyo listing last October.

Unlike most jumbo IPOs in Hong Kong, the Budweiser deal comes with no cornerstone investors.

“Feedback from pre-marketing was encouraging and the issuer has confidence the deal can be done even without cornerstone investors,”

said a person close to the deal. “Not bringing in cornerstones has also allowed the company to have more flexibility on setting the price range.”

Last year, mobile phone infrastructure company China Tower sold about 19%

of its HK$58.8bn IPO to 10 cornerstone investors. In 2016, Postal Savings Bank of China, the country’s biggest lender by branches, sold 77% of its HK$59.12bn IPO to six cornerstone investors.

The index implications are also important. Without a cornerstone tranche, Budweiser’s entire 15% offering will be counted as a free float, which allows the company to be included in MSCI indices, according to Sumeet Singh, head of research at Aequitas Research.

Market participants said there is demand for consumer companies that are generating real earnings.

“Investors see good returns and fair valuations in the consumer sector… It’s much easier to value these companies

Malaysian tolls 06 Air India jumbo 07 Tech board exceeds expectations 08

China woos overseas bond buyers Bonds MoF sells first CNH bond in Macau, plans Europe meetings

BY CAROL CHAN, YANFEI WANG

China is expanding its footprint in the international bond markets as it looks to enhance its profile at a time when global attention is focused on trade tensions with the US.

Last week, acting through the Ministry of Finance, the government sold renminbi-denominated bonds in Masau for the first time, furthering the internationalisation of the Chinese currency and the development of the CNH market.

This week and next, MoF officials will meet fixed-income investors in Europe ahead of a potential foreign currency-denominated bond offering later this year, which would follow two US dollar bond

issues in the past two years.The MoF’s core team in

charge of international funding will visit Frankfurt on July 12 and London on July 15, according to people familiar with the situation. The official purpose of the meetings is to update investors on China’s economic and financial situation.

Bank of China, Bank of Communications and Deutsche Bank are arranging the Frankfurt meetings, while BOC, BoCom, HSBC and Standard Chartered Bank are setting up the London leg.

China ended a decade-long absence from the US dollar bond market in October 2017, when it printed US$2bn of sovereign bonds to overwhelming demand. It

returned in October last year for a further US$3bn, again attracting strong demand despite a global market sell-off during bookbuilding.

Ahead of these two deals, MoF officials only held roadshows in Hong Kong, confident that demand would far outweigh supply.

The MoF has not announced any plans for foreign currency-denominated bonds so far this year, but the investor meetings are being watched with interest and the choice of two European cities has led some to speculate that China may be considering a new currency denomination.

“The MoF probably will continue to issue foreign currency-denominated bonds to international investors. To hold a roadshow in Europe doesn’t

mean that the MoF is looking to issue euro bonds. I think for currency, it is flexible,” one person said.

LOTUS BONDS

Last Thursday, the MoF broke new ground closer to home when it sold an offshore renminbi-denominated bond in the special administrative region of Macau. The Rmb1.7bn (US$247m) three-year notes priced at 3.05%, inside initial guidance of 3.20%.

The Reg S unrated issue will be cleared through Chongwa (Macao) Financial Asset Exchange and Macau will grant it tax exemption.

An additional Rmb300m 3.30% two-year retail tranche is open to local investors until July 19.

The offering comes ahead of the 20th anniversary of Macau’s return to China in December 1999 and is intended to demonstrate Beijing’s support


“The China business of Budweiser probably deserves an at-par or premium valuation to CR Beer and Tsingtao. But don’t forget the listing also includes non-China businesses which have slower growth.”

China offshore AT1 09 HNA bond auction flops 10 Uncertain Future 11

on a P/E multiple than a tech company that only has revenues,” the first ECM banker said.

CHINA PREMIUMInvestors generally reckon the valuation is reasonable at the low end of the price range.

The company is selling shares at a 2020 EV/Ebitda of 15.5–18.2 and a 2020 P/E of 28.5–33.5. Peer China Resources Beer trades at a 2020 EV/Ebitda of 17.6 and 2020 P/E of 34.6, while Tsingtao Brewery changes hands at 15 and 34, respectively.

“The China business of Budweiser probably deserves an at-par or premium valuation to CR Beer and Tsingtao. But don’t forget the listing also includes non-China businesses which have slower growth,” said a fund manager.

Budweiser produces and sells more than 50 beer brands including Budweiser, Skol and Corona. Its principal markets

in Asia-Pacific are China, Australia, South Korea, India and Vietnam.

The company posted a net profit of US$351m for the first three months of 2019, up 1.4% year on year. Its 2018 net profit was US$1.4bn, up 31% from 2017.

In the first quarter of 2019, the normalised Ebitda for Budweiser’s Asia Pacific West business, which is mostly China, saw an organic growth rate of 23% while that of Asia Pacific East was only 2.6%.

Singh at Aequitas Research reckons at the low end of the range the offering implies an upside of 16%–26% based on a forecast market capitalisation of US$63bn–$69bn.

Momentum is quietly building.

“Books continue to grow steadily including sizable roadshow conversion. We continue to receive positive feedback from long-only institutions and hedge funds

alike,” said another ECM banker with knowledge of the transaction.

DEBT REDUCTIONAB InBev, the world’s largest brewer, has said the listing will create an APAC consumer goods champion and provide a vehicle for potential mergers and acquisitions in the region.

It is also using the IPO to help pay down a debt stack that totals more than US$100bn, including some US$60bn in outstanding bonds, according to Refinitiv data.

AB InBev, rated Baa1/A–/BBB, has been aggressively terming out its debt, using a six-part US$15.5bn bond issue in January with maturities up to 40 years to tender US$16.5bn of bonds maturing between 2021-2026.

However, secondary bond spreads did not react overly positively to the news of the IPO in part because there is fear the company could turn around and use these funds for new

M&A, one investor said.The beer maker’s 5.45%

2039 bond was its most active on the week, moving just 3bp tighter on the news to trade hands at 143bp over Treasuries.

The company declined to comment on the use of proceeds from the IPO.

Bookbuilding for the Hong Kong IPO started last Tuesday and pricing is scheduled for July 11. Shares are due to start trading on July 19.

The deal offers an underwriting fee of 1% and an incentive fee of up to 0.5%.

The company plans to use the proceeds to repay loans due to AB InBev subsidiaries as a result of its reorganisation.

JP Morgan and Morgan Stanley are joint sponsors. They are also global coordinators and bookrunners with Bank of America Merrill Lynch and Deutsche Bank. The other bookrunners are BNP Paribas, CICC, Citigroup and HSBC.

for the development of the territory’s financial market and the diversification of its economy.

Becky Liu, China macro strategist at StanChart, said in a note on June 25 that the deal could mark the beginning of regular CNH bond issuance by the Chinese government in Macau, although the size and frequency will likely be much smaller than Beijing’s sales of Dim Sum bonds in Hong Kong.

The Macau CNH bonds have been dubbed “Lotus bonds” to distinguish them from Dim Sum bonds.

“We felt the MoF is increasing its presence in the offshore market this year. Apart from Macau, it might also tap the European market as Europe has been involved a lot in Belt and Road Initiative projects,” said a banker on the MOF’s Macau offering.

The expanded supply could help support the development

of the CNH by establishing a funding benchmark and increasing the availability of risk-free investible assets offshore, said Liu.

In its previous CNH bond

issues to institutional investors in Hong Kong, the MoF has used the bond tendering platform of the Hong Kong Monetary Authority’s Central Moneymarkets Unit. In Macau, it conducted a bookbuilding exercise as there is no equivalent to the CMU infrastructure.

EXPANDING FOOTPRINTThere is no specific timeline for CNH bond issuance, according to a MoF official, who said only that China is willing to strengthen financial cooperation with parties involved in BRI projects.

China has increased its renminbi bond issuance offshore. In addition to the MoF’s plan for annual CNH government bond issuance in Hong Kong starting in November last year, the People’s Bank of China has regularly issued CNH bills in Hong Kong through the CMU.

In the first half of this year, the PBoC sold Rmb70bn of CNH bills in Hong Kong, boosting overall CNH issuance, including bonds and certificates of deposit, to Rmb166bn, a 42% year-on-year increase, according to an HSBC report.

BOC Macau branch was the sole global coordinator on both

the institutional and retail tranches of the MoF’s offering in Macau. It was also joint lead manager and joint bookrunner with BoCom Macau branch, Banco Nacional Ultramarino, China Construction Bank Macau branch, ICBC (Macau), HSBC Macau branch, Luso International Bank, Agricultural Bank of China Macao branch, China Guangfa Bank Macau branch, StanChart HK, Tai Fung Bank, Macau Chinese Bank and Well Link Bank on the institutional tranche.

For the institutional portion, 67% of the bonds went to Macau, 28.5% to Hong Kong, and 4.5% to others. By investor type, 85% went to banks, 9% to pension funds, 4% to central banks, 1% to asset managers and fund managers, and 1% to insurers and others.

BOC Macau branch, BoCom Macau branch and BNU are joint lead managers and joint bookrunners on the retail tranche.


For daily news stories visit www.ifrasia.com

“To hold a roadshow in Europe doesn’t mean that the MoF is looking to issue euro bonds. I think for currency, it is flexible.”

Malaysia adds debt to cut tolls Bonds MoF plans to issue M$6.2bn bond via special vehicle to acquire concessions

BY KIT YIN BOEY

Malaysia’s offer to acquire the holders of four highway concessions may help the government meet its election pledge to remove toll charges, but it will add to an already high federal debt burden.

The Ministry of Finance in late June made a conditional offer to acquire four highway concessionaires for M$6.2bn (US$1.52bn). The highways – Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Lebuhraya Shah Alam (Kesas) and Smart Tunnel – are respectively owned by LINGKARAN TRANS

KOTA (Litrak), SISTEM PENYURAIAN

TRAFIK KL BARAT, KESAS and PROJEK

SMART HOLDINGS. The respective concessions are due to expire between nine years (Kesas) and 23 years (Smart).

The plan still requires the approval of the shareholders and creditors of the four concessionnaires, as well as the full cabinet.

The proposed acquisitions will be funded by a M$6.2bn bond to be issued by a special purpose vehicle set up by the MoF. The purchase price

will cover the highways’ outstanding debt.

The ministry has not yet clarified whether the government will provide an explicit guarantee for the proposed sukuk, which it said would be repaid from new congestion charges – fees that would be lower than the existing tolls.

The deal, however, is expected to leave the government with at least contingent liabilities, since the new owner of the highway concessions will be on the hook for any shortfall.

The four highways, which account for 48% of all toll revenues collected on Malaysia’s urban toll roads, have a combined M$2.3bn in outstanding Islamic bonds with maturities ranging from 2019-2032. Projek Smart has the longest-dated sukuk of M$50m maturing in September 2032.

Hong Leong Investment Bank is advising Litrak and Malaysian construction company GAMUDA, which has equity in all four projects, and the bank will likely lead efforts to gain consent from their respective bondholders to the sale of

assets and early redemptions, among other things.

GOVERNMENT TEMPLATEThe government is expected to use the plan as a template to acquire more of the country’s 21 toll roads, and the scheme is not expected to disrupt Malaysia’s deep bond market, which has funded up to M$471bn of infrastructure projects since a privatisation programme began in the 1990s.

“The preservation of investor confidence and adherence to the rule of law – by safeguarding the sanctity of contracts – is critical to the continued long-term funding of future infrastructure projects by the private sector,” said Davinder Kaur Gill, RAM’S co-head of infrastructure and utilities ratings.

Gamuda’s board swiftly announced its acceptance of the government offer. Subsequently, the sponsors and concessionaires of LDP, Sprint and Kesas also announced their approval. Projek Smart, a joint venture between Gamuda and MMC, has not made any announcement on the offer yet.

Analysts said the debt-funded acquisitions could be

an acceptable risk given that federal debt fell to M$686bn as of April this year from the M$1trn inherited by the Pakatan Harapan government in May last year. The drop has been attributed to the cancellation of some projects, the reduced costs of others and a rise in GDP. Overall debt and liabilities accounted for 75.4% of GDP in 2018, down from 79.3% in 2017.

The MoF said in a statement that the removal of toll charges would save public users about M$180m annually, while the government would no longer need to pay compensation amounting to M$5.3bn to the concessionaires for the freeze in toll rates imposed at the start of the year.

Public support may be undercut somewhat by the congestion fees that are planned to come into effect in January 2020, though the fees, which will vary based on peak, shoulder and off-peak hours, will be substantially lower than the toll charges. The fees will also be sufficient to cover the operation and maintenance costs of the highways.

“In other words, the acquisition cost will be self-financing through the collection of congestion charges and will not require any government expenditure,” said Finance Minister Lim Guan Eng.

Trade war hits BRI financings Loans Chinese lenders turn cautious on landmark infrastructure initiative

BY APPLE LI

The trade war between the US and China is forcing lenders to reassess, or even reject, financings linked to China’s massive US$1trn Belt and Road Initiative that includes transportation, energy and infrastructure projects in more than 70 countries.

While Chinese lenders remain the biggest backers of President Xi Jinping’s “project of the century”, some are turning increasingly cautious

on BRI deals that could be exposed to US tariffs or other measures.

Bankers are particularly concerned of a deterioration of credit quality for Chinese companies that sponsor BRI projects or play a pivotal role in the supply chain.

“We’re considering rejecting funding for some Belt and Road projects after analysing the potential impact the trade war might have on the sponsor,” a senior Beijing-based banker said.

Despite the uncertainty, lenders still see opportunities in certain industries or countries, including Vietnam, Taiwan, Bangladesh and South Korea.

“We remain supportive of projects which are not exposed to these risks, especially in some countries that could even benefit from the trade war, in particular, Vietnam, and other South-East Asian countries,” the Beijing-based banker said.

South-East Asian countries are likely to be among the

recipients of trade and investment opportunities as the US and China divert imports away from each other to other nations, according to a June 5 study by Japanese investment bank Nomura.

Vietnam has so far been the biggest winner, with increased exports to both China and the US helping boost GDP growth to 7.9%. Taiwan, Chile, Malaysia and Argentina also stand out as beneficiaries, according to Nomura.

The most recent financing

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linked to the Belt and Road Initiative was a US$1.065bn 14.5-year loan for China Construction America, the American subsidiary of state-owned builder China State Construction Engineering Corp.

The deal was signed in early June and backs the construction of a 538-kilometre highway project in Argentina. This is CCA’s first public-private partnership and the first such contract for a Chinese company in Argentina, which has pledged to deepen cooperation with China under the BRI framework but stopped short of formally endorsing the scheme.

Sumitomo Mitsui Banking Corp was the mandated lead

arranger and bookrunner of that transaction, which attracted four banks in syndication and pays an interest margin of 300bp over Libor.

OPPORTUNISTIC LENDING

Non-financial outbound direct investments from China into 51 countries along the Belt and Road declined 5.1% year on year to US$5.63bn in the first five months this year, according to data from the Chinese ministry of commerce.

The biggest destinations were Singapore, Vietnam, Pakistan, the United Arab Emirates and Malaysia, in sectors including leasing and business services,

manufacturing and retail as well as information and technology.

Despite the fall in outbound investments, bankers are still eyeing potential lending opportunities as uncertainties around trade talks drag on.

“We’re still seeing strong pipelines in the infrastructure and energy sectors in South-East Asia and in some parts of Europe,” said a second senior Beijing-based banker at a Chinese bank.

US President Donald Trump and Chinese President Xi Jinping met on the sidelines of the G20 summit in Japan on June 29, where the leaders of the two world’s biggest

economies agreed to restart stalled trade talks and pledged to hold off on new tariffs on each other’s imports.

Although trade talks have restarted, a potential deal is still a long way off, White House trade adviser Peter Navarro said in an interview with US media on July 2.

“It remains to be seen whether the two countries will be able to resolve the trade issues. We’ve all seen Trump changing his mind, days after he made his statements or promises, so we’ll remain selective in our lending and follow the developments closely,” said the second banker.

Air India plans jumbo bond sale Bonds Financing revives efforts to privatise national carrier

BY KRISHNA MERCHANT

The Indian government is counting on a jumbo Rs220bn (US$3.2bn) bond sale to revive efforts to privatise debt-ridden national carrier AIR INDIA after a first botched attempt last year.

AIR INDIA ASSET HOLDINGS LIMITED, a government-owned special purpose vehicle formed last year to take over Rs295bn of the airline’s Rs575bn debt, in addition to various assets and subsidiaries, is set to name underwriters for the proposed bond issue on Monday, according to a source close to the plans.

Around 16 arrangers put in bids last Wednesday to manage the sale.

The SPV is planning to raise Rs70bn from three-year government-serviced bonds on July 15. A sale of Rs150bn 10-year government-guaranteed bonds would follow by the end of the month.

The proceeds will be used to further streamline Air India’s debt structure and make it fit for a share sale later this year.

In May 2018, the government offered a 76% stake in the airline but failed to attract a single bidder, causing great

embarrassment at the time for the administration of Prime Minister Narendra Modi. AIAHL was formed afterwards to start cleaning up the company’s debt burden.

The government confirmed in its budget statement on Friday that it will now “reinitiate the process of strategic disinvestment of Air India”.

The company is expected to report a loss of more than Rs76bn for year to March 2019, up from a loss of Rs53.37bn a year earlier, according to Reuters, despite receiving Rs39.75bn of government funds in the last fiscal year.

According to local media reports, Air India does not have enough funds to pay employee salaries beyond October.

STAKE SALE

Much is riding on the success of the AIAHL bond issue. “The removal of the huge chunk of debt improves the attractiveness of the airline,” said a partner from an accounting firm.

However, Air India’s previous attempt at issuing a large government-supported bond was not a success. In March,

it sent an RFP to raise up to Rs70bn from bonds backed by a government guarantee at tenors of up to 15 years, but the issue did not materialise because investors were not comfortable with the structure.

“There was a clause in the issue that if the ownership changes, the government guarantee will cease to exist,” said a DCM banker. That was clearly a concern for investors, given that the government wants to sell its stake.

“Hopefully there will be an unconditional guarantee from the government of India” this time, said a fund manager.

Investors are expected to be keen on the bonds because of the government guarantee and the pick-up over government securities.

“Investors do not have to worry about repayment. If Air India Asset Holdings is not able to sell the assets and subsidiaries, the government will pay the coupon and principal to the bondholders,”

said another DCM banker.Few investors participated

the last time Air India came to the market in December 2012, when it raised Rs74bn from 19-year bonds at 9.27%. That issue had an unconditional government guarantee and was taken up by Employees’ Provident Fund Organisation and Life Insurance Corp of India, both of which are controlled by the government.

The competitive environment for the airline has improved after its debt-laden private sector rival Jet Airways ceased operations in May.

“With Jet Airways shutting down, the March quarter was good for Indian carriers as competition reduced and fares went up,” said Kinjal Shah, Icra’s vice president of corporate ratings.

Economic conditions are also more favourable.

“Oil prices have come off recent highs and the rupee is also stable,” said the accounting firm partner.

SBI Capital Markets is the adviser for the bond sale.



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Downgrade hits Laos bond plan Bonds Rating action may raise funding costs on Bt7bn issue

BY KIT YIN BOEY

The LAO PEOPLE’S DEMOCRATIC

REPUBLIC is considering various funding options after a rating downgrade threatened to push up pricing for a planned offering of baht-denominated bonds.

Thai rating agency Tris Ratings on June 28 demoted the land-locked country’s BBB+ grade by one notch to BBB with a stable outlook on rising concerns over falling foreign exchange reserves and a growing debt servicing burden. According to data from the Bank of the Lao PDR, official forex reserves fell 14% to US$873m at the end of 2018, equivalent to just 1.7 months of

imports in 2018. Forex reserves averaged US$901m during 2014-2018.

Tris is also projecting rising scheduled debt repayments over the next three years. The ratio of debt service to forex reserves is likely to have hit 78% in 2018, a surge from 34% in 2017, and external public debt was estimated to exceed US$9.76bn at the end of 2018.

“With limited domestic liquidity and the need to fund ongoing public investment projects, we expect the government’s external debts will continue rising, though at a slower pace compared with recent years,” said the Tris rating note.

The downgrade had minimal

impact on Laos’s US$1.6bn-equivalent bonds denominated in baht, due mainly to the illiquidity of the notes. As a result of the downgrade, however, investors are expected to request a higher yield on any new bond offering.

The sovereign has just started the process of a sale of up to Bt7bn (US$224m) of bonds after it received approval from Thailand’s Ministry of Finance in April. Banks have submitted bids for the mandate but no leads have been appointed yet. Twin Pine Group is advising Laos.

Laos is now mulling a series of meetings over the next two weeks with government authorities and Thai banks to clarify its plans and gauge

investor interest following the downgrade. It is not clear if the sovereign will want to pay a premium, but bankers said investor appetite will not be lacking.

“There have been a number of sales of Triple B rated bonds and they attracted healthy interest, so we are quite confident there will be demand for Laos’s bonds,” said one Thai banker.

Longer-term economic and fiscal prospects look more promising, said bankers. They pointed to a series of natural disasters as well as a dam collapse as key factors behind its economic slowdown to a growth rate of 6.3% in 2018.

“Going forward, growth is expected to remain strong supported by private investment, electricity exports, and completion of the Kunming-Vientiane railway

Four beat tech board targets Equities New Shanghai bourse offers more flexibility on IPO pricing, deal sizes

BY KAREN TIAN, FIONA LAU

Four companies priced IPOs on the Shanghai tech board last week at a premium to average industry valuations, underlining the appeal of the new board’s market-based pricing to potential issuers.

YANTAI RAYTRON TECHNOLOGY, SUZHOU TZTEK TECHNOLOGY, ZHEJIANG

HANGKE TECHNOLOGY and MONTAGE

TECHNOLOGY – which was previously listed in the US – are set to raise a combined Rmb6.35bn (US$924m), exceeding their targets in earlier filings.

After the first tech board issuer, Suzhou HYC Technology, raised slightly less than its target a week earlier, the four IPOs confirm that companies have more flexibility on the size of their capital raisings under the tech board’s market-based pricing framework.

Yantai Raytron set the IPO price at Rmb20 per share to raise Rmb1.2bn, 166% more

than its original target of Rmb450m.

At the issue price, the 2018 price to earnings multiple is 71.10, which is 133% higher than the industry average ratio of 30.58. However, it is still lower than the respective P/E multiples of 139.66 and 113.75 of two Shenzhen-listed comparable companies, Wuhan Guide Infrared and Zhejiang Dali Technology.

The issuer plans to offer 60m A-shares or 13.48% of its enlarged capital. The company plans to allocate 5% of the offer each to the sponsor Citic Securities and a special asset management plan for senior executives and core employees. The rest of the offer will be sold to institutions (80%) and retail (20%).

The company specialises in thermal imaging technology, and will use the proceeds to upgrade its production, develop more products and build an R&D centre.

Suzhou TZTEK, which makes precision measuring equipment and automated manufacturing systems, priced its IPO at Rmb25.50 to raise Rmb1.23bn, up from its original target of Rmb1bn.

The issue price translates into a 2018 P/E of 52.26, higher than the industry average ratio of 31.26. Haitong Securities is the sponsor.

Both above companies wrapped up the IPOs on July 4.

In a surprise twist, Galaxy Securities, which bid for 6.4m TZTEK shares in the institutional tranche, failed to subscribe for the shares on time, earning China’s eighth-biggest brokerage a six-month ban from investing in any A-share IPO.

Rechargeable battery manufacturer HangKe Technology set the issue price at Rmb27.43 per share to raise Rmb1.1bn, more than double its initial target of Rmb547m. This translates to a 2018 P/E of

38.4, higher than the industry average of 31.3.

Sponsor Guosen Securities bought 4% of the 41m-share IPO.

HAPPY HOMECOMING

Chipmaker Montage will become the first previously US-listed company to go public on the Shanghai tech board after pricing a Rmb2.8bn IPO at Rmb24.80 per share, again raising more than the Rmb2.3bn originally planned. The company plans to offer 113m A-shares, or not less than 10% of its enlarged capital.

The price values Montage at 40.12 times 2018 earnings, higher than the industry average ratio of 30.93 in the past month. Books will open for a day on Monday.

Montage raised US$71m from a Nasdaq IPO in October 2013, but delisted in November 2014 when a Chinese consortium acquired the company for US$693m. Based on its Shanghai IPO price,

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the company is now worth US$4.1bn.

Around 30% of the IPO, or 33.9m shares, has been allocated to strategic investors. Sponsor Citic Securities will buy 3% of the float or 3.4m shares as a strategic investor, and four other strategic investors, including a subsidiary of Intel in Dalian city, will buy 30.5m shares. The remaining 70% of the IPO will be bought by institutional (80%) and retail (20%) investors.

Citic Securities was one of the investors in a private financing round in May 2018. It owns a 5.65% stake in the company.

Montage will use the proceeds for research in artificial intelligence and new-generation chips and to upgrade its hardware.

Citic Securities is also joint bookrunner with CICC, China Securities, Guotai Junan Securities, and Zhongtai Securities.

The sponsor and bookrunner fee for the deal will be 1.25% of the fundraising size, and each bookrunner will get not less than Rmb1.8m as a service fee.

BOC scales back offshore AT1 Bonds Chinese banks seek cheaper capital in onshore market

BY CAROL CHAN, DANIEL STANTON

BANK OF CHINA, whose US$6.5bn Additional Tier 1 offering set a record for Chinese bank capital issuance in 2014, will refinance less than half of those securities in the offshore market later this year as onshore funding has become more attractive.

The Hong Kong and Shanghai-listed lender said on July 2 it received approval from the China Banking and Insurance Regulatory Commission to issue up to Rmb20bn (US$2.9bn) of offshore preference shares. This suggests that only part of the 6.75% preference shares, which have a first call date in October this year, will be refinanced in the international market.

The offshore quota is half what BOC had flagged earlier. In January, the bank won shareholder approval to issue up to Rmb120bn of preference shares in the onshore and offshore markets, with up to Rmb40bn to be raised offshore.

With onshore funding costs now far lower than offshore, Chinese lenders are favouring the onshore market for regulatory capital issuance.

China this year made it easier for banks to issue AT1 capital in the onshore market, allowing perpetual bonds for the first time and making the securities eligible for repo transactions with the central bank. Under previous rules, only preference shares counted as AT1 capital, putting the format off limits to unlisted banks.

BOC in late January issued the country’s first onshore bank perpetual bond, raising Rmb40bn at 4.50%. China Minsheng Banking Corp in May and Hua Xia Bank in June also issued onshore perpetual notes of Rmb40bn each, both at a yield of 4.85%.

The funding cost was much lower than what the two banks would have paid offshore. For

example, Minsheng’s 4.95% offshore preference shares issued in 2016 were trading at a yield of 6.1%-6.2% last week.

BOC was the first Chinese bank to issue offshore AT1 five years ago, and how it deals with the call option is seen as a model for others.

All subsequent Chinese bank offshore AT1s are callable after five years and have loss-absorption features that could see them converted into equity in the worst-case scenario.

OFFSHORE APPEAL?There was little bank capital issuance in the offshore market in the first half, but that is expected to increase towards the end of the year as some banks either issue debut AT1 bonds or refinance callable securities.

So far this year, China Construction Bank was the only PRC-incorporated bank to sell Tier 2 bonds in the offshore market with a US$1.85bn 10-year non-call five issue in February. Guangzhou Rural Commercial Bank was the only one to issue offshore AT1s – a tightly priced US$1.43bn debut at 5.90% in June.

“Yield products like AT1s and corporate hybrids are going to be in vogue in a world where the 10-year US Treasury yield is around 2%,” said Ed Tsui, head of Asia debt syndicate at Deutsche Bank. “Most Chinese AT1s were sold onshore earlier this year, but with the buoyant offshore market I think discussions will be refreshed.”

But so far, based on capital issuance plans announced by Chinese banks, the onshore market is likely to account for a large share of the supply.

BOC has received approval from both the CBIRC and the China Securities Regulatory

Commission to issue up to Rmb100bn of onshore preference shares.

Moreover, it also plans to issue up to Rmb40bn of perpetual capital bonds and up to Rmb70bn of Tier 2 bonds onshore and offshore. The onshore/offshore split was not specified.

INDUSTRIAL AND COMMERCIAL BANK

OF CHINA’s US$5.7bn-equivalent triple-currency offshore AT1s will be callable in December this year, but it looks like that ICBC will only refinance part of them in the international market.

ICBC last November won shareholder approval to issue preference shares in both onshore and offshore markets to raise up to Rmb100bn, with no more than Rmb44bn to come offshore.

Earlier this year, ICBC received approval from both the CBIRC and the CSRC to issue up to Rmb70bn of onshore preference shares. So far no approval has been received for its offshore AT1 issuance plan.

In May it received shareholder approval to issue up to Rmb80bn perpetual securities in the onshore market.

Meanwhile BANK OF

COMMUNICATIONS and CHINA

CONSTRUCTION BANK have calls next year on US$2.45bn and US$3.05bn of offshore AT1s, respectively. Smaller joint stock commercial banks, city commercial and rural commercial banks have call dates on their offshore AT1s mostly coming in late 2021 and in 2022.

CCB in June received shareholder approval to issue up to Rmb40bn of onshore perpetuals and up to Rmb80bn of Tier 2 bonds in the onshore and offshore markets.



project,” said an IMF report in May.

The completion of key projects, including the railway and a hydropower plant, will bring in much-needed revenues from dividends and royalty fees.

Laos has also restructured a number of public agencies, such as consolidating the finance ministry’s external and domestic functions under the 2018 Public Debt Management Law. The collection of taxes, such as car taxes and land taxes, is also being moved to an electronic system which has plugged major leakages.

Laos is looking to raise funds to refinance Bt6.6bn of bonds that are due to mature in October and November. It was the only foreign issuer to obtain Thai government approval to sell baht-denominated bonds between May 1 2019 and January 31 2020.

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RBNZ capital call upsets banks Bonds D-SIBs could face 16% Tier 1 capital ratio requirement

BY JOHN WEAVERS

Major New Zealand banks and their Australian parents have cried foul over the last and most controversial of the Reserve Bank of New Zealand’s four capital review consultation papers, titled “How much capital is enough?”

The central bank received 161 submissions and reported that many submitters, particularly from the general public, support higher capital requirements to ensure a safer banking system. However, the country’s big four lenders – ANZ Bank, ASB, BNZ and Westpac – balked at what they say would be the huge cost of implementing the proposals.

The RBNZ estimates the four dominant banks would need

to raise a combined NZ$20bn (US$13.43bn) of additional capital over the next five years to meet the proposals, a conservative estimate given that Westpac and ANZ project an extra NZ$12.5bn or more between them.

The country’s biggest lender, ANZ New Zealand, said a capital requirement of this size would require the bank to “review, and reconsider the size, nature and operations of the New Zealand business”.

Westpac New Zealand warned the “cumulative imposition of such high levels of regulatory capital on New Zealand banks will increase the cost to borrowers in New Zealand by more than 100bp”.

It also suggested that Australian parents may have to consider shrinking, demerging

or selling their subsidiaries across the Tasman Sea if their returns on equity are significantly reduced.

The RBNZ consultation paper called for the conservation buffer that all banks are required to hold to be raised to 7.5% of risk-weighted assets, from 2.5% currently, and for the introduction of a further 1.5% counter-cyclical buffer, alongside an extra 1.0% buffer for domestic systemically important banks.

Added to the existing requirement of Tier 1 capital equal to a minimum 6% of risk-weighted assets, this would translate to a new Tier 1 capital ratio requirement of 16% for D-SIBs and 15% for smaller banks, up from a flat 8.5% requirement at present.

The regulator also proposed to maintain the current 2% minimum in Tier 2 capital that all banks are required to hold, though it is open to discussing whether Tier 2 capital should be dropped from the framework altogether given the expected hike in Tier 1 ratios.

The RBNZ said that, in general, respondents “support the Reserve Bank’s objective to ensure that New Zealand’s financial system is safe, acknowledging the economic and well-being impacts (social costs) of banking crises”.

The proposals have been welcomed by the International Monetary Fund.

“The new requirements would increase bank capital to levels that are commensurate with the systemic financial risks emanating from the dominance of the four large banks with similar concentrated exposure to mortgages, business models

Investors shun HNA bond auction Bonds High floor price complicates recoveries in blind auction

BY YANFEI WANG, DANIEL STANTON

China’s first auction of bonds seized as a result of defaulted repo transactions flopped last week, dealing a setback to efforts to create a market for illiquid and non-performing assets.

An unnamed seller last Tuesday offered Rmb1.3bn (US$189m) of 7% perpetual notes and Rmb500m three-year private placement notes due October 2020, both issued by HNA Group subsidiary TIANJIN

AIRLINES.The auction, however, failed

to attract any buyers at the floor price, which is set at 80% of the average last traded price.

“The first auctions on the Tianjin Airlines bonds failed because of a lack of enough willing buyers,” said a bond trader.

Defaults on repo transactions have become more common

in recent months, and have accelerated since the government takeover of Baoshang Bank in late May made it harder for smaller banks to access funding.

China Foreign Exchange Trading System introduced blind auctions last year to help create a market for illiquid securities, but market participants do not think the format will do much to improve overall confidence as investors have no appetite for the underlying bonds.

The trader said there had been few trades in the Tianjin Airlines bonds ahead of the auction and they were bid at close to par before the auction.

Some defaulted bonds, including two from Wintime Energy, have been auctioned off via blind auctions, but the floor price rule may not reflect the true market price for an illiquid bond.

Tianjin Airlines is not in

default, but investors have long been concerned about financial troubles in the overstretched HNA Group, which has already defaulted on some overseas loans.

“The discounted prices at 80% were still too high and it’s not worth it,” said the trader. “Defaulted bonds at steeper discounts from face value look more attractive.”

A BETTER WAY?

A credit rating analyst said a blind auction is not enough to encourage counterparties to take more low-rated bonds or lower their standards for what they accept as collateral.

“A better way to mitigate credit risk is to build a specific pricing scheme and risk evaluation on counterparties and bonds used as collateral, respectively,” he said. “For instance, counterparties with high ratings but with low-rated

bonds can be accepted, or counterparties with low ratings need to use high-rated bonds as collateral. It might take quite long because of China’s long-standing pricing distortion in the bond market.”

An official with the National Association of Financial Market Institutional Investors said the blind auction system would be used for other types of illiquid bonds, including subprime asset-backed securities.

“Following the first two by Tianjin Airlines, many institutions are waiting in line to auction bonds used as collateral, many of which are bonds with AA+ and AA ratings,” he said.

Auctions of bonds issued by other HNA Group subsidiaries are in the pipeline, according to the official.

There is not much public information on the number of repo transactions or defaults in China. In one case, HNA

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Finance missed payments on two separate repo transactions totalling Rmb248.9m to China Life Pension, comprising Rmb100.21m 28-day and Rmb49.54m 14-day repos due on June 3, and Rmb99.11m due on June 6, according to a document viewed by IFR.

The collateral for those transactions were bonds from HNA unit Grand China Air: a Rmb200m 6% three-year PPN and a Rmb1bn 6% three-year PPN due on November 25.

The quality of collateral in repo transactions has come under scrutiny since the takeover of Baoshang Bank. China has described the case as an isolated incident, but the subsequent liquidity squeeze at smaller banks and non-bank lenders has raised the risk of default even on short-term transactions.

“After the Baoshang incident, we are keeping our white list for bonds unchanged to avoid risks. We only accept bonds by state-owned companies,” said a manager at a bank’s asset management department.

Future Land faces uncertainty Bonds Chairman’s detention prompts heavy sell-off, downgrade warnings

BY CAROL CHAN

FUTURE LAND DEVELOPMENT HOLDINGS is facing higher funding costs after the detention of its founding chairman forced a change of leadership.

In a stock exchange filing late on Wednesday, Future Land said that its chairman Wang Zhenhua is being held in criminal custody by the Shanghai police for “personal reasons” and has been removed from his position.

Wang Xiaosong, a non-executive director of the

company and the son of Wang Zhenhua, has been appointed chairman of the board with immediate effect.

S&P and Fitch on Friday placed the Hong Kong-listed Chinese real estate company and its outstanding senior unsecured notes on negative watch, while Moody’s said the incident was credit negative.

“In our view, the seriousness of the allegation and sudden change in leadership could have severe repercussions for Future Land’s reputation and brand name. This could hurt the company’s relationships with business partners and financial institutions,” S&P said.

S&P has a BB issuer rating on Future Land and BB– issue rating on its bonds. Fitch has BB ratings on the company and its bonds,

as well as Shanghai-listed unit SEAZEN HOLDINGS’ and its offshore bonds. All are on negative watch.

Fitch warned that investor perception may affect Future Land’s capital market or other financing activities in the near term.

Future Land’s Hong Kong-listed shares plunged 24% to close at HK$8.04 on Wednesday and its US dollar bonds also dropped after Chinese media reported that Wang Zhenhua had been detained by the Shanghai police.

Future Land’s shares continued to slump on Thursday and closed down 10.6% at HK$7.19.

The US dollar bonds of Future Land and Seazen were down by 3 points at the short end and 6-7 points at the long end on Wednesday. They continued to trade weak on Thursday morning but later drifted higher at the short end while slipping a little further at the long end.

Future Land’s 7.5% 2021s priced in January were quoted at 96.75/97.95 while its 6.15% 2023s, priced in April, were quoted at 90.375/91.625 on Thursday afternoon, according to Tradeweb. Seazen’s 6.75% 2022s priced in May were quoted at 93.083/94.50.

S&P sees a potential risk involving shares pledged by the former chairman if the group’s

share prices plummet for an extended period.

“That said, the company is unlikely to miss a margin call, should it happen, given the current liquidity position,” said the rating agency.

As of June 30, around 34% of Seazen’s outstanding A-shares are pledged, out of the 67% equity held by entities controlled by Future Land.

Research firm Lucror Analytics said the development raised questions over the company’s corporate governance and operations, and to some extent its access to funding.

It changed its recommendations on the company’s US dollar bonds to “not recommended” from “hold”.

Wang Zhenhua is Future Land’s controlling shareholder with a 71% stake.

Nomura’s trading desk said change of control put options for the two companies’ onshore and offshore bonds should not be triggered for now.

However, it said that there is still a lot of uncertainty as to how the situation will evolve and how long this will drag on.

“If we assume that he [Wang Xiaosong] will be the new chairman going forward, there may be doubts among banks, equity and bond investors if he, at the age of 32, could lead such a sizeable company against the backdrop of an industry downturn,” it wrote.

On the other hand, even if Wang Zhenhua eventually resumes his position, it is also uncertain whether the banks and investors will provide the same level of support to the group as before, it said.



and funding structures,” the IMF said on June 25 following a regular consultation mission.

However, the banks question the need for levels of capital well above other jurisdictions and the central bank’s own stress tests, in a country whose banking system proved sufficiently robust to withstand the global financial crisis without incurring major losses.

The banks also argued that some convertible debt instruments should be an option as a substitute for part of the proposed increase in equity capital, that they be given more than the proposed five years to meet any new requirements and for the impacts of the changes be periodically assessed.

The RBNZ will continue to consider feedback before publishing a final report in late November. A five-year implementation period is due to begin next April.

“The seriousness of the allegation and sudden change in leadership could have severe repercussions for Future Land’s reputation and brand name. This could hurt the company’s relationships with business partners and financial institutions.”

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HY boom sets G3 on record path Bonds league tables Chinese property, LGFV issuers power first-half volumes

BY DANIEL STANTON

Asian issuers sold US$186bn of bonds in G3 currencies in the first half of 2019, up more than 23% on the same period a year ago, as a resurgent high-yield market boosted activity.

At that rate, issuance from Asia ex-Japan ex-Australia is on track to beat 2017’s record US$335bn full-year total, according to Refinitiv data.

HSBC and Citigroup were the top two underwriters, just as last year, with US$15.9bn and US$9.7bn of volume, respectively, up 33% and 12% from a year ago, according to Refinitiv data. Standard Chartered booked US$9.0bn for the first half, up 41% on the same period a year ago, to climb two places to number three.

A deluge of China property deals and offshore bonds from Chinese local government funding vehicles, some of which had offshore approvals due to expire at the end of June, gave the league table a different

look from last year. Perhaps surprisingly, Bank of China was the only Chinese bank in the top 10, retaining its number four position from last year with volumes of US$8.2bn.

UBS, Mizuho and Haitong each jumped eight places in the league table compared with the same period a year ago. UBS saw 82% growth in volumes to US$6bn and eighth position, helped by its strong China high-yield franchise.

Mizuho and Haitong each more than doubled their deal volumes this year, to US$5.9bn and US$5.6bn, respectively, jumping to number nine and 11 in the league table.

Two American banks had a slow start to the year: Morgan Stanley was third in the league table at the halfway point last year, but dropped to number 14 as its deal volume fell by more than 40% to US$4.5bn, while Bank of America Merrill Lynch saw a 22% decline and dropped to 17th from sixth last year.

The first-half high-yield

rated total of US$45.0bn smashed 2018’s full-year tally of US$35.2bn. Credit Suisse topped the table with US$4.5bn of volume, more than double its total for the whole of 2018. Haitong and Citic Securities took second and third places, with US$3.1bn each, and were among five Chinese underwriters in the top 10.

The huge increase is partly due to tricky issuance conditions last year, when US rates were expected to follow an upward path and Asia high yield was all but closed for eight months. That also encouraged some Asian issuers to print in 144A/Reg S format to reach a broader range of investors.

“There has been an uptick in 144A issuance in the HY market in the first half of 2019 with US investors keen to put money to work in this region,” said Haitham Ghattas, co-head of the financing and solutions group for Asia Pacific at Deutsche Bank.

“As we saw in the second

half of last year, when the Reg S investor base switches off, this can seriously limit market access for Asian HY borrowers.”

Some Chinese local government funding vehicles may find themselves shut out of the dollar bond market in future as the result of increasing regulatory restrictions, explaining their rush to come to market. China has been clamping down on offshore bond approvals for debut issuers, but companies find it easier to obtain permission to issue when they have existing dollar bonds to refinance.

Chinese property companies seized on improved market conditions offshore, with many issuing several times. Zhenro Properties Group, for instance, came to the dollar market six times in the first half.

“I wouldn’t be surprised if a lot of these guys keep printing in the second half,” said a DCM banker. “We are also seeing plenty of debut issuers wanting to come.”

League tables


Top bookrunners of Asian fixed and

floating-rate bonds for G3 currencies

ex-Japan, inc-Australia

(inc-Samurais and Yankees)1/1/19 – 30/6/19 Amount

Name Issues US$(m) %

1 HSBC 167 19,028.4 8.9

2 Citigroup 93 12,444.1 5.9

3 JP Morgan 64 10,464.0 4.9

4 Standard Chartered 94 9,038.6 4.3

5 Bank of China 103 8,168.7 3.8

6 Credit Suisse 66 8,121.3 3.8

7 UBS 76 7,391.4 3.5

8 Goldman Sachs 38 6,817.9 3.2

9 BNP Paribas 63 6,702.8 3.2

10 Mizuho 57 6,085.6 2.9

11 Credit Agricole 39 5,919.6 2.8

12 BAML 51 5,894.8 2.8

13 Haitong Sec 111 5,645.6 2.7

14 Citic 92 5,604.3 2.6

15 Morgan Stanley 53 5,532.1 2.6

Total 441 212,730.2

*Market volume

*Includes Asian Development Bank issuance.

Proportional credit

Source: Refinitiv data SDC Code: AR1

Top bookrunners of Asian fixed and

floating-rate bonds for G3 currencies

ex-Japan and Australia

(inc-Samurais and Yankees)1/1/19 – 30/6/19 Amount


1 HSBC 149 15,903.7 8.6

2 Citigroup 80 9,713.5 5.2


4 Bank of China 103 8,168.7 4.4

5 JP Morgan 53 7,635.9 4.1



8 UBS 69 6,002.5 3.2

9 Mizuho 56 5,908.9 3.2


11 Haitong Sec 111 5,645.6 3.0

12 Citic 92 5,604.3 3.0

13 BNP Paribas 49 4,669.3 2.5


15 Deutsche 57 4,497.6 2.4

Total 392 185,991.6

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: AR2

Top bookrunners of

all Asian currencies

(excluding Japan and Australia)

(inc-certificates of deposit)1/1/19 – 30/6/19 Amount


1 Bank of China 587 79,953.4 8.0

2 ICBC 557 70,368.5 7.1

3 CCB 558 62,436.3 6.3

4 BoCom 480 58,248.9 5.9

5 ABC 385 44,998.9 4.5

6 Citic 397 44,914.2 4.5

7 CSC Financial 294 36,126.0 3.6

8 Industrial Bank 359 31,202.1 3.1

9 China Merchants Bank 255 23,317.1 2.3

10 China Minsheng 213 22,787.2 2.3

11 CICC 103 21,257.1 2.1

12 SPDB 231 20,457.6 2.1

13 Guotai Junan Sec 182 19,188.8 1.9

14 ADBC 147 16,308.9 1.6

15 Haitong Sec 136 16,040.9 1.6

Total 5,006 995,966.1

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: AS1

Top bookrunners of

all Asian currencies

(excluding Japan, Australia and China)

(inc-certificates of deposit)1/1/19 – 30/6/19 Amount


1 KB Financial 291 13,925.9 8.0

2 NH Inv & Sec 191 11,117.8 6.4

3 Korea Investment 292 10,436.7 6.0

4 Axis 103 7,348.1 4.2

5 Kyobo Life 158 7,273.4 4.2

6 Mirae Asset Daewoo 153 6,535.7 3.8

7 HSBC 98 5,591.0 3.2


9 Kiwoom Sec 126 5,076.7 2.9

10 ICICI Bank 93 5,061.9 2.9

11 DB Financial Invest 100 4,676.7 2.7

12 SK Sec 57 4,360.0 2.5

13 Hana Financial 120 3,748.5 2.2

14 CIMB Group 48 3,655.8 2.1

15 DBS 41 3,606.8 2.1

Total 2,841 173,537.9

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: AS1a

Asia loans slide to seven-year low Loans League Tables Slowest first half since 2012 as trade war dents Q2 volumes

BY PRAKASH CHAKRAVARTI

Syndicated lending in Asia Pacific, excluding Japan, fell 22% to a seven-year low of US$198.5bn in the first six months of 2019 as the global economy reeled from the effects of the ongoing trade war between the US and China.

Asian loans fell to US$92.0bn in the second quarter, down 29% on the previous year and 14% on the first three months of the year, according to LPC data.

The number of deals continued to fall, with the second quarter clocking up 234 loans, compared with 355 in the previous quarter. The first-half tally of 589 deals was 16% lower than 700 loans closed in the first six months of 2018.

“The global economy continued to suffer from the overhang of the trade war and uncertainty gripped the financial markets,” said Mildred Chua, head of syndicated finance at DBS Bank in Singapore. “Lending activity in Asia took a hit this year particularly due to the slowdown in China and the lack of blockbuster acquisition financings.”

The effects of the trade

dispute between the US and China were most evident in China, where syndicated lending in the first half of 2019 plunged 26% to US$35.4bn, compared with US$48.4bn a year earlier. Neighbouring Hong Kong also suffered a 20% decline to US$55.8bn this year against US$69.7bn raised in the first six months of 2018.

However, the two geographies produced significant activity from the real estate sector, particularly from financial sponsors borrowing to buy assets.

“Real estate financing is one of the areas where deal flow has been encouraging during the first half of this year, especially from financial sponsors and asset managers who have been very active acquiring assets,” said Amit Lakhwani, head of loan syndicate and distribution for Asia Pacific at Standard Chartered.

“The sector is less reliant on exports or impacted by tariffs and therefore has been somewhat insulated from the negative sentiment arising from concerns on the trade war.”

In May, a consortium comprising private equity

giant Blackstone Group, Hong Kong-based real estate fund Gaw Capital Partners and Goldman Sachs closed a HK$9.2bn (US$1.17bn) five-year loan backing the leveraged buyout of a dozen shopping malls from Hong Kong-listed Link Real Estate Investment Trust. It followed a Gaw Capital-led consortium’s HK$13.8bn LBO loan in March to back a winning bid for commercial properties of Link REIT in Hong Kong.

Gaw Capital and Chinese PE firm Hengli Group also raised HK$9.9bn through senior and mezzanine loans for their acquisition of office towers Cityplaza Three and Four in Hong Kong’s Taikoo district.

DOWN DOWN UNDER

Australia and Singapore were among the other major markets to post a significant drop in loan volumes. Australian volumes dipped 31% to US$36.6bn in the first half, while Singapore registered just US$14.3bn, plummeting 51% from the previous year.

Australia generated several popular leveraged financings, including a A$2.15bn (US$1.52bn) senior loan supporting the buyout of

Australian hospital operator Healthscope and a A$660m six-year unitranche loan backing US private equity firm TPG Capital’s leveraged buyout of Australian pet-store owner Greencross.

“It is positive to see strong investor demand for different loan structures and across a variety of sectors,” said Andrew Ashman, head of loan syndicate for Asia Pacific at Barclays.

“This year, we have seen a broadening of the institutional investor base with new lenders from Australia, Singapore and Hong Kong joining Aussie dollar TLB [term loan B] loans for the first time to gain exposure to Australian credit.”

Elsewhere, Vietnam stood out with a nearly four-fold increase in lending to US$5.4bn in the first six months of 2019, compared with US$1.1bn in the same period a year earlier.

The pipeline in South-East Asia shows promise, particularly with a jumbo S$8bn (US$5.9bn) new money loan and amendment-and-extension of existing debt for Singaporean integrated resort Marina Bay Sands, which is expected to close in the third quarter.



Top bookrunners of Asia Pacific

syndicated loans G3 currencies

(ex-Japan, inc-Australia)1/1/19 – 30/6/19 Amount

Name Deals US$(m) %

1 Bank of China 20 5,655.6 8.6

2 HSBC 28 5,499.1 8.3


4 SMFG 19 3,159.6 4.8

5 Deutsche 13 2,711.6 4.1

6 Mizuho 17 2,642.4 4.0

7 ANZ 14 2,273.5 3.4

8 MUFG 18 2,100.1 3.2

9 CCB 5 1,811.8 2.7


Total 132 66,154.6

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: S3k


syndicated loans All currencies

(ex-Japan, inc-Australia)1/1/19 – 30/6/19 Amount

Name Deals US$(m) %

1 Bank of China 126 17,544.4 11.0

2 HSBC 47 8,839.2 5.5

3 BoCom 38 7,637.5 4.8


5 ANZ 35 6,852.8 4.3

6 ABC 18 6,777.9 4.2

7 MUFG 31 5,382.0 3.4

8 SMFG 27 5,102.8 3.2

9 State Bank of India 3 4,972.0 3.1

10 UOB 16 4,543.8 2.8

Total 505 159,854.5

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: S3


syndicated loans Int’l currencies, Rmb

and NT$ (ex-Japan, inc-Australia)1/1/19 – 30/6/19 Amount

Name Deals US$(m) %

1 Bank of China 124 17,174.2 11.5

2 HSBC 42 7,870.2 5.3

3 BoCom 38 7,484.1 5.0


5 ANZ 35 6,841.1 4.6

6 ABC 18 6,748.9 4.5

7 MUFG Bank 31 5,358.3 3.6

8 SMBC 27 5,079.9 3.4

9 UOB 16 4,540.6 3.0

10 Mizuho Bank 25 4,256.6 2.9

Total 455 149,052.0

*Market volume

Proportional credit

Source: Refinitiv data LPC


syndicated loans All currencies

(ex-Japan and Australia)1/1/19 – 30/6/19 Amount

Name Deals US$(m) %

1 Bank of China 121 16,276.9 12.6

2 BoCom 38 7,637.5 5.9

3 ABC 18 6,777.9 5.2


5 HSBC 37 5,993.4 4.6


7 DBS 29 4,124.4 3.2

8 UOB 12 4,084.8 3.2

9 SMFG 21 3,897.5 3.0

10 Deutsche 13 3,145.3 2.4

Total 436 129,581.0

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: S5c

Asia ECM volumes regain ground Equities league tables Capital raisings expected to pick up in second half

BY FIONA LAU, S ANURADHA,

CANDY CHAN

Asian equity issuance rebounded in the second quarter, but a lack of jumbo IPOs from China left first-half volumes still 22% down on last year’s total.

Equity and equity-linked deals in Asia Pacific, excluding Japan, totalled US$53.3bn in the three months to June, up 9% from a weak first quarter and only 0.8% shy of the same period last year, according to Refinitiv data.

First-half underwriting volumes, however, remain well short of last year’s pace at US$103bn, down from a three-year high of US$132bn in 2018. Goldman Sachs leads the 2019 league table having managed deals totalling US$8.4bn, followed by Citic (US$7.9bn) and Morgan Stanley (US$7.3bn).

The main factor behind the drop in activity in the first half was the absence of sizable Chinese IPOs such as the Rmb27.12bn (then US$4.25bn) Foxconn Industrial Internet IPO in June 2018. Issuers from China, led by technology companies, accounted for US$66.6bn or 65% of deals but this included only US$17bn from IPOs, down 38% year on year.

The constant backdrop of US-China trade tensions dampened activity and only three Chinese companies completed US$1bn-plus IPOs: Ningxia Baofeng Energy in Shanghai and Shenwan Hongyuan and Hansoh Pharmaceutical in Hong Kong.

Equity issuance in Hong Kong, however, is expected to pick up strongly in the second half.

Budweiser Brewing Company APAC, the Asia-Pacific business of Anheuser-Busch InBev, has launched an IPO of up to HK$76.6bn (US$9.8bn), the world’s largest so far this year.

Chinese e-commerce giant Alibaba Group Holding is planning a US$10bn–$15bn secondary listing while Topsports, the sportswear unit

of Belle International, data centre operator Global Switch, Czech consumer finance company Home Credit Group and Chinese baby formula maker Feihe all plan IPOs of at least US$1bn each.

“For the second half of the year, most of the (Chinese) IPOs will take place in Hong Kong. I don’t think it’s a shift. It’s a reflection of a particular client’s needs,” said James Wang, co-head of equity capital markets for Asia ex-Japan at Goldman Sachs.

The launch of the Shanghai tech board is also giving Chinese issuers more options to raise capital. As of July 2, 141 companies had applied to list on the board with a combined fundraising target of Rmb129bn.

“I don’t anticipate a shift from Hong Kong to the Shanghai tech board. The tech board will give domestic Chinese companies the choice to list earlier and faster versus the main board,” said Wang.

INDIA UP, SE ASIA DOWNOutside China, India was the most active market with share sales totalling US$13.2bn in the first half of 2019 versus US$11.7bn in 2018.

The around US$3.6bn each rights offer in Vodafone Idea

and Bharti Airtel in May boosted volume.

Morgan Stanley led the league table ahead of Bank of America Merrill Lynch.

IPO activity was muted in the second quarter as the market awaited the outcome of the federal elections in May. The first IPO after the election was IndiaMart InterMesh’s Rs4.8bn (US$70m) issue in end June.

Follow-on offerings and secondary sell-downs, however, kept bankers busy. The significant deals in the second quarter were the Godrej Properties qualified institutional placement (Rs21bn), HDFC Life Insurance offer for sale (Rs25bn), SBI Life Insurance OFS (Rs17bn) and overnight block in Gruh Finance (Rs9bn).

Australia registered volumes of around US$12.1bn in the first half, down 27% year on year. UBS topped the league table, followed by Citigroup.

Most of the deals were driven by mergers and acquisitions particularly in the property sector, which accounted for about 40% of equity issuance so far this year, according to Richard Sleijpen, UBS’s co-head of equity capital markets for Australasia.

REITs have been especially prolific issuers. Dexus completed

the largest equity raising with a A$900m (US$632m) placement. IPOs were a more muted affair, with online lender Prospa’s A$110m listing the largest IPO year to date.

“In 2018, we saw a few large IPOs such as Viva Energy and Coronado. This year will be different with IPO sizes much smaller than last year, but there will be more IPOs by number this year,” said Sleijpen.

In South-East Asia, only Malaysia registered a busier first half than last year, with ECM volume rising to US$2bn from US$1.2bn in the first half of 2018.

Elections weighed heavily on activity in Indonesia and Thailand. Indonesian equity issuance totalled just US$591m, down from US$1.5bn in the same period of 2018, and the Thai market slumped to US$687m from US$3.2bn last year.

Philippines volumes tumbled to US$855m from US$3.2bn in 2018, and Vietnam failed to repeat last year’s record listings, with deal flow hitting just US$326m, compared to US$2.5bn in 2018.

Singapore stayed busy, with a first-half tally of US$3.1bn down only marginally on US$3.3bn in the same period last year.

League tables


Top bookrunners of global common

stock Asia Pacific (ex-Japan)1/1/19 – 30/6/19

Amount




3 UBS 35 4,586.9 6.4

4 Citic 25 3,692.3 5.2

5 Citigroup 35 3,569.0 5.0

6 JP Morgan 26 3,437.8 4.8

7 CICC 30 3,294.7 4.6


9 HSBC 14 2,229.3 3.1

10 BAML 10 2,194.2 3.1

Total 870 71,507.7

Market volume

Proportional credit

Source: Refinitiv data SDC Code: C4a2

Top bookrunners of global convertible

offering Asia Pacific (ex-Japan)1/1/19 – 30/6/19

Amount


1 Citic 10 4,226.3 12.6


3 China Sec 8 2,549.4 7.6

4 Bank of China 4 2,442.7 7.3

5 CICC 3 2,220.1 6.6

6 Huatai Sec 4 1,571.3 4.7


8 UBS 5 1,401.4 4.2

9 Citigroup 7 1,352.7 4.0

10 Ping An Sec 2 1,137.5 3.4

Total 98 33,588.4

*Market volume

Proportional credit

Source: Refinitiv data SDC Code: C9b1

Global Equity and Equity-related

Asia Pacific incl Australasia, ex Japan1/1/19 – 30/6/19

Amount



2 Citic 35 7,918.6 7.7


4 UBS 38 5,669.6 5.5

5 CICC 33 5,514.8 5.4

6 JP Morgan 30 4,448.3 4.3

7 Citigroup 41 4,226.0 4.1

8 China Sec 28 3,839.7 3.7


10 BAML 14 2,908.4 2.8

Total 810 102,930.7

Source: Refinitiv data

Asia IB Q2 fees hit three-year lowDCM accounts for half of overall fees during tough quarterAsian investment banking continued its moribund start to the year with the worst second quarter for three years as activity fell across all asset classes bar debt capital markets.

Overall investment banking fees for the

data, 7% lower than a year ago and down 5%

Bankers were hopeful of a recovery during Q2 following a downturn in activity that began during the second half of last year, as US-China trade tensions eased in April and share prices rallied.

That optimism proved unfounded with trade frictions worsening as the quarter wore on, leading to a dearth of sizeable, strategic deals and DCM again accounting for the lion’s share of fees.

quarter, particularly for ECM and M&A, although I think that’s partly because of the comparison with last year, which was very buoyant,” said one head of investment banking at a European bank.

“If you compare it with the second half of last year, the situation is a lot more favourable and in ECM, we are starting to see investors re-engage more as share prices

the year.”

the year dipped 2% to US$10.35bn with fees from ECM, M&A advisory and loans all posting double-digit declines, offsetting a rise of more than a third in DCM fees to US$5.18bn.

Chinese banks regained some of the ground they lost on their international

of the top 10 league table positions for

months, up from four a year earlier.BANK OF CHINA, which typically dominates

the league tables on the back of its strong syndicated lending business, kept its top slot, generating US$591m in fees, equivalent to a 5.7% share of wallet.

CITIC, which includes China Citic Bank, Citic Securities and CLSA, also retained second place with a 4.7% wallet share, while INDUSTRIAL AND COMMERCIAL BANK OF CHINA was up two places to third.

GOLDMAN SACHS suffered the biggest

drop among last year’s top 10, falling

the previous year from a strong showing in ECM, particularly in equity-linked underwriting.

UBS

international banks, up three places to fourth, followed by HSBC, up four places to

CREDIT SUISSE and CITIGROUP were the only other international banks among the top 10.

DCM DOMINATESDCM has accounted for the biggest component of Asian investment banking revenues in recent years, and its importance to banks’ bottom lines during Q2 was even greater than usual, contributing to half of overall fees.

Overall DCM fees during Q2 stood at US$2.49bn, an increase of 13% year on year, due to a rise in activity thanks to a more dovish US Federal Reserve and improved investor sentiment towards emerging markets. As things stand, issuance is even on track to beat 2017’s record total.

High-yield issuance continued apace following a surge in offshore China deals, especially from the property sector and local government funding vehicles, many of which had to use up their offshore quotas

“Around 30% of the issuance last year was sub-investment grade. I think this year

or so, it was close to half,” said Derek Armstrong, head of debt capital markets for APAC at Credit Suisse.

“Several issuers that looked at the market last year and were put off by the high borrowing costs have now come to market, especially in the Chinese real estate sector.”

ECM activity rebounded during Q2 following an especially poor Q1, although overall fees at US$1.29bn were still down slightly from US$1.32bn in the same period last year.

Bankers pointed to the drop-off in IPO activity, particularly from Chinese tech companies, as the main reason for the subdued performance, although are

investor sentiment has improved.“ECM has been a bit slower this year. I

think that’s primarily because of the post-IPO performance of a number of issuers last year, particularly in the TMT sector,” said John Lee, head of Greater China at UBS.

“But I suspect IPO volumes will pick up during the second half. A number of TMT issuers have started to perform better lately as well so we could see more activity in the sector again, either primary deals or follow-on offerings.”

M&A fees in Q2 fell more than a third to US$571m as Chinese outbound activity continued to slow, although this was partly compensated by an upturn in domestic China deals, according to bankers.

Fees from loans fell by almost half to US$683m, the worst quarterly performance in more than four years in terms of fees, as US-China trade tensions and slowing economic growth weighed on borrower demand.THOMAS BLOTT


TOP STORY FEES LEAGUE TABLES

Please send job moves to [email protected]

First Half 2019 IB Fee League TableASIA PACIFIC (EX-JAPAN)

Name Values fees (US$m) %

1 Bank of China 590.52 5.70

2 Citic 488.88 4.72

3 ICBC 400.88 3.87

4 UBS 317.16 3.06

5 HSBC 301.93 2.92

6 BoCom 298.70 2.88

7 Credit Suisse 296.65 2.87

8 Citigroup 264.37 2.55

9 CICC 257.21 2.48

10 ABC 257.06 2.48

11 Goldman Sachs 253.05 2.44

12 CCB 252.60 2.44

13 Morgan Stanley 242.16 2.34

14 JP Morgan 216.56 2.09

15 Haitong Sec 202.42 1.96

16 Guotai Junan Sec 178.33 1.72

17 CSC Financial 150.06 1.45

18 Deutsche 143.77 1.39

19 China Merchants Bank 140.97 1.36

20 DBS Group 121.45 1.17

21 Industrial Bank 118.10 1.14

22 Standard Chartered 116.29 1.12

23 BAML 115.37 1.11

24 Huatai Sec 113.56 1.10

25 China Minsheng 106.09 1.02

Grand Total 5,944.16 57.41

Total 10,354.07 100.00


People&Markets

Singapore reviews REIT gearing rules

the 45% gearing limit on locally listed real estate investment trusts to give them more

The Monetary Authority of Singapore last Tuesday launched a consultation paper on raising the leverage limit to 50%, along with the introduction of a minimum interest coverage ratio.

The central bank is also proposing to ease equity fundraising for REITs by removing the requirement to obtain a “restricted scheme” status when making a share offer to accredited and other investors.

“It is a positive move,” said one debt origination banker. “It is not a big increase in the [gearing] limit but it will help a REIT’s

a foreign asset that needs to be funded, especially against any foreign rivals that do

limits, or against private equity funds.”Singapore and Hong Kong both impose

a 45% gearing cap on REITs while Malaysia has a slightly higher 50% limit. In Thailand, investment-grade REITs can gear up to 60%, while Belgium, Germany and the Netherlands have limits of 60%–66.25%. REITs in the US, Canada, Australia, France and Japan face no such restrictions, while those in the UK are only subject to a minimum

MORE FLEXIBILITYREIT sponsors in Singapore have argued for

than through the equity markets.“Funding through debt – either through

bonds or loans – is cheaper and faster than

the REIT is competing for overseas assets,” said the banker. “The REIT can issue bonds many times a year, but you can’t issue that many units whether through public or private placements as that is very dilutive to shareholders.”

The MAS is asking for views on increasing the leverage limit to 50% with the addition

whether REITs that have showed good

leverage further to 55%.Speaking before the launch of the

consultation paper, Jerry Koh, secretary of the REIT Association of Singapore, said at an industry meeting that a higher gearing ratio was required to allow local REITs to buy local and overseas assets. Koh said there had been 190 REIT-related M&A transactions totalling S$12bn (US$8.8bn) in Singapore in the last 18

keep growing.However, analysts do not think the city’s

generally conservative REITs will go on a debt binge. Credit analysts said the majority of S-REITs maintain a 5% buffer with gearing

For that reason, ECM bankers are not worried that the proposed gearing change will stop equity sales. Follow-on offerings from REITs make up the bulk of equity issuance volumes in Singapore.

44 REITs and business trusts are listed on

most active markets for this instrument in the world.

The central bank’s proposals come four


People&Markets

Who’s moving where...

BANK OF AMERICA

MERRILL LYNCH has

appointed Peter Guenthardt co-

head of Asia Pacific

investment banking.

Guenthardt, who will

continue to serve as

country executive

for Singapore and

South-East Asia

until a successor

is appointed, will

relocate to Hong

Kong.

He reports to Jiro

Seguchi, head

of APAC global

corporate and

investment banking,

and Jack MacDonald

and Thomas Sheehan,

co-heads of global

investment banking,

in his new job.

Alex To is the other

co-head of APAC

investment banking.

Yip Kit Weng,

head of investment

banking for Malaysia

at NOMURA, is leaving

the bank, people with

knowledge of the

development have

said.

Based in Kuala

Lumpur, Yip is

likely to join a local

investment bank.

Yip joined Nomura

in 2014 from RHB

Investment Bank,

where he was director

for corporate and

investment banking

services. He has

also worked at CIMB

Investment Bank as

head of equity capital

markets.

Nomura declined to

comment.

Morgan Stanley nears China JV controlMorgan Stanley’s partner in its Chinese securities joint venture has put a 2% stake up for sale, paving the way for the US bank to take majority control.

51% shareholding in MORGAN STANLEY HUAXIN

SECURITIES in an auction process that runs until

Tuesday.Morgan Stanley is looking to increase its

stake in the JV to 51% from 49%, subject to regulatory approval.

UBS last year increased its stake in its Chinese securities joint venture, UBS Securities, to 51% through a similar process. In that case, UBS completed the acquisition less than three months after the vendors announced an auction process.

Morgan Stanley is likely to receive regulatory approval for the majority stake

in the second half of this year, Reuters reported last month, citing people with direct knowledge of the matter.

Morgan Stanley is one of many international banks seeking either to acquire

partner holds a 51% stake, after foreign ownership rules were eased last year.

In April, Credit Suisse agreed with its partner Founder Securities to acquire a 51% interest and is currently awaiting regulatory approval. JP Morgan and Nomura have also received preliminary approval to set up JVs



Icra CEO on leave amid Sebi probeShares in ICRA, the Indian unit of Moody’s, fell last Tuesday after the credit rating agency put

of a probe into a ratings decision it took last year.

Icra took the action against Naresh Takkar after concerns raised anonymously were forwarded to the company by market

of India, the rating agency said in a stock

concerning the credit rating it assigned to one of its customers and its units.

Indian media reported that the complaint

grade ratings to INFRASTRUCTURE LEASING AND

FINANCIAL SERVICES and its subsidiaries last year.

projects, has defaulted on a series of debts, its management has been removed and the Indian government has taken control of its management and board.

Takkar and an Icra spokeswoman both declined to comment beyond last Monday’s announcement.

Apart from Icra, two of India’s biggest and most prominent agencies – India Ratings & Research, which is owned by Fitch, and CARE Ratings – had granted IL&FS AAA ratings, indicating the highest level of creditworthiness.

Those ratings were still in place when its subsidiary IL&FS Transportation Networks

downgraded only by a notch in mid-August and then in just one month all three agencies slashed the rating to D, deep in junk debt territory.

The string of defaults that followed triggered fears about contagion in the

and debt markets and prompting the government to seize control.

Shares in Icra closed down 2.5% last Tuesday at Rs3,081.30 (US$44.72) after touching a low of Rs3,000 earlier in the day. The stock recovered later in the week, and was last seen at Rs3,200.

Icra’s decision to put Takkar on leave is the latest sign of the pressure being put

been increasingly concerned about how large indebted companies have earned strong credit ratings, only to have them downgraded overnight.

Sebi Chairman Ajay Tyagi said on June 27 that the market regulator had initiated adjudication proceedings against some credit rating agencies and was contemplating starting proceedings against

concerned.Sebi has been tightening disclosure

regulations for rating agencies to boost transparency and accountability and has made it mandatory for them to closely monitor whether issuers are meeting their debt obligations.

It has also curbed cross-holdings between

Last month, Sebi directed rating agencies to formulate a uniform benchmark for the “probability of default” for each rating category and asked them to disclose in their press releases factors to which a rating is

rating change.ABHIRUP ROY

Please contact us if you have information about job moves: [email protected]

years after it tweaked the leverage caps on REITs. Previously, unrated Singapore-listed REITs could leverage up to only 35% while rated trusts could gear up to 60%.

“Personally, I prefer the rating structure as that encourages REITs to get rated, which is in line with the central bank’s policy of pushing Singapore issuers to get ratings,” said one syndicate banker. “With ratings, the REITs are more transparent and they fund at the correct market levels.”

Credit analysts project that a higher cap will see more REITs seeking more debt-funded acquisitions as debt is cheaper than equity.

“We see this as a credit positive for developers as the larger-sized assets can be more easily injected into the REIT, allowing these assets to be more easily monetised,” said an OCBC credit note.

Morgan Stanley said in a note another

will be fewer instances of REITs issuing

gearing limit calculations, as a means to get around current restrictions.

The MAS consultation ends on August 1.KIT YIN BOEY, S ANURADHA

GOLDMAN SACHS has

hired Dawei Huang

from Bank of America

Merrill Lynch as

managing director

in its technology,

media and

telecommunications

team.

Huang, who started

last month, is based

in Hong Kong and

reports to Jung Min

and Raghav Maliah,

Goldman’s co-heads

of TMT in Asia Pacific

ex-Japan.

Min relocated from

San Francisco earlier

this year to run TMT

in Asia alongside

Maliah, who was

promoted to global

vice chairman of

investment banking

in October.

BNP PARIBAS has

appointed Fumito Okuyama (pictured)

head of global

markets for its

securities business in

Japan.

Okuyama joined in

August last year from

Citigroup and has

served as head of

sales for institutional

investors.

He started his career

at Salomon Brothers

in 1993, staying with

the firm after it was

acquired by Citigroup.

His predecessor

Ayumu Fukazawa has

retired.

from scratch with majority control.The JVs have so far yielded modest results.

In 2018, the seven Sino-foreign JVs recorded a combined net loss of Rmb48.1m (US$7m).

performer, reporting a net loss of Rmb99.8m.HSBC Qianhai Securities was the

worst performer, recording a net loss of

a foreign bank held a majority stake. HSBC

agreement between China, Hong Kong and Macau.STEVE GARTON, KAREN TIAN

Sebi approves framework for DVR shares

has approved a framework for certain technology companies to issue shares with differential voting rights and keep the voting structure in place for a limited number of years following an IPO.

The market regulator said at a board meeting it will allow companies in the information technology, intellectual property, data analytics, biotechnology or

nano-technology sectors to launch IPOs in which their founders have superior voting rights, as long as the founders do not have a collective net worth of more than Rs5bn (US$73m).

years from the date of a listing, though they can then apply to the market regulator for

approval. These shares can have superior voting rights in a ratio of between 2:1 and 10:1 to ordinary shares.

Shares with superior voting rights will be treated as ordinary shares post-IPO if they

the founders’ stakes. They will also lose their status in voting on key matters, including

when a company appoints or removes an independent director or auditor, if a founder transfers control to another entity, if the founder or company is involved in a third-party transaction, or if shareholders need to approve a delisting or buyback of shares.

Previously, DVRs could only be sold through rights or bonus share offerings that gave ordinary shares inferior or fractional

companies – Tata Motors, Gujarat NRE Coke, Future Enterprises, Jain Irrigation Systems and Stampede Capital – have issued DVRs. The DVRs issued by these companies had different layers of dividend payments but no voting rights.

In 2009, Sebi placed severe restrictions


People&Markets

Deutsche to cut investment bank in overhaulDEUTSCHE BANK is preparing to unveil a sweeping, multi-billion euro overhaul within

investment bankers, sources familiar with the matter said.

up to €5bn (US$5.6bn), one of the sources said.

when he promised shareholders “tough cutbacks” to the investment bank. The pledge came after Deutsche failed to agree a merger with rival Commerzbank.

The lender, Germany’s largest, is planning on cutting between 15,000 and 20,000

employees.

The bulk of the job cuts will take place outside Germany, said a person with knowledge of the plans, as they are mostly targeting the investment bank, a unit that

The overhaul signals that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan and Goldman Sachs.

“Sewing really wants to move the needle,” said another person familiar with the plans.

The price tag for restructuring raises the probability that the bank will report a loss for the full year, the person said, meaning Deutsche will have been in the red for four

overhaul, however costly, will be radical enough to turn around the bank’s fortunes after its shares fell to a record low last month.

Other measures under consideration include a reduction in the size of the nine-member management board as well as the creation of a so-called bad bank to hold tens

of billions of euros of non-core assets.The bank has also held talks with

Citigroup, BNP Paribas and others about the possible sale of parts of its equities business, the Wall Street Journal reported. BNP Paribas and Citigroup declined to comment.

Deutsche declined to comment on its restructuring. It said it was working on measures to accelerate its transformation so

“We will update all stakeholders if and when required,” it said. The bank’s supervisory board was due to meet on Sunday to discuss the overhaul, people familiar with the matter said.

The investment bank generates about half of Deutsche’s revenue but is considered its Achilles heel.

Revenue at the division is forecast to fall to €12.4bn this year, according to a consensus of analysts. That would mark a fourth consecutive year of decline, down more than 30% from 2015.

In a shift that underscores its waning internal relevance, the investment bank

Who’s moving where...

Kai Fang is joining CLSA as head of the newly created financial sponsors group, people with knowledge of the development have said.Fang is likely to join sometime in July.Based in Hong Kong, Fang joins from China Renaissance, where he was head of

China equity capital markets.CLSA declined to comment.

CREDIT SUISSE has poached Erica Poon Werkun from UBS to run its equity research division in Asia Pacific with current head Ernest Fong due to retire.Poon Werkun has spent the past 15 years at UBS including the last three years as head of research at UBS

Securities, UBS’s China securities joint venture, based in Shanghai.She was previously head of Asian consumer and internet research at UBS in Hong Kong and also worked as a research analyst at Goldman Sachs, covering consumer and technology.

Ankang Li has left his job as executive director in Goldman Sachs’s healthcare investment banking group in Hong Kong.Li, who worked on a number of biotech IPOs during his 18-month stint at Goldman, has joined pharmaceutical company TERNS

PHARMACEUTICALS as

chief financial officer.Li previously worked as a lawyer at both Davis Polk and Ropes & Gray, advising on capital markets and M&A transactions.



would be represented on the board by Sewing rather than having a seat at the table, as is currently the case, according to people familiar with the plans.

On Thursday, German newspaper Sueddeutsche Zeitung reported that Deutsche is planning to create a separate “corporate bank” unit that will include its transaction banking activities. The division will have a seat on the board, the paper said, citing internal documents. Currently, the transaction bank is part of the investment bank. A spokesman for Deutsche declined to comment.

is seeking to lower the amount of capital that regulators require it to have on hand, according to three people with knowledge of the matter.

The bank is aiming for a common equity Tier 1 capital ratio of 12.5%, two of the people

Financial Times. The paper said that would free up €3.5bn in capital.TOM SIMS, HANS SEIDENSTUECKER

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COMMERZBANK’s

Denis Rath is

relocating to Frankfurt

to become head of

international banks

for the international

banks franchise,

which combines

the German bank’s

former overseas and

emerging markets

teams.

Rath is currently

based in Singapore

in a debt capital

markets syndication

and origination role,

but will move in the

near future. He will

continue to cover

banks in Australia,

New Zealand and

Singapore.

In his new role, Rath

will report to Sylvia

Moussalli, head of

banks and public

sector origination.

GOLDMAN SACHS has

promoted Philippe Perzi to run its

financial institutions

group in Australia

and New Zealand.

Perzi is a direct

replacement for

Craig Murray, who

relocated to Hong

Kong last year to

become head of FIG

for APAC ex-Japan.

Murray retained his

position as FIG head

for Australia and New

Zealand at the time.

Perzi joined Goldman

in 2015 as executive

director and was

promoted to

managing director

two years later. He

previously spent 13

years at Macquarie

Group.

Syndicated loans

banker Marilyn Fung

has left DBS BANK

after more than eight

years.

Based in Singapore,

Fung was senior vice

president for the

syndicated finance

team and reported to

Mildred Chua, head

of syndicated finance

at DBS.

Prior to that, Fung

was an associate

for the corporate

coverage team at

Natixis for almost

three years, also in

Singapore, according

to her LinkedIn

profile.

on DVRs, effectively preventing companies from issuing them.

Market participants said DVRs are not likely to be welcomed by minority shareholders. “The credibility of many Indian promoters is not very high especially against the background of wilful default of loans and pledging of shares to raise funds,” a Mumbai-based analyst said.

However, some bankers said that the regulator is merely mirroring moves in Hong Kong and Singapore to allow dual-class shares. “The easiest thing is to do nothing fearing the worst. We need to give superior rights shares some time to see how well they work,” an ECM banker said.S ANURADHA

Hong Kong, China strike audit pactHong Kong’s securities regulator will be able to see audit working papers when investigating mainland China-based companies after signing an agreement with Chinese authorities.

The agreement last Wednesday may go some way to solving a long-standing point of contention between Chinese and Hong Kong regulators.

The issue also came to the fore after a bipartisan group of lawmakers in the US introduced a bill last month to force Chinese

provide access to audits or face delisting.China has long been reluctant to allow

overseas regulators, including those in Hong Kong, to inspect audit documents relating

concerns.In spite of a 2013 agreement with the US to

end the stalemate and allow US regulators to see audit working papers held in China, there

In 2014, EY was ordered by a Hong Kong court to hand working papers to Hong Kong’s Securities and Futures Commission relating to its work for a planned IPO. EY had argued it could not produce the papers under

Chinese laws prohibiting the spread of state secrets.

Since then, at least two Hong Kong-based

US-listed companies because they could not produce the China-related papers asked for by US regulators.

The SFC’s new memorandum of understanding will allow the Hong Kong regulator access to papers relating to Hong

based companies that are listed, or are trying to list, in Hong Kong as well as their related persons or entities, the SFC said in a statement last Wednesday.

Roughly half of the 2,315 companies on

The memorandum of understanding was signed by China’s Ministry of Finance, the China Securities Regulatory Commission and the SFC.

The MoF and the CSRC “will provide the fullest assistance in response to [the] SFC’s requests for investigative assistance regarding the provision of audit working papers,” the statement said.

MoF vice minister Cheng Lihua said in the statement that the deal would “further deepen the regulatory cooperation between the two sides, helping to improve the quality of annual reports of listed entities in Hong Kong and fully protect the legitimate interests of investors in both sides”.

Hong Kong’s Financial Reporting Council and the MoF’s Supervision and Evaluation Bureau signed a separate agreement in May to assist each other in their audit regulatory responsibilities.ALUN JOHN

China has long been reluctant to allow overseas regulators, including those in Hong Kong, to inspect audit documents relating to mainland firms, citing national security concerns.

IN BRIEF1MDB

Leissner hit with lifetime ban in HK

Hong Kong’s securities regulator has issued

a lifetime ban to Tim Leissner, the former

Goldman Sachs banker who has been embroiled

in a money-laundering scandal surrounding

Malaysian state investment firm 1MDB.

The Securities and Futures Commission said

in a statement last Wednesday that Leissner,

who has pleaded guilty to charges in the US

related to 1MDB and is awaiting sentencing, had

demonstrated “a serious lack of honesty and

integrity”.

Leissner has received similar bans elsewhere.

In 2017, he was banned from re-entering the

industry in Singapore for 10 years, later increased

to a lifetime ban. Earlier this year, he was barred

for life from the banking industry by the US

Federal Reserve.

Leissner was responsible for managing the

relationship with 1MDB when the fund hired

Goldman to arrange three bond issues in

2012–2013.

The US Department of Justice estimates

US$4.5bn was misappropriated from 1MDB

between 2009 and 2014, including some of the

funds that Goldman helped raise.

The bank has denied any wrongdoing and

said certain members of the former Malaysian

government and 1MDB lied to it about how the

bond proceeds would be used.

BNP Paribas

Research tie-up with Morningstar

BNP PARIBAS will source the bulk of its Asia Pacific

equity research from independent research

provider MORNINGSTAR.

The French bank said the agreement includes

coverage for about 150 stocks from six industry

sectors in China, Hong Kong, Singapore, South

Korea and Taiwan.

Most of BNP Paribas’ in-house equities research

team, mainly in Hong Kong and Singapore, will

depart as a result of the pact but the bank will

retain roughly half a dozen senior industry sector

specialists, a person familiar with the matter said.

A BNP Paribas spokesman in Hong Kong declined

to comment on possible headcount changes.

The bank’s total stock coverage in the region as

a result of the partnership will be around 330

companies including those listed in India, where

it will continue to undertake equity research in-

house, the bank said.

Asset managers have become less willing to pay

as much for stock-picking research following

the introduction of MiFID II. It has forced some

investment banks to scale back or outsource

their coverage of companies.

“With recent changes in regulatory and market

conditions, banks have sought to adapt their

sell-side, cash equity research models, while

continuing to meet clients’ needs,” the bank

said in the statement.

In December 2016, Societe Generale announced

a tie-up with Singapore-based independent

research provider Smartkarma.

National Australia Bank

Securities business in Japan planned

NATIONAL AUSTRALIA BANK will start a new

business in Japan to connect Japanese firms

and institutional investors with corporates in

Australia and New Zealand.

According to its press release, the Australian

bank’s securities unit was given a licence from

Japan’s Financial Services Agency on June 28,

which allows it to trade bonds, repurchase

agreements, rate and currency swaps, and

currencies. It will initially focus on the repo

business to help Japanese clients with their

Australian dollar funding.

It also plans to expand its business in the future

to include bond distribution in Australian or New

Zealand dollars as well as in yen to Japanese

banks and life insurers.

The unit, named NAB Japan Securities, has about

10 front staff and will be led by Janari Tonoike, who

spent 33 years at JP Morgan in foreign bond sales.

She joined the Australian lender in January 2019.

It is applying for membership of the Japan

Securities Dealers Association with the aim of

starting the new business in late August to early

September.

Similarly, Australia & New Zealand Banking Group

was granted a securities licence in May 2018

and registered its membership with the JSDA in

August.

Investec

Green light for Australia branch

INVESTEC has been granted approval by

Australia’s banking regulator to open a branch

office, joining a growing list of international

banks looking to expand Down Under.

The Australian Prudential Regulation Authority

has authorised the bank to operate as a foreign

authorised deposit-taking institution, according

to a statement on its website.

Investec has been operating in Australia for

close to two decades through a non-branch

structure. The upgrading of its status to branch

office will allow it to provide a wider array of

services and deploy its balance sheet.

Foreign banks are increasing their presence in

Australia once more as they bet on resources

and infrastructure investment gathering pace

and as regulators push to promote competition

in the sector, hitherto dominated by the Big

Four.

In May, Societe Generale reopened its branch

office in the country six years after it gave up its

licence. Barclays has also undertaken a similar

volte-face recently, while ABN AMRO opened a

branch office in March.

Asian Development Bank

Singapore office planned

The ASIAN DEVELOPMENT BANK has announced

plans to open an office in Singapore to support

the expansion of its private sector operations.

The multilateral development bank has

faced difficulties in the past recruiting staff to

support its private sector operations, being

headquartered in Manila.

Singapore’s status as a major financial services

and infrastructure financing hub has long

prompted speculation that the ADB would open

an office there.

The World Bank and its private sector

financing arm the International Finance

Corporation have operated in Singapore for

many years.

The ADB’s new office is expected to open in the

second half of the year and will comprise 12

staff including personnel from its private sector

operations department and office of public–

private partnership, the development bank said

in a statement.


People&Markets

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sales message, for more information email: [email protected]

MAKE THE MOST OF YOUR SUCCESS STORIES


COUNTRY REPORT Australia 21 China 24 Hong Kong 30 India 33 Indonesia 35 Japan 36 New Zealand 38

Philippines 38 Singapore 39 South Korea 41 Taiwan 41 Thailand 42 Vietnam 43

AUSTRALIA

DEBT CAPITAL MARKETS

› TD OPENS TLAC KANGAROO MARKET

TORONTO-DOMINION BANK, rated Aa1/AA– (Moody’s/S&P), raised A$1.25bn (US$875m) from the first TLAC Kangaroo bond offering by a Canadian bank.

Last Wednesday’s transaction could trigger copycat trades from other Canadian majors as long as comparative pricing stacks up, according to a banker on the deal.

A A$700m five-year floating-rate note priced inside 105bp area guidance at three-month BBSW plus 100bp.

A A$550m 2.05% fixed-rate five-year note

priced at 99.776 for a yield of 2.0975%, 100bp wide of asset swaps.

The banker said this represented a modest single-digit new issue concession against where a new benchmark Toronto-Dominion US dollar five-year note would price.

Pricing was competitive despite an approximate 10bp decline in the Australian dollar/US dollar five-year cross-currency basis swap from March and April levels, to around 23bp last week.

ANZ, CBA, DBS, NAB, Standard Chartered Bank and Westpac were joint lead managers for the notes, which have expected ratings of Aa3/A (Moody’s/S&P).

› RABOBANK TAPS FOR A$150M

RABOBANK AUSTRALIA BRANCH (Aa2/A+/AA–) tapped its March 3 2022 FRN for A$150m last Tuesday, increasing the outstanding

size to A$650m.ANZ was sole lead manager for the

reopening, which priced at 101.22, equivalent to 62bp over three-month BBSW.

› ME BANK PRINTS INSIDE GUIDANCE

MEMBERS EQUITY BANK, rated Baa1/BBB (Moody’s/S&P), raised A$400m last Thursday from a three-year floating-rate note offering that priced inside 105bp area guidance at three-month BBSW plus 98bp.

ANZ and NAB were joint lead managers.Members Equity previously sold a

A$250m three-year FRN in April 2018 and subsequently issued two RMBS and a A$100m perpetual non-call five subordinated AT1 note.

Unlisted ME Bank is a private entity under the control of 30 Australian industry superannuation funds.

Westpac jumps up Down Under Bonds Australian major surges up the local league table

Westpac jumped seven places to head the

Australian dollar bond league table for the

first six months of 2019, according to Refinitiv

data, having secured a 13.8% share of the

market.

Overall Australian dollar bond issuance

fell 19% in the first six months of 2019 to

A$42.4bn (US$29.4bn) from 156 trades,

excluding self-led deals and securitisations,

as the government dialled back syndicated

issuance.

The A$9.7bn contraction from the

A$52.1bn raised through 170 transactions in

the same period last year is almost entirely

explained by the absence of syndicated

Commonwealth government issuance,

following the record-busting A$9.6bn

November 2029 Treasury bond sale in

January 2018.

Westpac has been a lead manager on 31

deals, the same number as Australia and

New Zealand Banking Group, which lies

second with an 11.8% market share.

Westpac has made quite an advance from

H1 2018 when it occupied a lowly 8th place

with a 6.2% market share. ANZ led last

year’s January 1 to June 30 standings with

an 11% share from 38 trades, followed by

CBA and UBS.

Domestic financial (including self-

led deals), SSA Kangaroos and local

corporate bonds are little changed from

year-ago levels at A$30bn, A$12.0bn

and A$3.5bn, while Commonwealth and

state government supply declined from

A$19.8bn to A$11.1bn.

The other notable change was in the non-

bank Kangaroo sector, where issuance has

slowed to A$4.6bn from over A$7bn a year

earlier.

ASSET-BACKED GROWTH

Westpac also tops the Australian

securitisation league table thanks to its

self-led A$3bn WST 2019-1 Trust RMBS in

February.

Similarly, ANZ’s self-led A$1.5bn

Kingfisher RMBS elevates it to third spot

in the securitisation market, just behind

traditional market leader NAB, which has

been on 15 of this year’s 20 ABS/RMBS

tickets, none of which were self-led.

CBA and Macquarie complete an all-

Australian top five.

In contrast to the bond market downturn,

Australian dollar securitisations have raised

around 13% more than H1 2018’s total of

A$14.5bn, thanks to an upturn in non-bank

and major bank RMBS supply.

Only one major bank sale was executed

in the first half of 2018, the NAB-originated

A$2bn National Trust 2018-1.

LOWER OFFSHORE VOLUME

HSBC topped the offshore league table

having been on 20 of 53 foreign currency

tickets for an 11.5% share of this year’s

US$25.2bn market.

Supply is down nearly 29% from the

US$35.2bn, 68-deal market in the same

period of 2018 as Australian financials and

corporates scaled back their overseas funding

efforts.

This contraction is mainly due to Australian

banks’ reduced borrowing requirements,

which allows them to meet most of their

needs in the cheaper local markets.

In addition, Australian corporates did a lot

of pre-funding last year to take advantage of

the low yield environment, according to DCM

desks.

Citigroup has helped 14 Australian issuers

to public overseas markets for a 10.7%

share of the H1 2019 table and second place

behind HSBC. Next come JP Morgan, Bank of

America Merrill Lynch and BNP Paribas.

Citigroup held the lead this time last year

with a 9.5% share, closely followed by HSBC

and JP Morgan.

JOHN WEAVERS


› GPT INTRADAY TRADE NETS A$200M

GPT FUNDS MANAGEMENT, rated A– (S&P), raised A$200m, double the indicative minimum issue size, for last Thursday’s 6.5-year MTN offering via joint lead managers ANZ and CBA.

The 2.525% January 12 2026s priced at par, 10bp inside 140bp area guidance at asset swaps plus 130bp.

The issuing entity of GPT Wholesale Office Fund No 1 previously issued a A$200m 4.52% 10-year MTN in February 2017, following a debut A$150m seven-year print in May 2015.

GPT Wholesale Office Fund provides

investors with exposure to high-quality office assets in Australia’s major markets.

› BOC AVIATION EMTN GARNERS A$200M

BOC AVIATION, rated A–/A– (S&P/Fitch), the aircraft-leasing subsidiary of Bank of China, issued an Australian dollar Eurobond last Thursday via sole lead manager Westpac.

The A$200m 3.15% 10-year EMTN priced at 99.679 for a yield of 3.188%, 5bp inside 178bp guidance at mid-swaps plus 173bp.

BOC Aviation has an outstanding A$200m 5.375% January 24 2020 Eurobond which matures in six months.

STRUCTURED FINANCE

› PEPPER PLACES AUTO ABS

Consumer lender PEPPER GROUP issued its first auto securitisation last Wednesday, the A$511.6m (US$359m) PEPPER SPARKZ TRUST

NO.1, which is backed by prime auto and equipment loans originated bt Pepper Asset Finance.

The privately placed Reg S master trust offering attracted good demand from Australian, Asian and European fund managers, headed by a couple of key investors, according to a banker on the deal.

Merrill Lynch International was arranger and

BNPP stuns with Aussie AT1 first Bonds French bank finds hot demand for debut offering from foreign bank

BNP PARIBAS (Aa3/A+/AA–) secured

astonishing price traction last Wednesday

for the first Australian dollar AT1 note from a

non-Australian bank.

Having taken indications of interest in

the morning in the 5.25% area, guidance

was tightened to 5.00% area and finally to

4.500%–4.625% before pricing at the tight

end of this range.

The A$300m perpetual non-call 5.5-

year Additional Tier 1 Reg S note offering

attracted huge demand, including an order

book in excess of A$3bn when guidance was

5.00%, that reflects the continuing search

for yield in an increasingly low interest rate

world.

A source close to the proceedings said

the deal was opportunistic and driven by

enquiries from private bank clients with

Australian dollar funds to deploy and a desire

for yield.

A 25bp cut in the Reserve Bank of

Australia cash rate a day earlier, to a record

low 1.0%, and the prospect of further

easing to come, amplified the risk-on tone,

according to a lead manager on the trade.

Asian investors were predominant with a

66% allocation while Australians bought 27%

and EMEA 7%.

Private banks took 65%, asset managers

19%, banks 9% and others 7%.

In addition to obvious diversification

benefits, pricing was compelling from an

issuer’s perspective given that the 5.25%

area IOIs were flat to BNP Paribas’ US$1.5bn

6.625% perpetual non-call five AT1 notes

issued in March.

Australian dollar investors’ appetite for

foreign bank paper had been seen in a recent

wave of deals, with Societe Generale pricing

a 15-year non-call 10 Tier 2 at 4.5% in April,

Credit Agricole selling a 15-year non-call

10 Tier 2 at 4.2% the following month, and

Barclays and Standard Chartered finding

strong responses to holdco Kangaroos in

June.

BNP’s result can only encourage other

foreign financials to look to the Australian

dollar market for some of their capital

needs.

The subordinated note has expected

ratings of Ba1/BBB–/BBB– against BNP

Paribas’ senior ratings of Aa3/A+/AA–.

Nomura and Westpac were global

coordinators and joint bookrunners with ANZ,

CBA, NAB and TD Securities.

JOHN WEAVERS, DANIEL STANTON

Top lead managers of Australian dollar-

denominated domestic securitisation,

inc-self-funded transactions ex-CDOs1/1/19 – 30/6/19

Amount

Name Issues A$(m) %

1 Westpac 9 4,433.0 27.0

2 NAB 15 2,846.3 17.3

3 ANZ 7 2,837.1 17.3

4 CBA 10 1,811.5 11.0

5 Macquarie 6 1,049.2 6.4

6 Deutsche 4 761.3 4.6

7 MUFG 2 550.0 3.4

8 UOB 3 523.1 3.2

9 Standard Chartered 3 513.4 3.1

10 BAML 1 262.4 1.6

Total 20 16,439.5

*Market volume and including Kangaroo bonds

Proportional credit

Source: Refinitiv data SDC Code: AJ5

Top lead managers of all Australian debt, inc-

ABS, MBS (ex-self-funded transactions)1/1/19 – 30/6/19

Amount

Name Issues A$(m) %

1 Westpac 40 10,267.2 17.5

2 ANZ 38 7,815.1 13.3

3 NAB 41 7,075.3 12.0

4 CBA 34 6,339.4 10.8

5 Deutsche 20 3,954.2 6.7

6 Nomura 30 3,665.3 6.2

7 TD Sec 34 3,646.2 6.2

8 UBS 12 3,329.6 5.7

9 Macquarie 9 1,512.8 2.6

10 JP Morgan 9 1,377.4 2.3

Total 158 58,850.6


Proportional credit

Source: Refinitiv data SDC Code: AJ3a

Top lead managers of all Australian securitisation,

inc-self-funded transactions ex-CDOs1/1/19 – 30/6/19

Amount

Name Issues A$(m) %

1 Westpac 10 4,538.4 25.8

2 NAB 16 2,951.6 16.8

3 ANZ 7 2,837.1 16.2

4 CBA 11 1,916.8 10.9

5 Macquarie 6 1,049.2 6.0

6 Deutsche 4 761.3 4.3

7 Citigroup 3 669.3 3.8


9 MUFG 2 550.0 3.1

10 UOB 3 523.1 3.0

Total 21 17,563.0


Proportional credit



COUNTRY REPORT AUSTRALIA

joint lead manager with MUFG, NAB, RBC Capital Markets and Westpac.

The A$375m Class A1-a and A$11.6m Class A1-x notes, with respective weighted-average lives of 1.5 and 0.7-years, priced at one-month BBSW plus 118bp and 110bp.

The A$32.5m Class B, A$30m Class C, A$20m Class D, A$15m Class E and A$12.5m Class F notes, all with 2.2-year WALs priced 225bp, 275bp, 350bp, 525bp

and 700bp wide of one-month BBSW, respectively.

Pricing was not disclosed for the A$15m Class G notes with a 3.0-year WAL.

Initial credit support for the Class A1-a note is 25%. For the Class B to F notes respective support is 18.5%, 12.5%, 8.5%, 5.5% and 3.0%.

› ABSF TO PUBLISH PRINCIPLES

The Australian Office of Financial Management is due to publish finalised

principles of the A$2bn AUSTRALIAN BUSINESS

SECURITISATION FUND by July 22, ahead of roundtable discussions in Sydney on July 23 and in Melbourne on July 25.

Last November, the government announced it would create the fund to help provide finance to small and medium-sized enterprises on more competitive terms.

The finalised principles will cover market impact, transparency, good governance and reputational risk.

Top bookrunners of Australia syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 ANZ 18 3,719.9 13.5

2 MUFG 13 3,352.2 12.2

3 HSBC 10 2,845.8 10.3

4 NAB 11 2,472.4 9.0

5 CBA 11 2,134.2 7.7

6 Westpac 10 1,539.6 5.6

7 Mizuho 7 1,314.5 4.8

8 Bank of China 5 1,267.5 4.6

9 SMFG 6 1,205.3 4.4

10 BNP Paribas 5 1,057.3 3.8

Total 58 27,600.0

* Based on market of syndication and market total

Proportional credit

Source: Refinitiv data SDC Code: S7

Top bookrunners of Australian equity and

convertible offerings1/1/19 – 30/6/19

Amount


1 UBS 15 2,788.1 22.9

2 Citigroup 7 2,206.2 18.1

3 JP Morgan 12 1,572.8 12.9

4 Macquarie 10 1,458.7 12.0

5 Bell Financial 31 588.0 4.8

6 Deutsche 2 540.3 4.4

7 BAML 2 441.7 3.6

8 Goldman Sachs 2 337.5 2.8

9 Morgan Stanley 3 284.9 2.3

10 Morgans Financial 15 181.5 1.5

Total 300 12,183.4

*Market volume

“Standard Exclusion not applicable”

Proportional credit

Source: Refinitiv data SDC Code: AK1

Metro Finance taps ABS scarcity demand Structured Finance Diversification-hungry investors lap up rare auto securitisation

Consumer lender METRO FINANCE achieved

good traction for its second public auto and

equipment prime ABS offering, METRO 2019-1,

which was upsized to A$400m (US$281m)

from an indicative A$300m while most

tranches priced inside initial guidance.

The transaction enjoyed some scarcity

value as just the second auto ABS of the year

in Australia following Macquarie Leasing’s

A$1.1765bn funding-only trade in March,

SMART ABS Series 2019-1 Trust, which,

unlike Metro, only sold Triple A rated senior

notes.

There has been one other non-RMBS

securitisation in 2019, FlexiGroup’s Flexi ABS

Trust 2019-1, which was backed by consumer

receivables.

“Investors are keen to diversify away from

mortgage-backed issues which dominate

the market,” said a banker close to the deal.

“This appetite was certainly reflected in the

mezzanine tranches which were not present

in the Macquarie auto ABS.”

The order book reached US$800m from

15 investors, with seven first time investors in

Metro ABS and three from overseas.

Domestic accounts were allotted 82% and

offshore 18%, while real money investors

bought 90% and bank balance sheets 10%.

The subordinated tranches were

particularly well bid with the Class D and

Class E Notes 4.7 times and 4.8 times

subscribed, respectively.

The A$120m Class AS notes with a

0.7-year weighted-average life priced

last Wednesday at the wide end of final

one-month BBSW plus 85bp–90bp area

guidance, which was revised from initial 90bp

area price thoughts.

The A$202m Class AL notes with a 2.6-

year WAL priced inside 130bp area IPTs and

at the tight end of refined 125bp–130bp area

guidance.

The Metro 2019-1 A$30m Class B, A$14m

Class C, A$8m Class D, A$12m Class E and

A$4.4m Class F notes, all with 2.8-year

WALs, priced below initial 225bp area, 270bp

area, low 300bp area, mid 500bp area and

700bp area guidance at one month BBSW

plus 215bp, 260bp, 300bp, 540bp and

690bp, respectively.

The A$4.6m Class GA and A$5m Class GB

notes were pre-placed.

Credit support for the Class A notes is 19.5%.

For the Class B to GA notes respective support

is 12%, 8.5%, 6.5%, 3.5%, 2.4% and 1.25%.

NAB was arranger, having also brought the

A$300m Metro 2018-2 auto ABS to market

last November.

Metro Finance privately placed a A$288m

six-tranche prime commercial auto and

equipment ABS offering in June last year, the

Metro Finance 2018-1 Trust.

Metro Finance was established in 2011 as

a commercial auto and equipment lender.

It targets prime borrowers for small-ticket

auto and equipment assets in low volatility

industries.

JOHN WEAVERS

Top lead managers of Australian dollar-

denominated domestic bonds, inc-Kangaroo bonds,

ex-self-funded transactions, ABS, MBS1/1/19 – 30/6/19

Amount

Name Issues A$(m) %

1 Westpac 31 5,834.1 13.8

2 ANZ 31 4,978.0 11.7

3 CBA 24 4,527.9 10.7

4 NAB 26 4,229.1 10.0

5 Nomura 30 3,665.3 8.6

6 TD Sec 34 3,646.2 8.6

7 UBS 12 3,329.6 7.9

8 Deutsche 16 3,193.0 7.5

9 Mizuho 10 1,266.7 3.0

10 RBC Capital 14 1,256.8 3.0

Total 138 42,411.1


Proportional credit



SYNDICATED LOANS

› CROSS RIVER RAIL PLAN SELL-DOWN

Banks providing a A$2.3bn (US$1.62bn) loan for the Brisbane-based CROSS RIVER RAIL public-private partnership project are planning a limited sell-down.

Eleven banks provided the loan, which is expected to launch soon. The lenders are: BBVA, Credit Agricole CIB, Intesa Sanpaolo, Kfw IPEX-Bank, MUFG, Norinchukin Bank, Societe Generale, Standard Chartered, Sumitomo Mitsui Banking Corp, Sumitomo Mitsui Trust Bank and HSBC, according to LPC data. The financing was signed on June 30.

A consortium comprising Australia-listed construction company CIMIC Group and its units Pacific Partnerships, CPB Contractors and UGL, as well as independent fund manager DIF, Dutch contractor BAM International and Italian construction company Ghella won the bid for the Tunnel, Stations and Development PPP of the Cross River Rail project in April.

The project also includes a Rail, Integration and Systems package, which will be developed by a separate consortium, but not under a PPP framework.

The entire Cross River Rail project will cost A$5.4bn to develop and is expected to start operating in 2024. Once completed, the 10.2-kilometre railway line will run from Dutton Park to Bowel Hills and include a 5.9-kilometre twin tunnel running under the Brisbane River and the central business district.

› CROMWELL PROPERTY SEEKS €225M

Real estate company CROMWELL PROPERTY GROUP is seeking a €225m (US$254m) three-year loan.

Coordinator Goldman Sachs has invited lenders to submit indicative pricings.

Funds are for general corporate purposes.In September 2018, Cromwell Seven

Hills, a unit of Cromwell Property, raised a A$233.935m 15-month senior loan. Credit Agricole CIB, Shinsei Bank and Westpac Banking Corp were the lenders on that transaction, according to LPC data.

As at December 31 2018, ASX-listed Cromwell had a direct property investment portfolio in Australia valued at US$2.5bn and total assets under management of US$11.5bn across Australia, New Zealand and Europe.

CHINA


› BIG BOOK FOR GUANGZHOU R&F

GUANGZHOU R&F PROPERTIES (Ba3/B+/BB–) last Thursday priced a US$450m five-year non-call three senior notes offering at par to yield 8.125%, inside initial guidance of 8.625% area.

Orders were over US$3.6bn from more than 190 accounts. Asia took 95% of the Reg S bonds and EMEA 5%.

By investor type, fund managers booked 60%, private banks and corporates a combined 39%, and banks and insurers 1%.

Easy Tactic will issue the notes, while R&F Properties (HK) and certain offshore subsidiaries of Guangzhou R&F Properties will guarantee them. Guangzhou R&F Properties is providing a keepwell deed and deed of equity interest purchase undertaking.

The bonds have an expected rating of BB– by Fitch.

Proceeds will be used mainly to finance offshore debt, including the redemption of the Chinese property developer’s US$300m bonds due on October 8.

Goldman Sachs, Heungkong Financial, Credit Suisse, Bank of America Merrill Lynch and JP Morgan were joint global coordinators and bookrunners.

› BLUESTAR HOLDS MEETINGS

CHINA NATIONAL BLUESTAR (GROUP), rated Baa2/BBB/A–, has mandated BNP Paribas, BOC International, Credit Agricole and Morgan Stanley as joint global coordinators and, together with Industrial Bank, Hong Kong branch and Standard Chartered, joint bookrunners to arrange investor meetings in Hong Kong, Singapore and London. Meetings began on July 4.

A Reg S offering of US dollar senior

unsecured fixed-rate notes may follow, subject to market conditions.

Bluestar Finance Holdings will issue the proposed bonds with a guarantee from China National Bluestar (Group). The notes are expected to be rated BBB/A– (S&P/Fitch).

State-owned China National Chemical Corp (ChemChina) owns a 79.5% stake in specialty chemicals and materials manufacturer Bluestar, and Shandong International Trust owns the remainder.

› DAFA PROPERTIES PAYS 14%

DAFA PROPERTIES GROUP, rated B2/B (Moody’s/S&P), priced US$180m 12.875% two-year bonds at 98.095 to yield 14%, unchanged from initial guidance.

The Reg S senior unsecured bonds have expected ratings of B3/B– (Moody’s/S&P). Proceeds will be used primarily to refinance debt.

Barclays, BOC International, CCBInternational, CLSA, CMB International, Credit Suisse, Deutsche Bank, Haitong International, Heungkong Financial and Natixis were joint global coordinators and bookrunners.

Shanghai-based residential property developer Dafa listed in Hong Kong in October 2018.

› FOSUN WRAPS UP TENDER

Chinese conglomerate FOSUN INTERNATIONAL has agreed to buy back US$233.6m in principal amount of its offshore bonds under a cash tender offer that was funded by last month’s US$700m four-year non-call three senior bond offering.

Fosun will repurchase US$129.625m of the US$550m 5.375% senior notes due 2020 and US$103.996m of the US$590m 5.50% senior notes due 2023. It had earlier said it would accept up to US$350m of each set of notes in the tender.

Fosun will pay US$1,011.5 per US$1,000 in principal amount of the 5.375% 2020s and par for the 5.50% 2023s.

Credit Suisse, BOC International, HSBC and Standard Chartered Bank were dealer managers for the tender offer. DF King was the information and tender agent.

The company said it might launch further liability management exercises, depending on market conditions.

› GUANGZHOU STATE FIRM READIES DEBUT

GUANGZHOU DEVELOPMENT DISTRICT FINANCIAL

HOLDINGS GROUP, rated Baa1/BBB+ (Moody’s/Fitch), has hired banks for a proposed debut offering of US dollar senior unsecured bonds, subject to market conditions.

Guotai Junan International, Bank of China and CMB Wing Lung Bank are joint global

Top bookrunners of Australian equity 1/1/19 – 30/6/19

Amount


1 UBS 15 2,788.1 23.8

2 Citigroup 6 2,064.6 17.7

3 Macquarie 10 1,458.7 12.5

4 JP Morgan 11 1,431.2 12.2

5 Bell Financial 31 588.0 5.0

6 Deutsche 2 540.3 4.6


8 BAML 1 300.0 2.6


10 Morgans Financial 14 180.8 1.6

Total 294 11,693.6

*Market volume


Proportional credit

Source: Refinitiv data SDC Code: AK2


COUNTRY REPORT CHINA

coordinators on the Reg S issue. They are also joint bookrunners and joint lead managers with ABC International, Bank of Communications, Barclays, China Industrial Securities International, DBS Bank, Haitong International, Industrial Bank Hong Kong branch and OCBC Bank.

The state-owned financial service and investment vehicle started to meet investors in Hong Kong last week and will meet investors London and Singapore this week.

Wholly owned subsidiary GET International Investment Holdings will be the issuer and GZDDFH is the guarantor.

The proposed bonds have expected ratings of Baa1/BBB+ (Moody’s/Fitch).

GZDDFH manages state capital and industrial facilities in the Guangzhou Development District economic zone. Its main businesses include heat and power supplies, science park construction and management, technology investment, real estate development and financial services.

› JIAYUAN EXCHANGE OFFER CLOSES

JIAYUAN INTERNATIONAL on Friday announced the result of an exchange offer for its US$400m 12.0% senior bonds due October 22 2020, while conducting a concurrent new money issue.

The Hong Kong-listed real estate company said US$191.1m of the 2020s had

been validly tendered but that it would only accept US$150m of the tendered notes.

It also said that the aggregate principal amount of the new notes to be issued under the exchange offer and the concurrent new money issuance was expected to be US$225m.

Under the exchange offer, for each US$1,000 in principal amount of the validly tendered 2020s, holders will receive US$1,000 in aggregate principal amount of the new notes, accrued interest, cash in lieu of any fractional amount of new notes, plus a cash consideration of US$26.25.

Final price guidance for the additional new notes, which have a tenor of two years and eight months with a put option after one year and eight months, was set at 13.75%.

There is an investor put option to sell the bonds at 102.402 on March 11 2021, or a yield to put of 15.00%.

Proceeds from the new money part will be used for debt refinancing.

Jiayuan has a Caa1 rating (on review for upgrade) by Moody’s and the Reg S issue is unrated. The deal has not yet priced at the time of writing.

The settlement date for the new notes is expected to be on July 11.

Guotai Junan International, CLSA, China Investment Securities International, China Citic Bank International, Morgan Fuel Go Securities and CCB International are joint global coordinators, lead managers and bookrunners.

› MACROLINK HOLDING TAPS 2021S

MACROLINK HOLDING on June 28 reopened its US$168m 9.5% senior notes due January 4 2021 for a further US$40.4m.

The tap priced at 99.998 to yield 9.5%, in line with final price guidance.

Macrolink Global Development is the issuer and Macrolink Holding is the guarantor.

Proceeds will be used for general corporate purposes.

The original notes were priced at par on December 28 2018. The two-year Reg S notes are unrated.

Silk Road International, CMBC Capital and CCB International were joint global coordinators as well as joint lead managers and joint bookrunners with CM Financial on the reopening.

Macrolink Holding is involved in cultural tourism real estate development, chemical engineering, petroleum trading, and non-ferrous metals in China.

› NEW TOWN BUILDS CAPITAL

NEW TOWN CONSTRUCTION INVESTMENT (JIZHOU,

TIANJIN) on June 28 priced a US$70m three-year credit-enhanced bond offering at par to yield 4.80%, inside initial price guidance of 4.95% area.

The Reg S bonds are supported by an

Shandong Guohui swoops at dawn Bonds Issuer still has large unfulfilled offshore quota

SHANDONG GUOHUI INVESTMENT, rated Baa2/

BBB+ (Moody’s/Fitch), priced a chunky

US$800m three-year senior unsecured bond

at par to yield 4.37%, 43bp tighter than initial

4.80% area guidance.

The new issue priced on July 3 around 3am

Hong Kong time, which is unusual for a Reg

S issue. But two bankers on the deal said this

was mainly due to “discussion of allocations”

and insisted there was nothing unusual.

The deal was mainly supported by the

leads, one of the bankers on the deal

acknowledged, although some foreign

investors also took part.

Final statistics were not available at the

time of writing but orders were said to be

over US$3.3bn, including US$2bn demand

from the leads, ahead of the release of final

guidance.

The issue was Shandong Guohui’s first

offshore bond issue after it received first-

time issuer ratings from Moody’s and Fitch

in April. Prior to that, it had printed two

unrated issues last year with tenors of less

than one year in the international market,

for which it did not need an issuance quota

from the National Development and Reform

Commission. It sold US$188m 363-day notes

at 5.7% in September and US$600m 363-

day notes at 5.7% in November.

Despite the massive size of the latest

offering, Shandong Guohui is likely to revisit

the offshore bond market as it has a total

US$1.5bn NDRC quota, according to a note

from Nomura’s trading desk.

Nomura has suggested investors

participate in the deal with final guidance at

no less than 4.4%.

Indirectly wholly owned subsidiary Guohui

International (BVI) is the issuer of the bonds

with a guarantee from Shandong Guohui.

The bonds have an expected rating of

BBB+ from Fitch. The bonds traded up 0.375

points in cash price in the aftermarket.

Proceeds will be used for refinancing

of the group’s onshore and offshore debt,

project construction and general corporate

purposes.

Central Wealth Securities Investment, Zhongtai International, Bank of China,

China International Capital Corp and

Standard Chartered Bank were joint global

coordinators. They were also joint lead

managers and joint bookrunners with BoCom International, CMB Wing Lung Bank, China Minsheng Banking Corp Hong Kong branch,

Industrial Bank Hong Kong branch, China Citic Bank International, China Everbright Bank Hong Kong branch, ABC International, Silk Road International, Haitong International, Huatai Financial Holdings (Hong Kong), Bank of East Asia and China Securities International.

Established in 2016, Shandong Guohui

has a strategic role in the reform and

restructuring of SOEs in Shandong

province. It owns equity in SOEs involved in

transportation, engineering, and financial

and operating leasing.

CAROL CHAN


irrevocable standby letter of credit issued by China Zheshang Bank’s Tianjin branch, which is rated Ba1 by Moody’s.

Proceeds will be used for general corporate purposes and working capital.

Haitong International and Inter Capital were joint global coordinators and bookrunners.

The issuer is designated by the Tianjin Development and Reform Commission to build the Jixian New City Model Town in the Jixian New City in Tianjin.

› PINGCOAL PRICES SMALL DEBUT

PINGDINGSHAN TIANAN COAL MINING, rated BB– (stable) by S&P, has priced a US$100m debut offshore bond offering for general corporate purposes.

The 363-day senior unsecured notes were priced at par to yield 6.25%, inside initial price guidance of 6.5% area.

Central China International Capital and Haitong International were joint global coordinators, joint lead managers and joint bookrunners on the Reg S unrated issue.

The Shanghai-listed issuer is a subsidiary of China Pingmei Shenma Energy & Chemical Group, a provincial state-owned enterprise 65%-owned by Henan SASAC.

› TAHOE PAYS YEAR'S TOP YIELD

TAHOE GROUP has paid Asia’s highest yield of the year so far, in a US dollar deal that few investors seemed to have heard about.

The Chinese property developer on June 28 priced a US$400m three-year senior unsecured Reg S bond at 97.689 with a coupon of 15% to yield 16%.

This was the highest yield for an Asian US dollar bond so far this year, according to IFR data, beating the 14.969% yield to put that Fantasia Holdings Group paid to tap its 2021 bonds in January.

Haitong was sole bookrunner for the Tahoe deal. Wholly owned subsidiary Tahoe Group Global will issue the bonds with a guarantee from Tahoe Group. The bonds have expected ratings of Caa1 by Moody’s and CCC+ by Fitch, both one notch below the company ratings.

Fitch wrote that Tahoe’s business profile is similar to BB rated peers, but that the company’s leverage is among the highest among the homebuilders it rates. The rating agency said that Tahoe had refinanced debt of up to Rmb34bn (US$5.0bn) since the start of this year, helped by the sale in March of a stake in a commercial property in Hangzhou to Shimao Property.

Moody’s on June 28 revised its outlook on Tahoe’s rating to stable from negative, citing its proactive liquidity management, including selling assets and scaling back land acquisitions.

In May, S&P withdrew its B– rating on the company and CCC+ rating of its dollar bonds at the company’s request, days after downgrading both by a notch and warning that Tahoe’s reliance on debt funding was “unsustainable”.

› TIANJIN BINHAI PLANS THREE-YEAR

TIANJIN BINHAI NEW AREA CONSTRUCTION & INVESTMENT

GROUP, rated Baa2/BBB/BBB+, has hired banks for a proposed offering of three-year US dollar senior bonds, subject to market conditions.

Standard Chartered Bank, Bank of China, CCB International and HSBC are joint global coordinators on the Reg S issue. They are also joint bookrunners and joint lead managers with BNP Paribas, China Citic Bank International, CMBC Capital, CMB Wing Lung

Bank, Everbright Sun Hung Kai, Guotai Junan International, Haitong International, Industrial Bank Hong Kong branch and Shanghai Pudong Development Bank Hong Kong branch.

Tianjin Binhai New Area Construction will meet investors in Hong Kong and Singapore, starting Monday.

The proposed bonds will be issued by Zhaobing Investment (BVI) and guaranteed by Tianjin Binhai New Area Construction.

The notes have expected ratings of Baa2/BBB/BBB+, in line with the guarantor.

The guarantor is wholly owned by Tianjin Sasac and was established in 2006 by the Tianjin municipal government to undertake capital operations and investment management for major projects in the Tianjin Binhai New Area. Its main businesses include transportation infrastructure construction and operation, civil projects, environmental protection, clean energy and regional development.

› TSINGHUA TONGFANG PRINTS

TSINGHUA TONGFANG last Tuesday priced US$300m 2.5-year senior unsecured notes at 99.548 with a coupon of 6.8% to yield 7.0%, having tightened from initial guidance of 7.125% area.

Indirect wholly owned subsidiary Tongfang Aqua will issue the unrated Reg S bonds, which will have an unconditional and irrevocable guarantee from Tsinghua Tongfang. Tsinghua Holdings has issued a letter of support for the guarantor.

DBS, UBS, CMB International and Guotai Junan International were joint global coordinators. They are also joint bookrunners with Orient Securities (Hong Kong) and BoCom International.

Tsinghua University holds a 25.75% stake in technology company Tsinghua Tongfang through Tsinghua Holdings.Top bookrunners of Dim Sum bonds

(Rmb issued and settled offshore bonds)1/1/19 – 30/6/19

Amount

Name Issues Rmb(m) %

1 HSBC 33 9,347.1 56.8


3 Scotiabank 1 500.0 3.0

4* SPDB 1 357.1 2.2

4* BoCom 1 357.1 2.2

4* CICC 1 357.1 2.2

4* Credit Agricole 1 357.1 2.2

4* CTBC Financial 1 357.1 2.2

9 BNP Paribas 2 350.0 2.1

10* Guotai Junan Sec 1 252.8 1.5

10* DBS 1 252.8 1.5

10* Citic 1 252.8 1.5

Total 48 16,466.1

*Market volume

Proportional credit


Top bookrunners of all renminbi bonds,

ex-self-funded transactions1/1/19 – 30/6/19

Amount

Name Issues Rmb(m) %

1 Bank of China 583 540,243.1 9.7

2 ICBC 556 476,678.0 8.6

3 CCB 558 423,483.2 7.6

4 BoCom 465 372,495.2 6.7

5 ABC 384 304,958.1 5.5

6 Citic 396 303,819.3 5.5

7 CSC Financial 294 244,791.4 4.4

8 Industrial Bank 359 211,666.0 3.8


10 China Minsheng 213 154,159.3 2.8

Total 2,165 5,578,058.8

*Market volume

Proportional credit


Top bookrunners of China syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 Bank of China 98 11,328.9 35.9

2 BoCom 30 6,347.4 20.1

3 ABC 12 6,064.2 19.2

4 ICBC 5 1,988.7 6.3

5 SMFG 2 1,201.6 3.8

6 CCB 4 1,129.0 3.6

7 HSBC 4 598.2 1.9

8 CDB 1 566.1 1.8


10 Taiwan Financial 3 301.4 1.0

Total 164 31,517.7


Proportional credit

Source: Refinitiv data SDC Code: S8b



› YUZHOU SELLS ADDITIONAL BONDS

YUZHOU PROPERTIES, rated Ba3/BB–/BB–/BB (Moody’s/S&P/Fitch/ Lianhe Global), has reopened its 6.00% senior notes due October 25 2023 for a tap of US$400m, bringing the total outstanding to US$650m.

The Hong Kong-listed Chinese real estate company sold the additional bonds at 93.872 to yield 7.70%, well inside initial guidance of 8.20% area.

The deal drew final orders of over US$3.3bn from 202 accounts. Asia took 81% of the bonds, Europe 18% and offshore US 1%. By investor type, 81% went to asset managers and fund managers, 10% to banks and securities, 8% to private banks, and 1% to corporates and insurers.

It will use the proceeds primarily for debt refinancing, and also for business development in China.

The seven-year non-call four notes were originally issued in October 2016. The Reg S notes are rated B1/BB– (Moody’s/Fitch).

BOC International, HSBC, JP Morgan and Yuzhou Financial were joint global coordinators as well as joint lead managers and joint bookrunners with Barclays, Guotai Junan International and Haitong International.

› BANK OF HANGZHOU PRINTS

BANK OF HANGZHOU has printed Rmb10bn three-year financial bonds at 3.6%, in the lower half of initial guidance at 3.2%–4.2%.

Proceeds will be used to replenish the bank’s capital.

ICBC is the lead bookrunner and lead underwriter. Citic Securities, Bank of Communications and China Merchants Bank are joint underwriters.

China Chengxin rates both the issuer and the bonds AAA.

Bank of Hangzhou has outstanding debt of Rmb157.8bn, according to Refinitiv data.

› CHINA ORIENT AM GETS CBIRC NOD

CHINA ORIENT ASSET MANAGEMENT, one of China’s big four bad-debt management companies, has received approval from the China Banking and Insurance Regulatory Commission to issue up to Rmb30bn financial bonds.

Proceeds will be used to trade non-performing assets and debt-to-equity swaps programmes.

The issuer has an expected rating of AAA by China Chengxin.

On January 17, the CBIRC authorised Great Wall Asset Management to issue up to Rmb30bn bonds, with proceeds used for trading of non-performing assets.

› CR LAND EYES RMB1BN NOTES

CHINA RESOURCES LAND plans to issue Rmb1bn medium term notes in two tranches off of a Rmb8bn quota it registered with financial regulators.

The property developer will split the bonds equally into three and five year tranches.

Agricultural Bank of China is the lead underwriter and lead bookrunner. ICBC is joint underwriter.

Bookbuilding opened last Friday and the settlement date is July 9.

The developer will use the proceeds to repay bank loans and replenish capital at its subsidiaries.

China Chengxin has assigned a AAA rating to both the issuer and the bonds.

› THREE GORGES FUNDS GREEN PROJECTS

State-owned power company CHINA THREE

GORGES CORPORATION has printed Rmb3.5bn five-year Green notes at 3.85%, within guidance of 3.2%–4.2%.

China Construction Bank is the lead underwriter and lead bookrunner. China Minsheng Bank is the joint underwriter.

Proceeds will be used for hydropower projects meeting the standards of qualified Green bond projects of the National Development and Reform Commission.

The issuer has expected AAA ratings from China Chengxin.

Its outstanding debt totals Rmb189.7bn, according to Refinitiv data.

› XINJIANG LGFV PRINTS NOTES

XINJIANG INVESTMENT DEVELOPMENT GROUP issued Rmb500m of three-year notes at 4.85% last Wednesday, within initial guidance of 4.2%–5.2%.

The offering drew orders from six qualified institutional investors.

The issuer is a local government financing vehicle backed by the Xinjiang Uygur Autonomous Region.

China Development Bank was the lead underwriter and Industrial Bank was the joint underwriter.

Proceeds will be used to replenish capital.China Chengxin assigned AA+ ratings to

both the issuer and the bonds.

SYNDICATED LOANS

› CTRIP.COM UPS LOAN AFTER BOOKING 14

CTRIP.COM INTERNATIONAL has increased a three-year term loan to US$2bn from €600m-equivalent (then US$675m-equivalent).

The loan was launched as a dual-currency loan available in US dollars and euros. During syndication, the Nasdaq-listed borrower asked all banks to lend only US dollars.

Mandated lead arrangers and bookrunners Bank of Communications Hong Kong branch, Bank of East Asia, China Construction Bank (Asia), HSBC and Korea Development Bank have brought in 14 banks, including Bank of China that joined as an MLAB.

The bullet financing pays a top-level all-in pricing of 141.67bp based on an interest margin of 135bp over Libor.

For full allocations, see www.ifrasia.com.

› LEGEND SETS PRICING IN STONE

LEGEND FINANCIAL LEASING (SHANGHAI), a unit of state-owned Guangzhou Finance Holdings Group, has finalised the terms of a HK$1bn (US$128m) three-year term loan.

According to the draft terms sent earlier by mandated lead arranger and bookrunner Luso International Banking, the deal was initially a dual-currency bullet loan available in both US and HK dollars.

The final terms now state that the deal is solely a HK dollar amortising loan.

The interest margin of 220bp over Hibor and the all-in pricing remain the same, but all-ins are now based on an average life of 2.625 years and lower arrangement fees, for which payment is tied to drawdown.

Banks are now invited to join as MLABs with commitments of HK$200m or more for a top-level all-in of 300bp based on an arrangement fee of 210bp. MLAs with tickets of HK$120m–$199m earn an all-in pricing of 280bp through a fee of 158bp, while lead arrangers committing HK$80m–$119m receive an all-in of 260bp based on a 105bp fee.

Top bookrunners of China equity and

convertible offerings1/1/19 – 30/6/19

Amount


1 Citic 31 7,703.5 11.6


3 CICC 31 5,434.9 8.2


5 China Sec 28 3,839.7 5.8

6 Bank of China 12 2,733.3 4.1

7 UBS 16 2,715.3 4.1

8 Haitong Sec 29 2,344.3 3.5

9 Citigroup 23 2,276.1 3.4

10 Credit Suisse 19 2,126.7 3.2

Total 278 66,592.8

*Market volume


Proportional credit

Source: Refinitiv data SDC Code: C1m


Previously, the draft invitation listed the arrangement fees as 240bp, 180bp and 120bp for the respective commitment levels.

The final terms state that repayments will take place through six semi-annual instalments after a six-month grace period: 5% (sixth, 12th, 18th, 24th and 30th months) and 75% (36th month).

Funds are for refinancing existing debt and purchasing leasing assets.

Guangzhou Finance Holdings, a unit of the Guangzhou city government, will continue to provide the letter of comfort. Guangzhou Finance invests mainly in financial service providers.

› WOLONG ELECTRIC STARTS WITH €150M

Shanghai-listed electric motor manufacturer WOLONG ELECTRIC GROUP has invited banks to join a maiden €150m (US$169m) three-year term loan at three commitment levels.

Standard Chartered Bank is the mandated lead arranger and bookrunner of the deal, which pays an interest margin of 180bp over Euribor and has an average life of 2.75 years.

Banks have been asked to join as MLAs with tickets of €30m or more for a top-level all-in pricing of 210bp based on an upfront fee of 82.5bp. Lead arrangers committing €20m–€29m receive an all-in pricing of 205.1bp through a fee of 69bp, while arrangers with tickets of €10m–€19m earn an all-in of 200bp based on a 55bp fee.

Proceeds are for refinancing and working capital purposes.

A site visit and bank presentation have been scheduled for July 10 and July 11 in Shang Yu, Zhejiang province. Commitments are due by August 2.

Founded in 1984, Wolong Electric makes high and low-voltage motors, lithium and lead-acid batteries, heavy equipment and transformers, and has factories in Asia, Europe and North America.

› RIGHT LANE UNIT LAUNCHES LOAN

WELL FAITH MANAGEMENT, an entity that is 20%-owned by Right Lane, has launched a US$135m four-year term loan.

CMB Wing Lung Bank is the sole mandated lead arranger and bookrunner of the financing, which pays an interest margin of 240bp over Libor and has an average life of 3.75 years.

Banks have been invited to join as MLAs with tickets of US$40m or more for a top-level all-in pricing of 260bp based on an upfront fee of 75bp. Lead arrangers committing US$25m–$35m earn an all-in

pricing of 250bp through a fee of 37.5bp while arrangers with tickets of US$10m–$20m receive an all-in of 245bp based on an 18.75bp fee.

Commitments are due by July 29.Right Lane, a wholly owned investment

holding subsidiary of Chinese state-backed and Hong Kong-listed Legend Holdings, is providing a guarantee.

Funds are to refinance Well Faith’s US$100m loan signed in February 2016 and for developing and expanding a commercial property in Qianhai, Shenzhen.

CMB Wing Lung also led the 2016 loan and brought in Industrial & Commercial Bank of China (Asia) and Bank of Shanghai (Hong Kong), according to LPC data. The four-year deal was also guaranteed by Right Lane and was split between tranches of US$20m and US$80m.

In March, Right Lane raised a US$399m-equivalent three-year term loan from 11 banks. Bank of China, Credit Agricole CIB, Natixis and Standard Chartered were the MLABs. The top-level all-in pricing was 151.7bp or 146.7bp based on an interest margin of 130bp over Libor or 125bp over Euribor, respectively.

Other shareholders of Well Faith hold stakes of 10% or less in the borrower. John Zhao and Lin Tun, respectively chairman and managing director of Legend-sponsored private equity firm Hony Capital, are among the directors of Well Faith.

Separately, Hony Capital and Boston-based AEW Capital Management are also in the market for a US$390m-equivalent three-year onshore/offshore loan to back their acquisition of Hopson International Plaza, an office tower in Beijing. The office tower serves as the security for the onshore tranche and will be shared with lenders on the offshore portion through an inter-creditor agreement.

The deal has a two-year extension option and pays an offshore margin of 230bp over Libor.

› NINGBO HUATAI SHENGFU GETS RMB3BN

NINGBO HUATAI SHENGFU POLYMERIC MATERIAL has raised a Rmb3.06bn seven-year loan.

Bank of Communications was the sole mandated lead arranger and bookrunner of the transaction, which attracted five banks in general syndication.

The deal offers an interest margin of 110% of the PBoC rate for five years or more, which is currently at 4.9%.

Funds are for capital expenditure purposes.

Established in 2012, the borrower is a chemicals manufacturer in Ningbo, Zhejiang province.


› RUNMAO PROPERTY RAISES RMB10BN

Property developer NANJING RUNMAO PROPERTY has raised a Rmb10bn (US$1.46bn) six-year real estate loan.

Bank of Communications was the mandated lead arranger and bookrunner of the transaction, which attracted four banks in general syndication.

The deal offers an interest margin of 110% of the PBoC rate for five years or more, which is currently at 4.9%.

Nanjing Runmao Property is a subsidiary of Hong Kong-listed property developer China Jinmao Holdings Group.

In June 2018, China Jinmao Holdings raised a HK$8bn (US$1.02bn) borrowing. Agricultural Bank of China Hong Kong branch, Bank of China (Hong Kong), Bank of Communications Hong Kong branch, China Construction Bank Hong Kong branch, Chong Hing Bank, Industrial & Commercial Bank of China (Asia), MUFG and Standard Chartered (Hong Kong) were the MLABs on that deal, which offered respective top-level all-in pricing of 165bp and 185bp based on interest margins of 145bp and 165bp over Hibor for three and five-year tranches.


EQUITY CAPITAL MARKETS

› DOUYU MAY LAUNCH US IPO THIS WEEK

Tencent-backed game live-streaming platform DOUYU INTERNATIONAL HOLDINGS is considering launching its planned NYSE IPO as early as this week after putting the deal on hold in May, people with knowledge of the transaction have said.

The company has filed for a US$500m deal with the SEC but the size may change.

No final decision about the timing of the launch has been made, said the people.

DouYu put the deal on hold in early May after US President Donald Trump threatened to impose higher tariffs on China, leading to global market sell-offs. There have been conciliatory moves between the US and China since, helping to soothe market sentiment.

A spokesman for DouYu said the company “continues to work toward the objective of completing its IPO”.

DouYu last week updated its prospectus with first-quarter 2019 operating and financial results.

According to the amended filing, average total monthly active users (MAUs) reached 159.2 million, up 26% from 126.7 million in the first quarter of 2018. Paying users grew by 67% to 6 million from 3.6 million during the same period.



Net revenue increased by 123% to Rmb1.5bn (US$217m) in Q1 2019 from Rmb666.5m in Q1 2018. Adjusted net income was Rmb35.3m against a net loss of Rmb149.9m in Q1 2018.

Founded in 2013, DouYu, or “Fighting Fish”, is one of the leading live game-streaming/esports platforms in China. It was valued around US$2.4bn when Tencent invested US$630.7m in the company in March 2018. Pre-IPO, Tencent owns a 40% stake through Nectarine Investment, a fully owned subsidiary.

Morgan Stanley, JP Morgan, Bank of America Merrill Lynch and CMB International are joint bookrunners.

› EDVANTAGE’S IPO IS TEXTBOOK SO FAR

Books of EDVANTAGE GROUP’s up to HK$805m (US$103m) IPO are covered, a person with knowledge of the transaction has said.

The higher education provider is selling 250m primary shares or 25% of the capital in a HK$2.48–$3.22 range.

The international tranche comprises 225m shares and the retail tranche 25m. There is an over-allotment option of 37.5m shares.

Cornerstone investor Ariana Capital has agreed invest US$27m.

Pricing is scheduled on July 9.Edvantage operates two private higher

education institutions in China and one private vocational education institution in Australia. It mainly offers business programmes.

The company posted a profit of Rmb175m (US$25m) for the year ended August 31 2018, up 9.4% year on year. It earned about Rmb40m for the two months ended October 31 2018.

BNP Paribas is the sole sponsor.

› CIMC VEHICLES PRICES IPO AT HK$6.38

Trailer maker CIMC VEHICLES has priced its IPO at the bottom of a HK$6.38–$8.08 range to raise HK$1.7bn, a person with knowledge of the transaction said.

The subsidiary of Shenzhen-listed China International Marine Containers sold 265m primary shares for a 15% free float. The final price translates to a 2019 P/E of seven.

Books were covered multiple times with demand from long-only institutions and hedge funds.

There is a greenshoe option of 15% of the base deal.

Two cornerstone investors have committed to purchase about US$85m of the deal: SAIC Motor Corporation (US$50m) and Shandong Linglong Tire (US$35m).

CIMC Vehicles manufactures semi-trailers and truck bodies. It will use the proceeds

to develop new manufacturing or assembly plants in the US and Europe, for research and development, to repay the principal and interest on bank borrowings, and for working capital and general corporate purposes.

CIMC Group controls 63.3% of the company.

The shares are expected to be listed on July 11.

Haitong International is the sole sponsor. It is also joint global coordinator and lead manager with ICBC and Nomura.

› MANPOWERGROUP LIKELY TO PRICE LOW

MANPOWERGROUP GREATER CHINA, a subsidiary of NYSE-listed ManpowerGroup, is likely to price a Hong Kong IPO of up to HK$630m at the bottom of the HK$9.90–$12.60 range, a person with knowledge of the transaction has said.

The employment agency is selling 50m shares, or 25% of the enlarged share capital. At the bottom of the range, the deal would bring in HK$495m.

The range translates to a 2019 P/E of 11.5–14.6 and a 2020 P/E of 9.2–11.7, as well as a market capitalisation of US$253m–$322m.

There is a greenshoe option of 15% of the base size.

The shares will be listed on July 10.Huatai Financial is the sole sponsor.

› COMPANIES FILE FOR A-SHARE IPOS

Seventy-seven companies with a combined fundraising target of Rmb47bn filed to the China Securities Regulatory Commission for A-share IPOs in the last week of June, before the validity of their audited results expired.

The tally excludes companies that applied to the Shanghai tech board.

The CSRC released the draft prospectuses of the 77 applicants last Friday.

Of these, 29 have filed for Shanghai IPOs totalling Rmb26.1bn, while 11 have filed for Shenzhen IPOs (Rmb4.2bn) and the remaining 37 for ChiNext IPOs (Rmb16.4bn).

Two companies, JIANGSU SWORD

AGROCHEMICAL (Rmb2.01bn) and POSTAL SAVINGS

BANK OF CHINA (Rmb2.12bn), plan to raise more than Rmb2bn from Shanghai IPOs, while nine target over Rmb1bn. They are KEMAI CHEMICAL (Rmb1.42bn), JIANGSU

BOQIAN NEW MATERIALS STOCK (Rmb1.16bn), ALLIED MACHINERY (Rmb1.05bn), XINYAQIANG

SILICON CHEMISTRY (Rmb1.2bn), NINGBO DEYE

TECHNOLOGY (Rmb1.02bn), BEIDAHUANG

KENFENG SEED (Rmb1.03bn), BEIJING ZEHO

WATERFRONT ECOLOGICAL ENVIRONMENT TREATMENT (Rmb1.45bn), GOODFARMER FOODS HOLDING GROUP

(Rmb1.06bn), and CHINA NATIONAL GOLD GROUP

GOLD JEWELLERY (Rmb1.25bn).The average size of the 37 proposed

ChiNext deals is only Rmb443m. Only theme park operator FANTAWILD HOLDINGS plans to raise more than Rmb1bn.

Citic Securities is the sponsor of eight of the IPOs, followed by Minsheng Securities on seven.

› CRSC KICK OFF TECH BOARD IPO

CHINA RAILWAY SIGNAL AND COMMUNICATION conducted price consultation for a Rmb10.5bn tech board IPO last Friday, the biggest listing so far on the new Shanghai board.

The company will announce the issue price this Monday, and books will open for a day on July 10.

CRSC, which is already listed in Hong Kong, has lowered the number of A-shares on offer from 2.2bn to 1.8bn, or up to 17% of its enlarged capital, while the fundraising target remained unchanged.

Of the shares on offer, 30% or 540m shares have been allocated to a strategic tranche for sponsor CICC, special asset management plans, and other strategic investors.

Under the tech board rules for IPOs of over Rmb5bn, the sponsor is required to buy at least 2% of the IPO shares and hold them through a subsidiary for two years, up to a cap of Rmb1bn.

Other early IPO applicants have agreed a relatively high fee to compensate sponsors for the additional risk, but CSRC has offered no special incentive.

According to the filing, the company is paying an underwriting fee and sponsor fee equal to 1.5% of the fundraising size. Assuming the company raises Rmb10.5bn, the fee is Rmb157.5m.

Excluding the strategic tranche, about 80% and 20% of the remaining shares will be earmarked for institutional and retail investors, respectively.

Proceeds will be used for intelligent technology research, the construction of an intelligent technology manufacturing base in the city of Changsha, IT services, and to replenish working capital.

CICC is the sponsor of the deal and also joint bookrunner with Goldman Sachs Gao Hua Securities, Citic Securities, BOC International (China), Morgan Stanley Huaxin Securities and TF Securities.

› FEIHE FILES AGAIN FOR HONG KONG IPO

Baby-formula maker CHINA FEIHE, which delisted from the US in 2013, has filed a listing application to the Stock Exchange of Hong Kong for an IPO of at least US$1bn.


It plans to list in Hong Kong in the fourth quarter, said people close to the deal.

China Merchants Securities, CCB International and JP Morgan are the sponsors.

The company filed for a Hong Kong listing in 2017 but the deal did not materialise.

Feihe delisted from the New York Stock Exchange in 2013, after chairman Leng Youbin, management and Morgan Stanley Private Equity Asia took the company private for about US$147m.

› PSBC EYES SHANGHAI IPO

Hong Kong-listed POSTAL SAVINGS BANK OF

CHINA plans to offer 5.17bn A-shares in its Shanghai IPO, or 6% of the enlarged capital, according to a disclosure by the China Securities Regulatory Commission.

It is offering less than the 5.95bn A-shares approved by the China Banking and Insurance Regulatory Commission in June.

Based on its close of HK$4.66 on June 28, equivalent to Rmb4.10, the lender could raise Rmb21.2bn from the listing.

It will use the proceeds to replenish capital.PSBC, the country’s biggest bank by

number of branches, raised HK$59.1bn (US$7.6bn) from a Hong Kong IPO in 2016.

It announced its Shanghai listing plan in 2017 and has been seeking shareholder and regulatory approval since then.

CICC and China Post Securities are joint sponsors and joint bookrunners with UBS Securities and Citic Securities. UBS Securities is also the sole financial adviser on the IPO.

› SIX LAUNCH TECH BOARD IPOS

Six companies conducted price consultations last Friday for Shanghai tech board IPOs after their registrations were accepted by the China Securities Regulatory Commission at the start of the week.

They are ESPRESSIF SYSTEMS SHANGHAI (Rmb1.01bn or US$146m), ADVANCED

MICRO-FABRICATION EQUIPMENT (Rmb1bn), HARBIN XINGUANG OPTIC-ELECTRONICS TECHNOLOGY (Rmb876m), XIAN BRIGHT LASER TECHNOLOGIES (Rmb700m), FUJIAN FORECAM OPTICS (Rmb651m) and ANJI MICROELECTRONICS TECHNOLOGY SHANGHAI (Rmb303m).

The companies will give pricing details on July 8 and open the books on July 10.

The six companies will wrap up their IPOs on July 12, when the other three tech board candidates - CHINA RAILWAY SIGNAL AND

COMMUNICATION (Rmb10.5bn), NINGBO RONBAYMAT

NEW ENERGY TECHNOLOGY (Rmb1.6bn) and APPOTRONICS CORPORATION (Rmb1bn) - will also complete their IPOs.

In addition, eight companies are set to conduct price consultations on Monday and Tuesday for Shanghai tech board IPOs totalling Rmb6.06bn.

They are ARCSOFT CORPORATION (Rmb1.13bn), MICRO-TECH (NANJING) (Rmb894m), WESTERN

SUPERCONDUCTING TECHNOLOGIES (Rmb800m), SHANGHAI MICROPORT ENDOVASCULAR MEDTECH (Rmb651m), GUANGZHOU FANGBANG ELECTRONICS (Rmb1.06bn), BEIJING TIANYISHANGJIA NEW

MATERIAL (Rmb646m), SUZHOU HARMONTRONICS

AUTOMATION TECHNOLOGY (Rmb468m), and BEIJING WORLDIA DIAMOND TOOLS (Rmb407m),

The first four companies will announce pricing on July 9 and open the books on July 11 and the latter four will price on July 10 and open books on July 12.

Meanwhile TRAFFIC CONTROL TECHNOLOGY (Rmb550m), BEIJING PIESAT INFORMATION

TECHNOLOGY (Rmb567m) and GUANGDONG JIA

YUAN TECHNOLOGY SHARES (Rmb969m) have completed the registration process for their tech board IPOs.

As of July 5, 25 tech board listing candidates had completed IPO registrations with the CSRC. An additional six companies are still awaiting the completion of the registration process after passing listing hearings. These 31 companies are expected to start trading together.

The tech board’s listing committee has also scheduled two IPO hearings, one on July 11 for EVERSEC TECHNOLOGY (Rmb800m) and BEIJING ABT NETWORKS (Rmb298m) and another on July 15 for SHANGHAI HAOHAI

BIOLOGICAL TECHNOLOGY (Rmb1.48bn) and CNANO TECHNOLOGY (Rmb870m). Last month, the tech board held 13 hearings for 31 candidates from June 5-28.

› SUZHOU HYC TECH MISSES BILLION MARK

SUZHOU HYC TECHNOLOGY, the first company to price a Shanghai tech board IPO, has raised Rmb973m from the deal, slightly less than its original Rmb1.01bn target.

HYC sold 40.1m A-shares or 10% of its enlarged capital at Rmb24.26 apiece. Sponsor Huatai United Securities will buy 4.1% of the offer through the strategic tranche. The remaining shares are split 70-30 between institutional and retail investors.

Public funds, social security funds, pension funds, enterprise annuity funds and insurance funds have been classified as Class A institutional investors and allocated 21.9m A-shares or 81% of the institutional tranche.

Class B institutional investors, composed of qualified foreign institutional investors (QFII), and Class C institutional investors, composed of other funds such as private equity funds, were allotted 105,245 and 5m A-shares, or 0.4% and 18.6% of the institutional tranche, respectively.

For retail investors, the online tranche was 2,514 times subscribed when the offer closed on June 27.

Following a lottery, 22,929 winning numbers were allocated 500 shares each.

Each investor could have 1-15 numbers.The Shanghai Stock Exchange said late

on Friday that trading will begin on the new board on July 22, without naming the first companies to list.

› RISEN ENERGY DOWNSIZES CB TARGET

ChiNext-listed RISEN ENERGY has cut the size of a proposed six-year convertible bond to Rmb2.71bn from Rmb2.9bn.

The plan still needs approval from Chinese regulators.

The solar energy equipment maker will use the proceeds to expand production of batteries and components, build a photovoltaic power station in Australia, and replenish working capital.

Essence Securities is the sponsor.

HONG KONG


› CHONG HING BANK PLANS AT1 ISSUE

CHONG HING BANK, rated Baa1/BBB (Moody’s/Fitch), is planning an offering of US dollar-denominated Basel III-compliant perpetual, non-cumulative, subordinated Additional Tier 1 capital securities off a newly set-up US$2bn medium-term note and perpetual capital securities programme.

BOC International, CCB International, Chong Hing Bank, HSBC and Yue Xiu Securities are joint global coordinators as well as joint lead managers and joint bookrunners with ABC International on the Reg S issue.

The Hong Kong lender, 75% owned by Guangzhou Yue Xiu Holdings, met investors

Top bookrunners of Hong Kong dollar bonds,

inc certificates of deposit, commercial paper1/1/19 – 30/6/19

Amount

Name Issues HK$(m) %

1 BoCom 15 27,018.3 29.5

2 HSBC 69 26,681.0 29.1


4 Mizuho 4 3,061.1 3.3


6 CBA 7 2,545.8 2.8

7 BNP Paribas 13 2,360.0 2.6

8 Bank of China 4 2,174.9 2.4

9 OCBC 2 1,305.0 1.4

10 Citigroup 2 1,257.1 1.4

Total 153 91,550.5

*Market volume

Proportional credit



COUNTRY REPORT HONG KONG

in Hong Kong and Singapore last week.The proposed AT1 securities have an

expected Ba2 rating from Moody’s.Chong Hing Bank’s common equity Tier

1 ratio improved to 13.4% at the end of 2018 from 11.3% at the end of 2017.

SYNDICATED LOANS

› GOSHAWK LAUNCHES BULLET

Dublin-based aircraft leasing company Goshawk Aviation has launched an unsecured US$500m five-year bullet term loan with a greenshoe option.

Agricultural Bank of China Hong Kong branch is the sole mandated lead arranger and bookrunner of the financing. China Everbright Bank Hong Kong branch, Development Bank of Japan, OCBC Bank, Philippine National Bank and Societe Generale Hong Kong branch, which joined as senior lead arrangers before launch, and ABC will together pre-fund the US$500m amount. The deal will be increased beyond US$500m when banks join through the greenshoe option in syndication.

The deal, guaranteed by Goshawk Aviation, is split between tranche A for DIONYSUS AVIATION and tranche B for MAGUEY DUTCH AVIATION. The interest margin is 160bp over Libor.

Banks have been invited to join as senior lead arrangers with commitments of US$40m–$50m for a top-level all-in pricing of 170bp based on an upfront fee of 50bp. Lead arrangers with tickets of US$30m–$39m earn an all-in pricing of 168bp through a fee of 40bp while arrangers committing US$20m–$29m receive an all-in of 166bp based on a 30bp fee. Sub-arrangers with tickets of US$10m–$19m are offered an all-in of 164bp through a 20bp fee.

Funds are for general corporate purposes.Commitments are due by August 16.

In July 2018, the two borrowers raised a US$430m five-year term loan also guaranteed by Goshawk Aviation and led by ABC Hong Kong branch. That deal attracted six other banks and offered a top-level all-in pricing of 168.5bp based on the same margin of 160bp over Libor.

Later that year in November, Goshawk Aviation signed a US$1.14bn four-year revolving credit facility with 15 banks. The loan was mainly coordinated in Europe but some banks in Asia also joined. Citibank

Europe is the facility agent.Established in November 2013, Goshawk

currently has a fleet of 223 aircraft. Hong Kong’s Chow Tai Fook Enterprises and NWS Holdings are equal shareholders of the company.

› NINE DRAGONS PAPER SIGNS HK$3.9BN

Hong Kong-listed NINE DRAGONS PAPER (HOLDINGS) signed a HK$3.9bn (US$500m) three-year term loan for its US unit on June 28, according to a stock exchange filing.

FWD brings rare sub notes Bonds Insurer sells subordinated bullet bonds in PB-driven offering

Insurer FWD GROUP sold what is thought to

be one of the first US dollar subordinated

bonds with a bullet maturity from an Asian

corporate issuer.

The Hong Kong-headquartered pan-

Asian insurance group last Thursday priced

US$550m five-year subordinated unsecured

bonds at par to yield 5.75%, inside initial

guidance of 6% area.

The issuer was thought to have paid a

higher yield than it would have done for a

senior unsecured bond, but bankers said it

was hard to put a number on it.

Orders built steadily from US$600m on

Thursday morning to a peak of US$2.1bn when

final guidance was announced. Private banks

were said to have been the main drivers of

the deal.The bonds opened at a cash price of

100.75, before rising further to 101.

The notes are unrated, as is the issuing

entity, so FWD did not need to sell

subordinated bonds to defend a rating, but

a banker said the new issue would fit in well

with the company’s capital structure.

FWD had only issued subordinated

perpetual securities prior to this deal, and has

only bank debt.

“We use a mixture of debt, hybrid securities

and equity to finance our growth and

expansion, similar to our international peers,”

said a spokesperson for FWD.

The bonds also had other rarely seen

structural features, balancing protection for

investors with flexibility for the issuer.

Hong Kong tycoon Richard Li currently

holds a 75.4% stake in FWD, alongside other

investors including Swiss Re and Singapore

sovereign wealth fund GIC. If Li ceases to

control FWD, the issuer can redeem the

bonds at 101% of face value or increase the

interest rate by 500bp.

The issuer can also redeem the bonds at

101% of face value if it holds an IPO.

UBS and JP Morgan were joint

bookrunners.

Proceeds from the bond issue will be used

for general corporate purposes.

DANIEL STANTON

Top bookrunners of Hong Kong dollar bonds,

ex-certificates of deposit, commercial paper1/1/19 – 30/6/19

Amount

Name Issues HK$(m) %

1 HSBC 30 16,880.0 35.3

2 BoCom 4 5,918.3 12.4


4 Bank of China 4 2,174.9 4.6

5 CBA 3 1,918.3 4.0

6 OCBC 2 1,305.0 2.7

7 BNP Paribas 6 1,300.0 2.7


9 Citigroup 2 1,257.1 2.6

10 Nomura 2 1,147.1 2.4

Total 68 47,792.0

*Market volume

Proportional credit


Top bookrunners of Hong Kong syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 HSBC 21 3,993.0 11.0

2 Bank of China 17 3,426.9 9.5



5 Deutsche 6 1,889.1 5.2

6 UOB 3 1,857.0 5.1

7 DBS 8 1,574.2 4.3

8 Mizuho 7 1,324.7 3.7

9 BoCom 8 1,290.1 3.6

10 ICBC 7 1,128.8 3.1

Total 60 36,250.4


Proportional credit


Hong Kong global equity and equity-related1/1/19 – 30/6/19

Amount


1 HSBC 3 654.1 15.2

2 Credit Suisse 3 555.0 12.9


4 Guotai Junan Sec 4 259.2 6.0

5 JP Morgan 1 254.8 5.9


7 DBS 3 180.8 4.2

8 Citic 2 155.2 3.6

9* BNP Paribas 1 135.0 3.1

9* Citigroup 1 135.0 3.1

Total 63 4,315.5



Bank of China (Hong Kong) and Bank of Communications Hong Kong branch were the lenders on the club facility. The two banks are considering syndicating the deal, according to sources.

ND Paper US, a wholly owned subsidiary of Nine Dragons Paper Holdings, is the borrower while the listed company and Nine Dragons Paper (BVI) Group are the guarantors.

Ownership covenants require chairwoman Cheung Yan and her family to own at least 51% of Nine Dragons Paper Holdings and maintain management control over the recycled paper and cardboard producer.

According to LPC data, BOC and Industrial & Commercial Bank of China in March provided a Rmb523m (US$76.2m) one-year loan for Nine Dragons Worldwide (China) Investment Group, another wholly owned subsidiary. The deal was guaranteed by Nine Dragons Paper Holdings and paid a fixed interest rate of 4.3%.

In July 2016, Nine Dragons also raised a US$168m seven-year loan to fund the expansion of a paper plant in Vietnam. Cheng Yang Paper Mill was the borrower while Nine Dragons Paper Holdings provided a guarantee. Original mandated lead arranger and bookrunner BOC Ho Chi Minh branch brought in three other branches of BOC and four other banks.

› SF MANDATES SIX FOR HK$5BN TAKEOUT

Express delivery service SF HOLDING has mandated six banks for a HK$5bn five-year loan to take out a bridge facility that backed the purchase of the Greater China supply chain operations of Deutsche Post.

ANZ, Credit Agricole CIB, Credit Suisse, HSBC, MUFG and Standard Chartered are the mandated lead arrangers and bookrunners of the loan, which is expected to offer an interest margin of about 110bp over Hibor.

In February, Shenzhen-listed SF Holding completed the Rmb5.5bn acquisition of Deutsche Post DHL Group’s Greater China supply chain operations. SF Holding will pay DPDHL partnership fees for the next 10 years for the trademark licence, customer referrals, employee training and other support services.

The target business is now branded as SF DHL Supply Chain China with headquarters in Shanghai.

Rated A3/A-/A-, SF Holding owns China’s largest private delivery courier company, SF Express.

› BEIJING ENTERPRISES UNIT GOES GREEN

Chinese state-owned BEIJING ENTERPRISES CLEAN

ENERGY GROUP has launched a HK$3bn three-year term loan, which will partially be used to support payments for clean energy projects.

DBS Bank and Standard Chartered Bank are the mandated lead arrangers, bookrunners and underwriters of the deal, which offers an interest margin of 155bp over Hibor and has a 2.85-year average life.

Banks are being invited to join with commitments of HK$400m or above for the mandated lead arranger and bookrunner title and a top-level all-in pricing of 192bp via a 105.45bp fee, tickets of HK$250m-HK$390m for the MLA title and an all-in of 185bp via a 85.5bp fee, and tickets of HK$100m-HK$240m for the lead arranger title and an all-in of 180bp via a 71.25bp fee.

Commitments are due by July 31.Hong Kong-listed Beijing Enterprises

Water Group, a majority shareholder of the borrower, is providing a letter of comfort.

Proceeds will also be used for general corporate purposes and refinancing.

Beijing Enterprises Clean Energy previously obtained a HK$1.78bn three-year loan from 10 banks in September 2017. That facility offered a top-level all-in pricing of 202.6bp based on a margin of 170bp over Hibor.

Listed in Hong Kong, Beijing Enterprises Clean Energy Group is a producer and distributor of renewable energy. Beijing Enterprises Group, which is owned by Beijing’s municipal government, is the borrower and Beijing Enterprises Water Group’s ultimate parent.

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COUNTRY REPORT INDIA

INDIA


› REC TO SEEK BOARD NOD FOR BONDS

REC, formerly known as Rural Electrification Corporation, will seek board approval on July 10 to raise up to Rs750bn (US$11bn) from bonds, according to a filing on BSE.

The issuer will raise the funds through secured and unsecured non-convertible debentures via a private placement in one or more tranches, subject to shareholder approval.

The funds will be raised over the course of one year from the date of shareholder approval.

› THDC WITHDRAWS 10-YEAR BOND ISSUE

TEHRI HYDRO DEVELOPMENT CORP scrapped the sale of Rs15bn 10-year bonds after receiving tepid investor interest and failing to achieve its price target, according to market sources.

The hydropower company is jointly owned by the government of India and the state government of Uttar Pradesh.

The issuer was eyeing Rs7.5bn, plus a greenshoe option of the same amount.

India Ratings and Icra had assigned provisional ratings of AA+ and AA, respectively.

› SHRIRAM EYES RS100BN RETAIL BONDS

SHRIRAM TRANSPORT FINANCE is planning to raise up to Rs100bn from a public issue of bonds in one or more tranches, according to a draft prospectus filed on the BSE.

JM Financial, AK Capital and SMCCapitals are the arrangers.

Care and Crisil have assigned AA+ ratings to the bonds.

› SBI GETS BOARD NOD FOR AT1 SALE

STATE BANK OF INDIA has received board approval to raise up to Rs70bn from Basel III-compliant Additional Tier 1 bonds, according to a filing on the exchanges.

The state-owned bank will issue the AT1 bonds in rupee or any other convertible currency such as offshore rupee (Masala) or US dollar through a public offering or private placement to overseas and Indian investors.

It will raise the funds in one or more tranches at an appropriate time.

The coupon will be decided at the time of the issuance in the current financial year and SBI will obtain government of India approval for the issuance.

The first tranche for AT1 bonds in the onshore market is expected in August, said a source close to the plans.

Recently, SBI raised Rs50bn from 10-year non-call five Basel III-compliant Tier 2 bonds at 7.99%

› RHF EXTENDS MATURITY

RELIANCE HOME FINANCE has extended the maturity of Rs4bn non-convertible debentures to October 31 because of tight liquidity, according to a filing on BSE.

The extension, “to address timing mismatches in receipt of proceeds from the ongoing monetisation of retail asset pools of the company”, was agreed by the debenture trustee and bondholders, said the non-banking financial company under the control of business tycoon Anil Ambani.

“The extension of maturities by mutual consent is a recognised global practice to deal with severe dislocations in capital markets, and does not in any sense constitute a default.”

Ambani, once one of India’s top billionaires, has seen his wealth erode in the past five years because of burgeoning debt at firms in his group. His diversified telecoms to financial services and infrastructure group has been struggling to make debt repayments on time, and his flagship business, Reliance Communications, is going through insolvency proceedings.

Reliance Home Finance is selling assets including its Mumbai headquarters to pare debt, according to local news reports. The housing finance company has already monetised Rs50bn of retail assets.

It is facing liquidity stress because all categories of lenders have completely frozen new lending to housing finance companies for nine months, the company said.

Market participants said domestic banks are reluctant to lend money to any company controlled by Ambani.

Reliance Mutual Fund said a few funds had exposure to the bonds of Reliance Home Finance which were due to mature. “While Reliance Home Finance has paid interest that was due, it has failed to honour its principal repayment obligations,” the fund house said in a statement to investors.

The mutual fund has marked down the investment, which has affected the net asset value of the various open-ended schemes.

› KOSAMATTAM FILES FOR PUBLIC BONDS

KOSAMATTAM FINANCE has filed a draft shelf prospectus with the market regulator to

raise up to Rs3bn from a public issue of bonds.

The Indian gold loan-financing company plans to raise Rs1.5bn, with a greenshoe option of the same amount.

It is planning to offer bonds with maturities of 400 days, two, three, four, five and seven years.

India Ratings has assigned a BBB rating to the notes.

› INDIABULLS TO BUY BACK MORE BONDS

INDIABULLS HOUSING FINANCE will buy back a total of Rs27.05bn outstanding non-convertible debentures and Masala bonds maturing in September and October, according to market sources.

The housing finance company is buying back Rs13.75bn of NCDs due in September, of which Rs6.6bn were issued via the public route. It is also buying back Rs13.3bn Masala bonds maturing in October. Approval is being sought from the Reserve Bank of India, the company said.

In June, the non-banking financial company bought back Rs21.73bn of bonds maturing in July and August to build investor confidence.

The company said it had cash and cash equivalents of Rs282bn as of May 31, according to a filing on the exchanges on June 6.

Indiabulls Housing Finance was rattled last month when a writ was filed in India’s Supreme Court accusing its chairman and directors of embezzlement, in what the company said was an attempt at blackmail, before the petitioner withdrew the claim a few days later.

› HDFC SEEKS BOARD APPROVAL

HOUSING DEVELOPMENT FINANCE CORP will seek board approval on August 2 to raise up to Rs450bn from non-convertible debentures, according to a filing on the exchanges.

The funds will be raised via private placement in various tranches under the shelf disclosure document.

SYNDICATED LOANS

› PFC SEALS US$300M LOAN

State-owned POWER FINANCE CORP has completed a US$300m three-year loan, according to a company filing last Monday.

State Bank of India Hong Kong branch and MUFG were the lenders on the deal, PFC’s second foreign-currency borrowing in the second quarter of this year.

Last month, PFC raised US$1bn in Reg S bonds – the biggest overseas issuance from


a government-owned non-banking financial company. Barclays, MUFG and Standard Chartered were the joint bookrunners on that deal, which comprised US$400m five-year and US$600m 10-year bonds, according to IFR Asia.

The borrower last signed a US$150m-equivalent five-year Samurai loan in January. Mizuho Bank and MUFG were the mandated lead arrangers and bookrunners of the bullet facility, which has been equally pre-funded.

PFC is rated Baa3/BBB–/BBB–.

› EXIM INDIA SIGNS DUAL-TRANCHER

State-owned EXPORT-IMPORT BANK OF INDIA has signed a US$225m dual-tranche financing with three lenders joining in syndication.

MUFG and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners of the term loan, which comprises a US$150m five-year tranche and a US$75m three-year portion.

Bank of New York Mellon joined as an arranger, while ING Bank and National Bank of Kuwait came in as participants.

Proceeds are for general banking and other purposes approved by the Reserve Bank of India and in compliance with the RBI’s external commercial borrowing guidelines.

The borrower raised a US$120m 27-month facility in December 2015, according to LPC data. Mizuho Bank was the sole MLAB, while Hyakujushi Bank joined as a participant.

Exim India is rated Baa2/BBB–/BBB–.

› SIX JOIN BORL'S US$125M FACILITY

BHARAT OMAN REFINERIES has signed a US$125m two-year term loan with six lenders joining in general syndication.

Sumitomo Mitsui Banking Corp was the sole mandated lead arranger and bookrunner.

Taipei Fubon Commercial bank joined the deal as an MLA, while AfrAsia Bank, Gunma Bank, Hyakugo Bank, Korea Development Bank and Taiwan Cooperative Bank Manila OBU came in as lead arrangers.

The financing paid a top-level all-in pricing of 101.5bp based on an interest margin of 73bp over Libor and a remaining average life of 1.75 years.

It will use the funds to refinance existing foreign-currency facilities in compliance with Reserve Bank of India guidelines.

The borrower last raised a US$125m three-year loan in December 2015. Mizuho Bank, SMBC and UOB Bank were the MLABs of that bullet facility, which closed as a club. The deal is said to have been mandated at below 130bp all-in pricing.

BORL, a unit of state-owned Bharat Petroleum Corp, owns and operates an oil refinery with a capacity of six million metric tonnes per annum in Bina, Madhya Pradesh in Central India. BORL is a 50-50 joint venture between BPCL and Oman Oil.


› TATA SPONGE LAUNCHES RIGHTS OFFER

TATA SPONGE IRON has opened a Rs17bn (US$239m) rights offer for subscription.

The company is selling 33m shares in a 15-for-7 ratio at Rs500 each. Tata Sponge shares closed at Rs540.25 last Tuesday.

Books will close on July 16. The funds raised from the rights offer will be used to reduce debt.

Axis Capital, Centrum Capital and SBI Capital are the lead managers.

› INDIA HIRES BANKS FOR RITES STAKE SALE

Department of Investment and Public Asset Management has hired Elara, IDBI

Capital and SBI Capital for a 15% stake sale in engineering consultant Rites.

At current market prices the sale will total up to Rs8.9bn.

ITI Capital, IDFC Securities, PNB Investment and Yes Securities also bid for the mandate but did not make it to the final syndicate.

For the first time, Dipam has allowed banks to quote a “drop dead fee”. This fee is payable by the government in case it calls off the transaction after hiring the banks.

Last year, the government sold a 12.6% stake through the company’s Rs4.7bn IPO at Rs185 each. Rites shares were down 0.2% at Rs295.65 Wednesday morning on the National Stock exchange.

Elara Capital, IDBI Capital, IDFC and SBI Capital were the banks on the IPO.

› STERLING WILSON TO LAUNCH IPO

Solar engineering procurement and construction company STERLING AND WILSON plans to launch an IPO of up to Rs45bn in the next two weeks, according to people with knowledge of the transaction.

Controlling shareholders Shapoorji Pallonji & Company and founder and managing director Khurshed Daruvala will sell secondary shares. No primary shares will be offered.

In the nine months to December 31 the company recorded revenue of Rs61bn compared with Rs32bn in the same period of 2017. Net profit rose to Rs3.4bn from Rs1.7bn during the same period.

Axis Capital, Credit Suisse, ICICI Securities, Deutsche Bank, IIFL Holdings and SBI Capital are the joint global coordinators and bookrunners with IndusInd Bank and Yes Securities.

The company is part of the Shapoorji Pallonji Group which has interests in construction, engineering, textiles and power.

Top lead managers of Indian rupee bonds1/1/19 – 30/6/19

Amount

Name Issues Rs(m) %

1 Axis 103 512,911.6 21.3

2 ICICI Bank 93 352,960.6 14.6

3 HDFC 81 215,062.9 8.9

4 Yes Bank 69 214,157.5 8.9

5 Trust Group 87 214,011.9 8.9

6 AK Capital 70 170,605.4 7.1

7 Kotak Mahindra 59 166,249.1 6.9

8 Tipsons 49 124,807.6 5.2


10 Punjab National Bank 22 49,418.5 2.1

Total 157 2,411,942.8

*Market volume

Proportional credit


Top bookrunners of India syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %


2 Axis 8 2,130.0 12.5

3 Yes Bank 23 1,692.9 9.9


5 Westpac 3 997.1 5.9

6 L&T Financial Services 7 680.3 4.0

7 Indusind-Bank 9 667.0 3.9


9 First Abu Dhabi Bank 5 525.2 3.1

10 SMFG 4 504.6 3.0

Total 62 17,037.0


Proportional credit


India equity and equity-related1/1/19 – 30/6/19

Amount



2 BAML 5 1,492.5 11.3

3 ICICI Bank 6 1,366.2 10.4

4 Axis 10 1,120.6 8.5

5 Kotak Mahindra 6 1,010.8 7.7

6 JP Morgan 3 920.3 7.0


8 HSBC 4 793.4 6.0

9 HDFC 2 749.6 5.7

10 Citigroup 7 744.8 5.6

Total 78 13,204.5

Source: Refinitiv data SDC Code: C1L


COUNTRY REPORT INDONESIA

S and W builds solar power plants in India, the Middle East, Africa, Australia and Europe.

INDONESIA


› PLN PLANS 144A/REG S OFFERING

PERUSAHAAN LISTRIK NEGARA, rated Baa2/BBB/BBB, has picked banks for a proposed offering of 144A/Reg S US dollar bonds, subject to market conditions.

ANZ, BNP Paribas, Citigroup, HSBC, Mandiri Securities and Standard Chartered Bank are joint bookrunners and joint lead managers.

The Indonesian integrated power producer started meeting investors in Asia, Europe and the US on July 4.

The proposed notes have expected ratings of Baa2/BBB/BBB.

SYNDICATED LOANS

› TOWER BERSAMA COMPLETES REFI

Telecom tower company TOWER BERSAMA

INFRASTRUCTURE has closed a self-arranged US$375m 5.5-year bullet term loan with nine banks.

Signing is currently taking place by circulation. United Overseas Bank is the facility agent.

Set to mature in January 2025, the deal pays an all-in pricing of 193.2bp based on an interest margin of 175bp over Libor and an upfront fee of 100bp.

Funds are to refinance a US$400m five-year term loan that was part of a US$1bn

financing completed in November 2014. The US$400m tranche paid an offshore margin of 200bp over Libor and a fee of 125bp.

The 2014 deal also included a US$300m 364-day revolving credit facility and a US$300m 3.5-year revolver. In April 2017, all lenders to the 3.5-year revolver agreed to extend that deal by four years, and eight banks provided a separate US$200m five-year new-money revolver, which offered a margin of 175bp over Libor.

Tower Bersama is rated BB–/BB– (S&P/Fitch). Its major shareholders are Saratoga Investama Sedaya and Provident Capital Indonesia.


› CSUL INCREASES LOAN TO US$130M

CHANDRA SAKTI UTAMA LEASING has increased a three-year loan to US$130m from the US$75m target after attracting five lenders in general syndication.

ANZ, Bank Mandiri, CIMB Bank, OCBC Bank and Standard Chartered were the mandated lead arrangers and bookrunners of the financing, which paid a top-level all-in pricing of 230.77bp (offshore) and 250.77bp (onshore) based on interest margins of 200bp (offshore) and 220bp (onshore) over Libor, and a remaining average life of 1.625 years.

Funds will be used for general corporate purposes.

In April last year, CSUL raised an increased US$126.5m three-year loan. ANZ, Emirates NBD, StanChart and Sumitomo Mitsui Banking Corp were the MLABs on that financing, which paid a top-level all-in pricing of 301.9bp (offshore) and 336.9bp (onshore) through margins of 265bp (offshore) and 300bp (onshore) over Libor, respectively, and a remaining average life of 1.625 years.

The borrower is the financing arm of privately owned PT Tiara Marga Trakindo. The parent, founded in 1970, is an authorised dealer of heavy equipment in Indonesia. Trakindo has customers in the mining, construction, forestry, agricultural, energy and industrial sectors.


› CT UNITS INCREASE LOAN TO US$115M

Automotive financing companies MEGA CENTRAL FINANCE and MEGA AUTO

FINANCE, majority-owned by Indonesian conglomerate CT Corp, have increased a dual-currency secured term loan to US$115m-equivalent from a US$100m-equivalent target.

Standard Chartered, CTBC, Sumitomo Mitsui Trust Bank, Taishin International Bank and Tokyo Star Bank were the mandated lead arrangers and bookrunners of the transaction, which comprises a US$78m portion and a ¥4.02bn (US$37m) piece.

The deal comprises a three-year tranche A and a four-year tranche B with respective average lives of 1.875 years and 2.375 years.

Banks were invited to lend US dollars or yen to tranches A and B on a 50:50 basis. Tranche A offers interest margins of 225bp over Libor and 175bp over Tibor, while tranche B offers margins of 250bp over Libor and 200bp over Tibor.

The top-level all-in pricing was 257bp (tranche A) and 284bp (tranche B) for US dollar lenders, and 207bp and 234bp for the respective tranches for yen lenders.

The deal has fiduciary security over accounts receivable and is also secured by a pledge over transaction accounts.

CT Corp holds its majority stake in the borrowers through Mega Corpora, while Japanese conglomerate Marubeni owns 30% of Mega Central Finance and Mega Auto Finance.

In March 2017, Mega Central Finance

Top bookrunners of Indonesian rupiah bonds1/1/19 – 30/6/19

Amount

Name Issues Rp(m) %

1 Indo Premier Sec 18 3,906,866.7 12.6

2 Bank Mandiri 15 3,649,575.0 11.8

3 Pt Cgs-Cimb Sekuritas 12 3,489,091.7 11.3

4 TD Sec 5 2,991,041.1 9.6

5 DBS 12 2,481,975.0 8.0

6 JP Morgan 5 2,210,806.4 7.1

7 Bank Negara Indonesia 8 2,035,008.3 6.6

8 HSBC 6 1,639,816.5 5.3

9 Danareksa 6 1,605,608.3 5.2

10 BCA Sekuritas 6 1,193,675.0 3.9

Total 49 31,019,389.0

*Market volume

Proportional credit


Top bookrunners of Indonesia syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %


2 MUFG 5 511.7 12.7

3 DBS 4 286.4 7.1

4* BNP Paribas 2 277.4 6.9

4* Maybank 2 277.4 6.9

6 Mizuho 3 233.1 5.8

7 Citigroup 3 231.0 5.7

8 Deutsche 1 207.4 5.1

9 SMFG 4 198.5 4.9

10 HSBC 2 175.0 4.3

Total 11 4,035.5

Based on market of syndication and market total

Proportional credit


Indonesia global equity and equity-related1/1/19 – 30/6/19

Amount



2 UOB 9 77.0 13.0

3* Deutsche 1 74.8 12.7

3* Indo Premier Sec 1 74.8 12.7

3* Credit Suisse 1 74.8 12.7

3* UBS 1 74.8 12.7

7 Jasa Utama Capital 2 19.1 3.2

8 Woori Korindo Sec 2 18.7 3.2

9* Buana Capital PT 1 12.3 2.1

9* PT Kresna Sekuritas 1 12.3 2.1

Total 21 590.9



and Mega Auto Finance raised a US$79.8m three-year loan. Sole MLAB StanChart brought in eight banks. The top level all-in pricing was 291.67bp based on a margin of 250bp over Libor and an average life of 1.8 years.



› PLAZA INDONESIA PLANS LOCAL REIT IPO

PLAZA INDONESIA is planning a local real estate investment trust IPO of around US$140m as early as this year, people with knowledge of the transaction have said.

Plaza Indonesia is a subsidiary of the Indonesia Stock Exchange-listed Plaza Indonesia Realty and owns Plaza Indonesia Shopping Centre and Grand Hyatt Hotel Jakarta.

The REIT will comprise assets totalling US$700m. Around 20% of the trust will be sold to investors.

Citigroup is working on the transaction.

JAPAN


› SANTANDER CF PRINTS EUROYEN

SANTANDER CONSUMER FINANCE, rated A2/A–/A–, has raised ¥50bn (US$464m) from a dual-tranche euroyen bond offering that marks its biggest deal in yen.

A ¥31.5bn three-year note priced at 40bp over yen offer-side swaps with a 0.325% coupon. A ¥18.5bn five-year note priced at 55bp over with a 0.482% coupon.

The issuer let both tranches price at the wider ends of the initial guidance ranges to accommodate price-sensitive investors and new accounts. At the start of marketing last Monday, the guidance ranges were 35bp–40bp and 50bp–55bp, respectively.

Price-sensitive investors were looking for absolute yields of 0.3% for the three-year and 0.4% for the five-year, while new accounts wanted a 55bp spread for the five-year piece.

The main buyers were megabanks, central public accounts and trust banks.

Both tranches were attractive on a relative value basis as they priced about 20bp over the issuer’s euro curve.

The Spanish consumer finance company was initially marketing 18-month and two-year tranches on a reverse enquiry basis, but dropped them.

This transaction is the issuer’s first yen issue since 2017, when it printed a ¥20.8bn three-tranche Pro-bond deal. Its debut deal, printed in 2016 also in the Pro-bond market, was ¥12.7bn.

Daiwa, Mizuho and SMBC Nikko are the lead managers on the deal, which will not be listed on the Pro-bond market.

› SUMITOMO PRINTS EUROBOND

SUMITOMO last Tuesday priced US$500m 2.6% five-year senior unsecured fixed-rate notes at 99.777 to yield 2.648%, equivalent to Treasuries plus 87.5bp.

This was at the tight end of final guidance of Treasuries plus 90bp, plus or minus 2.5bp, and inside initial guidance of 110bp area.

Orders were over US$2.25bn from more than 120 accounts, with Asia taking 82% of the Reg S bonds and EMEA 18%.

By investor type, asset managers booked 51%, banks 27%, insurers 14%, corporate

treasuries 6%, and private banks and others 2%.

The issue has expected ratings of Baa1/A– (Moody’s/S&P).

The Japanese trading company plans to use proceeds for general corporate purposes, including debt refinancing.

Goldman Sachs, Citigroup and Bank of America Merrill Lynch were active bookrunners, and Morgan Stanley was passive bookrunner.

› PANASONIC EYES MULTI-TRANCHE

PANASONIC mandated Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch to arrange investor meetings and calls in the US, Europe and Asia, which began on July 5.

A benchmark multi-tranche US dollar 144A/Reg S senior notes transaction with tenors of three to 10 years may follow, subject to market conditions.

The Japanese electronics company’s proposed bonds are expected to be rated A3/A– (Moody’s/S&P).

› JR EAST TAKES 50-YEAR JOURNEY

EAST JAPAN RAILWAY (JR East), rated AA+ by R&I, priced an upsized ¥20bn 50-year bond last week, the second 50-year bond in Japan after Mitsubishi Estate’s issue in April.

According to DealWatch, IFR’s sister publication, the ultra-long bond, with a 0.809% coupon, priced at 42bp over a hypothetical 50-year JGB, the tighter end of the initial guidance range of 42bp–43bp. The longest JGB maturity is 40 years.

The railway company, which was initially targeting a ¥10bn fundraising amount for that tranche, exceeded the size of Mitsubishi Estate’s ¥15bn deal and priced tighter than the 54bp over hypothetical JGBs with a 1.132% coupon achieved by that issuer.

JR East also sold ¥10bn of 0.10% 10-year

Top bookrunners of all Malaysian ringgit bonds1/1/19 – 30/6/19

Amount

Name Issues M$(m) %

1 CIMB Group 33 9,471.1 26.0

2 Maybank 28 8,588.0 23.5

3 AMMB 20 5,924.2 16.2

4 RHB 15 5,304.3 14.5

5 Bank Islam Malaysia 2 2,000.0 5.5

6 K&N Kenanga 8 1,627.0 4.5

7 Hong Leong Financial 4 1,238.8 3.4

8 HSBC 6 1,051.3 2.9


10 Public Bank 2 309.5 0.9

Total 72 36,488.9

*Market volume

Proportional credit


Top bookrunners of Malaysia syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 CIMB Group 5 1,991.1 23.0

2 OCBC 3 1,649.6 19.0

3* UOB 1 1,126.4 13.0

3* CCB 1 1,126.4 13.0

3* Bank of China 1 1,126.4 13.0

6* Maybank 2 523.2 6.0

6* DBS 2 523.2 6.0

8* Deutsche 1 149.5 1.7

8* BNP Paribas 1 149.5 1.7

8* MUFG 1 149.5 1.7

8* Citigroup 1 149.5 1.7

Total 6 8,664.1


Proportional credit


Malaysia global equity and equity-related1/1/19 – 30/6/19

Amount


1 CIMB Group 6 615.1 30.5

2 JP Morgan 3 406.6 20.2

3 RHB 6 166.4 8.3

4 Maybank 4 136.6 6.8

5 AMMB 8 132.7 6.6

6 Hong Leong Financial 5 85.5 4.3

7* BNP Paribas 1 66.7 3.3

7* Citigroup 1 66.7 3.3

9 M and A Sec 11 52.0 2.6


Total 77 2,013.8



COUNTRY REPORT JAPAN

and ¥10bn of 0.488% 30-year bonds.Mizuho and SMBC Nikko were the leads.

SYNDICATED LOANS

› BUNGE COMPLETES US$375M REFI

New York-based global agribusiness and food company BUNGE has closed a US$375m five-year loan that refinances a dual-currency borrowing maturing in December, sources said.

Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp were the mandated lead arrangers and bookrunners of the deal, which was signed on July 1.

The loan is split into a ¥30.7bn (US$285m) tranche and a US$90m tranche, which pay interest margins of around 80bp and 120bp over yen and dollar Libor,

respectively, unchanged from the previous deal, one of the sources said.

The borrower’s debut loan in Japan was a US$375m five-year facility completed in December 2014. SMBC was the MLA.

In December 2018, Bunge amended and extended a US$1.1bn five-year revolving credit via its subsidiary Bunge Ltd Finance Corp, which paid a margin of 125bp over Libor and a 12.5bp commitment fee based on the company’s rating of BBB by S&P.

› JBIC BACKS MITSUI'S RUSSIAN LNG STAKE

JAPAN ARCTIC LNG, a Dutch joint venture between Japan’s Mitsui & Co and Japan Oil Gas & Metals National Corp, signed a €125m (US$141m) loan with Japan Bank for International Cooperation last Monday, JBIC said in a statement.

Private financial institutions also

provided a loan with an undisclosed amount on top of JBIC’s loan.

Funds are to back Japan Arctic LNG’s 10% stake purchase in Russia’s Arctic LNG 2 from natural gas producer Pao Novatek.

Mitsui plans to offtake LNG produced by Arctic LNG 2, which builds and operates an LNG plant with an annual capacity of 19.8 million tons on the Gydan Peninsula in the Yamalo-Nenets Autonomous district of Russia.

› NRI RAISING BRIDGE FOR SHARE BUYBACK

NOMURA RESEARCH INSTITUTE is raising a ¥100bn one-year bridge loan to back a planned ¥160bn share buyback, according to an exchange filing.

MUFG is the sole lender of the bridge.The Japanese economic research firm

on Monday launched a buyback offer at

Busy first half for yen, but slowdown ahead Bonds European banks, sovereigns boost yen issuance volumes

International yen bond issuance topped ¥2trn

(US$18.6bn) in the first half of 2019, a 57%

increase from the same period a year earlier,

as European banks and huge sovereign

Samurai transactions drove the busiest start

to the calendar year since 2008.

Volume is expected to drop in the second

half of the year as European lenders had

rushed to sell bail-in-able bonds before

higher risk weightings for regional investors

kicked in on April 1.

According to Refinitiv data, international

yen issuance reached ¥2.12trn in the first half,

up from ¥1.35trn a year earlier.

The key theme in January to March was

the last-minute issuance from European

banks. Japanese regional investors were

hungry for bail-in-able bonds before the

implementation by the Financial Services

Agency at the end of March of a new risk

weighting rule for investments in bonds

counting towards total loss absorbing

capacity requirements.

BNP Paribas, BPCE, Rabobank, ING Groep,

Societe Generale and Credit Agricole printed

bail-in-able bonds during the first quarter.

Notably, BPCE and ING were the only

banks not to choose a euroyen format, as

most of the lenders wanted quicker funding

than the traditional Samurai format, which

has a longer marketing period. Still, BNP

Paribas was able to raise over ¥140bn from

a dual-tranche callable senior non-preferred

bond offering, while BPCE used the investor-

friendly Samurai format to raise ¥163.6bn

from a five-tranche senior preferred and SNP

transaction.

Issuance was expected to slow because of

the reduced demand for TLAC bonds from

April onwards, but sovereigns came to the

rescue.

Malaysia printed in March a massive

¥200bn 10-year Samurai bonds with a

guarantee from Japan Bank for International

Cooperation, and Indonesia raised ¥177bn

without such a guarantee from a six-tranche

transaction. Mexico drew over ¥220bn of

orders for a capped ¥165bn four-trancher.

The issuers in the first half were more

diverse than usual, as the regular European

banks were joined by issuers from other

regions.

From the US, Bank of America and MetLife

raised ¥86.3bn and ¥151.7bn, respectively.

From Asia came Korea National Oil,

Korean Air, Malayan Banking, HongKong

Shanghai Banking Corp and China

Construction Bank. From Latin America,

Bladex returned to refinance with a small

three-year euroyen.

SLOWER SECOND HALF

One syndicate banker said he thinks volume

will slow down substantially in the second

half, partly because of the reduced demand

for TLAC bonds. Indeed, SNP tranches from

BPCE and Credit Agricole in the second

quarter only drew ¥55.6bn and ¥35.9bn,

respectively.

Falling yen rates are also a new headache

for Japanese syndicate bankers. The five-year

yen swap rate dropped about 14bp in the first

half.

If Japanese investors stick with certain

absolute yield levels, foreign issuers will need

to pay a wide spread over yen swaps, likely

discouraging them from choosing the yen

market for funding.

The currency rates are also problematic for

bankers trying to bring new issuers to the yen

market.

Canadian banks are potential yen bond

issuers as they have been actively selling

bail-in-able bonds in dollars and euros and

are expected to do so in yen eventually. Last

week, Toronto-Dominion Bank issued its first

bail-in-able Kangaroo in Australia.

However, falling swap rates would make

Canadian bonds less attractive to Japanese

investors.

“The new five-year TD bond in Australian

dollars priced at a 100bp spread is equivalent

to an absolute yield level of just 0.06% in

yen,” said a second syndicate banker. “(At

that level) I think investors would choose to

buy domestic municipal bonds.”

SNPs from Nordic banks would not be

attractive either.

Their SNPs are currently trading about

50bp over Libor in euros, which is about

20bp over in yen and 0.14% in an absolute

yield terms,” said the syndicate banker. “I

think investors would go to domestic electric

power companies which yield 0.18%.”

TAKAHIRO OKAMOTO


¥1,570 per share, which ends on July 29. Nomura Holdings’ will tender 101.9m of the shares it holds in NRI, as a result of which its stake in NRI will fall to 23.1% from 36.6%.

S&P has placed NRI’s A rating on negative watch.

› LOUIS DREYFUS SIGNS UPSIZED SAMURAI

Netherlands-headquartered commodities trading firm LOUIS DREYFUS has increased a three-year Samurai loan to ¥34.3bn from the original ¥30bn target, sources said.

LDC’s Swiss unit Louis Dreyfus Suisse is the borrower of the deal, which was heavily oversubscribed.

Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp were the mandated lead arrangers and bookrunners. The deal was signed on June 17.

The loan is to renew and increase a ¥12.5bn three-year borrowing that was completed in March 2016 via its Swiss unit Louis Dreyfus Commodities Suisse. MUFG was the MLA.

LDC is looking to diversify its funding sources.

Meanwhile, Louis Dreyfus Co Asia is in the market with a US$500m three-year sustainable revolving credit facility, which pays an interest margin of 90bp over Libor.

In May, the company renewed its US$750m North American revolving credit facility, linking pricing on one of the company’s credit lines to sustainability criteria for the first time.

› INVINCIBLE REIT FUNDS WAR CHEST

INVINCIBLE INVESTMENT CORP signed a ¥27.4bn multi-tranche bullet term loan for real estate acquisitions, the Tokyo Stock Exchange-listed real estate investment trust said last Monday.

The loan is split into six tranches with tenors ranging from one to six years and interest margins ranging from of 20bp to 70bp over one-month Tibor.

Mizuho Bank was the arranger, while Aeon Bank, Aozora Bank, Citigroup, Development

Bank of Japan, MUFG, Nomura Trust & Banking, Sumitomo Mitsui Banking Corp and Sumitomo Mitsui Trust Bank joined in syndication.

Drawdown is slated for July 19.The borrower invests in hotels and

residential properties.

NEW ZEALAND


› AUCKLAND TAPS GREEN DEMAND

AUCKLAND COUNCIL, rated Aa2/AA (Moody’s/S&P), raised the maximum NZ$150m (US$101m) it was seeking from its second Green bond offering which, like its inaugural issue, printed 2bp inside the municipality’s standard local secondary curve.

The new 2.013% six-year note priced last Wednesday at the tight end of the mid-swaps plus 55bp–59bp guidance range.

ANZ was green coordinator and joint lead manager with BNZ.

The proceeds are to be allocated in accordance with the council’s green bond framework or to refinance corporate debt that supports eligible assets.

Auckland Council debuted in the green market in June 2018 with a capped NZ$200m 3.17% five-year bond.

Besides Auckland, only International Finance Corp and two domestic corporates – Argosy Property and Contact Energy – have issued Green bonds in New Zealand dollars.

A shortage of supply and the huge expansion in socially responsible assets under management helps explain the keen pricing results achieved by Auckland Council for these instruments.

On June 18, Westpac New Zealand sold the first offshore Green bond from a Kiwi issuer with a €500m (US$559m) five-year Eurobond print.

› HNZL DELAYS BOND TAPS

HOUSING NEW ZEALAND, rated AA+ (S&P), has delayed a proposed tap of its NZ$250m 3.36% June 12 2025 and/or NZ$250m 3.42% October 18 2028 bonds following a cabinet reshuffle that included changes in the housing ministry.

HNZL, a crown agency that provides housing services for New Zealanders in need, still held last Tuesday’s scheduled global investor call for the planned reopenings, which was arranged by ANZ and Westpac.

STRUCTURED FINANCE

› MTF PLANS FIFTH AUTO ABS

MOTOR TRADE FINANCE has mandated CBA and Westpac to arrange investor meetings in the week beginning July 22 for a potential New Zealand dollar auto ABS issue.

MTF has previously printed four auto-loan securitisations totalling NZ$740m (US$496m). The last of these was the NZ$220m MTF Sierra Trust 2017 trade in September 2017, via the same two lead managers.

› FLEXIGROUP TO REFINANCE Q CARD ABS

Consumer finance specialist FLEXIGROUP has mandated BNZ and Westpac New Zealand to refinance the Q CARD TRUST ABS notes backed by credit card and fixed-instalment receivables, ahead of the soft bullet maturity date on August 15.

Earlier this year, FlexiGroup refinanced Q Card Trust ABS notes maturing on February 15 with new NZ$89.5m Class A notes, NZ$37.5m Class B notes and NZ$26.25m Class C notes.

Q Card is a continuous issuer because, unlike loans which have defined maturity dates, credit-card balances are revolving in nature.

Credit-card ABS are typically sold out of master trusts, which purchase eligible receivables from the sellers on a revolving basis, and tend to have soft bullet maturities rather than weighted-average lives.

PHILIPPINES


› METROBANK MAKES IT FOUR

METROPOLITAN BANK & TRUST has raised Ps11.25bn (US$220m) from two-year bonds at 5.5%, payable quarterly, according to a filing on the Philippine Stock Exchange.

The bank increased the issue size from its initial target of Ps5bn to accommodate robust demand from institutional, high-net-worth and retail investors.

This is the fourth issuance under Metrobank’s Ps100bn bond programme approved by the board of directors last year.

The two-year peso notes will be listed on the Philippine Dealing Exchange today.

In April, Metrobank printed Ps17.5bn three-year bonds at 6.3%, payable quarterly. In January, the bank raised Ps18bn from

Top bookrunners of New Zealand syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 ANZ 7 1,761.6 65.9

2 CBA 3 776.8 29.1

3 Citigroup 1 135.0 5.1

Total 11 2,673.4


Proportional credit



COUNTRY REPORT SINGAPORE

a tap of November 2020 bonds at 7% and in October last year, it raised Ps10bn from two-year notes at 7.15%.

Metrobank has now raised a total of Ps56.75bn from bonds in four tranches since Bangko Sentral ng Pilipinas in August last year allowed banks to issue bonds without prior authorisation.

The bank reported 15% growth in net income to Ps6.8bn in the first quarter of 2019 driven by double digit growth in operating income. Consolidated assets reached an all-time high of Ps2.3trn as of March 2019.

› PSB TO ISSUE TWO-YEAR NOTES

PHILIPPINE SAVINGS BANK is planning to raise Ps3bn from two-year fixed-rate peso notes at 5.6%, payable quarterly.

The issue opened on July 1 and will close on July 17.

The bank will be able to diversify its funding sources and use the proceeds to expand its customer business.

“We believe that this bond issuance is properly timed to provide potential institutional and individual investors with an alternative investment to lock-in their funds at a high yield and for a relatively shorter tenor,” said Jose Alde, president of the bank.

A minimum investment of Ps500,000 is required to participate in the issue. The bonds will be issued and listed on the Philippine Dealing and Exchange Corp on July 24.

Standard Chartered is the sole arranger. PSB, Metrobank, First Metro Investment Corp and Standard Chartered are the authorised selling agents.

PhilRatings has assigned a Aaa rating to the bonds.

The bank clocked 10.3% growth year-on-year in net income to Ps 681m in the

first quarter of 2019 led by customer loan portfolio expansion.


› AXELUM RESOURCES PLANS OCTOBER IPO

AXELUM RESOURCES, a maker of coconut-based products, plans an IPO of up to Ps7.7bn (US$151m) in October.

The company said in a filing 700m primary shares and 430m secondary shares will be offered at a maximum price of Ps6.81 each.

First Metro Investment is the issue manager.Proceeds will be used for future

acquisitions and new manufacturing facilities.

Axelum makes products such as coconut water, coconut milk, desiccated coconut and coconut oil for industrial and consumer use.

SINGAPORE


› THOMSON MEDICAL CHECKS MARKET PULSE

THOMSON MEDICAL GROUP has mandated DBS as sole global coordinator as well as joint bookrunner with Maybank and Credit Suisse for a potential Singapore dollar bond offering.

This will be a debut issue from the Singaporean healthcare company, which met fixed income investors last Wednesday to introduce its credit profile.

The bonds will be drawn from a newly established multi-currency debt issuance

programme of S$500m (US$369m). Under the programme, Thomson Medical can sell bonds denominated in various currencies, and in senior and perpetual structures. Proceeds are to be used for general corporate needs, including debt refinancing as well as funding acquisitions, expansion plans, capital expenditure and general working capital needs.

Thomson Medical provides healthcare services for women and children and operates medical centres in Singapore and Malaysia.

› MAXI-CASH LAUNCHES TENDER

MAXI-CASH FINANCIAL SERVICES last Monday kicked off a tender offer to repurchase and exchange S$70m of outstanding 5.5% bonds ahead of maturity on April 27 2020.

Holders can choose to sell back the bonds to the Singaporean pawnbroker or swap the notes for new 6.35% Singapore dollar-denominated notes due 2022. Maxi-Cash has indicated that it will only repurchase in cash up to S$5m of outstanding notes.

The company, a subsidiary of jewellery store chain owner Aspial, sold an original S$50m of the 5.5% bonds in April 2017, following that up with a S$20m tap six months later. The existing notes were quoted at a bid of 98.55 or a yield of over 7.3% last Monday, according to Refinitiv data.

Of the total S$70m issue, S$4m is held by the company’s directors and/or controlling shareholders. Some bondholders, including directors and shareholders, have indicated an interest to remain invested in the company’s bonds beyond the 2020 maturity. Maxi-Cash said this interest prompted it to launch the exchange offer, which will extend its maturity profile and keep it well capitalised for the next few years.

While the bond repurchase will be made at par, the exchange premium, equal to 0.75% of principal amount of the offered notes, will be paid in cash. The tender ends on July 12.

Top bookrunners of all Philippine peso bonds1/1/19 – 30/6/19

Amount

Name Issues Ps(m) %


2 Deutsche 2 25,320.0 13.4

3 HSBC 4 23,260.0 12.3

4 BDO Unibank 6 17,000.0 9.0

5 China Bk Capital Corp 5 16,500.0 8.7

6 ING 4 15,510.0 8.2

7 BPI 4 13,500.0 7.1

8* Philippine National 2 6,000.0 3.2

8* Metropolitan B&T 3 6,000.0 3.2

8* Security Bank 2 6,000.0 3.2

Total 16 189,153.7

*Market volume

Proportional credit


Top bookrunners of Philippines syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1* Standard Chartered 2 192.0 15.4

1* Bank of China 2 192.0 15.4

3 Citigroup 2 133.8 10.8

4* ANZ 1 133.3 10.7

4* DBS 1 133.3 10.7

4* Mizuho 1 133.3 10.7

4* SMFG 1 133.3 10.7

8 HSBC 1 75.1 6.0

9* KDB 1 58.7 4.7

9* Philippine National 1 58.7 4.7

Total 3 1,243.6


Proportional credit


Philippines global equity and equity-related1/1/19 – 30/6/19

Amount


1 UBS 2 446.6 52.2

2 Metropolitan B&T 1 153.5 18.0


4 Deutsche 1 89.6 10.5

5 JP Morgan 1 63.4 7.4

6 SVS Sec 1 0.3 0.0

Total 7 855.2



DBS is sole dealer manager while Tricor Barbinder Share Registration Services will be tender and exchange agent.

SYNDICATED LOANS

› FRASERS HOSPITALITY REIT RAISES S$370M

FRASERS HOSPITALITY REAL ESTATE INVESTMENT TRUST has obtained S$370m (US$272.6m) in bank facilities, according to a company filing on June 27.

Bank of China Singapore branch, DBS Bank and Maybank Singaporebranch are the lenders of the financing, which comprises a S$350m term loan and a S$20m revolving credit facility.

Frasers Hospitality Asset Management is the manager of Frasers Hospitality REIT. Perpetual (Asia), as trustee of the REIT, is the borrower.

It is an event of default if Frasers Hospitality Asset Management resigns or is removed as manager of Frasers Hospitality

REIT and is not replaced by a substitute approved by the Monetary Authority of Singapore, or if the manager ceases to be a majority-owned subsidiary of Frasers Property, the filing said.

A failure to prepay the loan in the event of a default will trigger a cross-default under other borrowings of Frasers Hospitality REIT. The aggregate level of facilities that may be affected is about S$799m, excluding interest.

Frasers Hospitality REIT last raised a S$615m dual-tranche club deal in July 2014, according to LPC data. BOC, DBS and HSBC were the lenders of the term loan, which comprised a S$500m five-year tranche and a S$115m three-year portion.

The REIT develops, invests in, and owns hotel and resort properties.

› AVOLON TO HOLD NON-DEAL ROADSHOW

Aircraft leasing firm AVOLON HOLDINGS has invited banks to attend a non-deal roadshow coordinated by DBS Bank on July 16 in Singapore.

Avolon Holdings is 70% owned by an indirect subsidiary of Bohai Leasing, which is majority owned by Chinese conglomerate HNA Group, and 30% owned by ORIX Aviation Systems, the Irish subsidiary of Japanese financial services group Orix.

Dublin-headquartered Avolon provides aircraft leasing and lease management services. It is the world’s third largest aircraft leasing company with offices in the United States, the UAE, Singapore, Hong Kong and China.

In March, Avolon Holdings raised a US$500m unsecured three-year term loan. Natixis and Sumitomo Mitsui Trust Bank were the leads on that deal, which included 13 banks from Asia, Europe and the US.


› EQUITATIVA CONSIDERING SGX REIT

United Arab Emirates-based EQUITATIVA

GROUP is planning to buy US$700m–$1bn of commercial, education and office properties in Asia and list them on Singapore Exchange, said Racha Alkhawaja, group chief distribution and development officer.

Alkhawaja said the assets will be located in China, Malaysia, Vietnam and Indonesia. According to Alkhawaja, the listing destination has not been finalised but the Singapore Exchange is a preferred destination because of the liquidity it offers. She did not indicate the timing of the offer.

Top bookrunners of all Singapore dollar bonds1/1/19 – 30/6/19

Amount

Name Issues S$(m) %

1 DBS 27 4,498.8 31.5

2 OCBC 20 3,607.5 25.3

3 UOB 12 2,399.2 16.8


5 HSBC 7 848.0 5.9


7 Maybank 2 295.0 2.1

8 Societe Generale 1 187.5 1.3

9 Credit Agricole 1 108.3 0.8

10 Haitong Sec 2 75.0 0.5

Total 45 14,289.0

*Market volume

Proportional credit


Top bookrunners of all Singapore dollar bonds

(non-domestic)1/1/19 – 30/6/19

Amount

Name Issues S$(m) %


2 DBS 7 708.3 18.6

3 UOB 3 362.5 9.5

4 HSBC 4 328.0 8.6

5 OCBC 3 320.8 8.4


7 Societe Generale 1 187.5 4.9

8 Credit Agricole 1 108.3 2.9


10* SPDB 1 25.0 0.7

10* Ping An Sec 1 25.0 0.7

10* Guotai Junan Sec 1 25.0 0.7

10* UBS 1 25.0 0.7

10* Haitong Sec 1 25.0 0.7

10* Citic 1 25.0 0.7

10* BAML 1 25.0 0.7

Total 13 3,805.3

*Market volume

Proportional credit


Top bookrunners of all Singapore dollar

bonds (domestic)1/1/19 – 30/6/19

Amount

Name Issues S$(m) %

1 DBS 20 3,790.4 36.2

2 OCBC 17 3,286.7 31.4

3 UOB 9 2,036.7 19.4

4 HSBC 3 520.0 5.0


6 Maybank 2 295.0 2.8


8 Haitong Sec 1 50.0 0.5

Total 32 10,483.8

*Market volume

Proportional credit


Top bookrunners of Singapore syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 DBS 7 803.8 14.4

2 UOB 3 784.5 14.1

3 Maybank 5 600.1 10.8

4 SMFG 3 498.2 9.0

5 OCBC 2 439.1 7.9

6 Nordea 2 312.7 5.6

7 HSBC 4 310.1 5.6

8 Deutsche 1 225.0 4.0

9 ING 2 185.8 3.3

10 NatWest Markets 2 171.9 3.1

Total 16 5,567.0


Proportional credit


Singapore global equity and equity-related1/1/19 – 30/6/19

Amount


1* Morgan Stanley 1 776.3 24.9

1* Goldman Sachs 1 776.3 24.9

3 DBS 3 346.8 11.1



6 Citigroup 2 142.6 4.6

7 UBS 2 141.8 4.6

8* UOB 1 92.5 3.0

8* HSBC 1 92.5 3.0

10* Mizuho 1 57.5 1.8

10* Leerink Partners 1 57.5 1.8

10* Jefferies LLC 1 57.5 1.8

Total 22 3,118.9



COUNTRY REPORT TAIWAN

The group is also planning to buy US$300m–$500m of school properties in India and list them through a local REIT. Currently, Embassy Office REIT is the only REIT to be listed in India.

Alkhawaja was speaking at the WIBC Capital Markets Summit in Singapore.

Emirates REIT, which is listed on Nasdaq Dubai, is part of the Equitativa Group.

› LENDLEASE HIRES TWO BANKS FOR IPO

Australia’s LENDLEASE GROUP has hired Citigroup and DBS to manage a real estate investment trust IPO of up to US$400m–$500m on the Singapore Exchange, people with knowledge of the transaction said.

More banks are likely to join the syndicate.

The REIT will contain retail assets and the IPO is being targeted for later this year.

Lendlease has retail properties in Singapore and Australia. In Singapore it owns the Parkway Parade, 313@Somerset and Jem retail malls.

SOUTH KOREA


› KDB MAKES GREEN EURO DEBUT

KOREA DEVELOPMENT BANK priced its first Green euro-currency bond, a €500m (US$565m) five-year offering that drew more than €2bn of orders from 104 accounts.

Market sentiment was helped by the June 30 border meeting between the leaders of North and South Korea and the US, which softened tensions on the peninsula even though nothing of substance was agreed.

KDB’s bond priced at 99.905 with a zero coupon to yield 0.019%. This was equivalent to mid-swaps plus 28bp, well inside guidance of 30bp–35bp and initial price thoughts of 45bp area.

That was a marginally tighter spread than that paid by like-rated Export-Import Bank of Korea in its five-year euro deal in March: a €750m issue that priced at mid-swaps plus 32bp.

The bonds have expected ratings of Aa2/AA/AA–, in line with the issuer and level with the Korean sovereign.

Benelux countries took 24% of the bonds, France 11%, the UK 11%, Germany 10%, Switzerland 10%, other EMEA countries 24%, and Asia 10%. Central banks and official institutions booked 46%, continuing a recent trend of strong participation by SSA investors in offshore bonds from

Korean quasi-sovereigns. Asset managers and funds got 37%, banks 10%, insurers 6%, and private banks and others 1%.

Citigroup, Credit Agricole, HSBC and Standard Chartered were joint bookrunners. KDB Asia and Kexim Asia were co-managers.

The Green euro offering follows KDB’s debut Green bond issue in 2017, a US$300m five-year. The development bank this year upgraded its Green framework to a Sustainable bond framework.

It is the latest in a flurry of ESG bonds from Korean issuers this year, following a Green and Sustainable US dollar bond

offering by the sovereign in June, a Green bond from Korea Electric Power Corp, and a Sustainable Additional Tier 1 and Tier 2 bonds from Kookmin Bank.

TAIWAN

SYNDICATED LOANS

› SHUNSIN TECHNOLOGY INCREASES FACILITY

SHUNSIN TECHNOLOGY HOLDINGS has increased a three-year loan to NT$3.9bn-equivalent (US$126m) from a NT$3bn-equivalent target after attracting a dozen banks in general syndication.

CTBC Bank was the sole mandated lead arranger and bookrunner of the deal, which was available in either NT or US dollars.

The interest margin for NT dollars ranges from 60bp to 65bp over Taibor, while the

Top bookrunners of all South Korea Won bonds1/1/19 – 30/6/19

Amount

Name Issues Won(m) %

1 KB Financial 291 15,920,136.0 16.5

2 NH Inv & Sec 191 12,707,000.0 13.1

3 Korea Investment 292 11,941,899.0 12.3

4 Kyobo Life 158 8,305,478.3 8.6

5 Mirae Asset Daewoo 151 7,430,272.0 7.7

6 Kiwoom Sec 126 5,809,890.0 6.0

7 DB Financial Invest 100 5,361,280.0 5.5

8 SK Sec 57 5,008,000.0 5.2

9 Hana Financial 120 4,300,680.0 4.5

10 Hanwha Inv & Sec 35 3,926,195.0 4.1

Total 2,255 96,743,861.4

*Market volume

Proportional credit


Top bookrunners of South Korea syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 KDB 1 1,378.0 82.1

2 Mizuho 1 300.0 17.9

Total 2 1,678.0


Proportional credit


South Korea global equity and equity-related1/1/19 – 30/6/19

Amount


1 NH Inv & Sec 11 629.4 18.2

2 Korea Investment 7 448.5 13.0

3 UBS 1 327.8 9.5

4 JP Morgan 1 296.2 8.6

5 KB Financial 8 281.2 8.1


7 Samsung Sec 5 188.5 5.5

8 Hana Financial 4 152.0 4.4


10 Shinhan Financial 7 123.6 3.6

Total 46 3,456.5

Source: Refinitiv data SDC Code: C1Q

Top bookrunners of all Taiwan dollar bonds1/1/19 – 30/6/19

Amount

Name Issues NT$(m) %

1 Capital Sec 3 23,600.0 21.9

2 Yuanta Financial 7 16,500.0 15.3

3 HSBC 2 15,750.0 14.6

4 Masterlink Sec 4 15,340.0 14.2

5 Taishin Financial 3 12,750.0 11.8

6 Mega Financial 4 6,650.0 6.2

7 KGI Financial 1 6,500.0 6.0

8 E Sun Financial 2 3,300.0 3.1

9* Taiwan Cooperative 5 3,000.0 2.8

9* Fubon Financial 1 3,000.0 2.8

Total 28 107,990.0

*Market volume

Proportional credit


Top bookrunners of Taiwan syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 Mega Financial 23 2,728.6 13.8

2 Taiwan Financial 17 2,153.3 10.9

3 Taiwan Cooperative 17 1,553.7 7.9

4 CTBC Financial 14 1,410.7 7.1

5 First Financial 15 1,365.8 6.9

6 Fubon Financial 12 1,344.9 6.8

7 Taishin Financial 11 1,120.0 5.7


9 Land Bank of Taiwan 11 1,028.1 5.2

10 Cathay Financial 4 723.3 3.7

Total 100 19,777.1


Proportional credit



margin for US dollars ranges from 100bp to 105bp over Libor.

Banks were offered a top-level upfront fee of 12bp.

Funds are for capital expenditure and general corporate purposes.

The borrower, through its unit ShunSin Technology (Zhongshan), is engaged in the semiconductor business in Asia, the Americas and Europe.


THAILAND


› BAM HIRES FOR MULTI-TRANCHER

BANGKOK COMMERCIAL ASSET MANAGEMENT has mandated Bank of Ayudhya and Kasikornbank to jointly lead a bond offering to raise up to Bt15bn (US$489m).

The state-owned financial institution, locally rated AA– by Fitch, has started sounding out investors on seven tranches with tenors of 1.5 years to 15 years, although some tranches may be dropped.

Books are expected to open on July 10. Preliminary price indications range from 55bp–70bp for the 1.5-year tranche to 160bp–175bp for the 15-year piece.

BAM was set up by the Bank of Thailand’s Financial Institutions Development Fund (FIDF) in 1998 to manage distressed assets during the Asian financial crisis. Although that core role has been reduced as Thai banks recovered through the years, it continues its role as the country’s largest distressed asset manager.

FIDF has plans to list BAM on the Stock Exchange of Thailand but no final timetable has been set.

› ENERGY ABSOLUTE MARKETS BOND

ENERGY ABSOLUTE last Friday offered three and 10-year bonds to raise Bt3bn.

Initial price guidance was 2.57%–2.73% for the three-year tranche and 3.47%–3.63% for the 10-year tranche.

The Thai power producer, rated A by

Taiwan global equity and equity-related1/1/19 – 30/6/19

Amount


1 Yuanta Financial 7 374.2 47.4

2 Grand Fortune Sec 4 71.4 9.1

3 KGI Financial 6 66.3 8.4

4 CTBC Financial 3 53.9 6.8

5 Taishin Financial 6 53.8 6.8

6 HSBC 1 50.0 6.3

7 Masterlink Sec 5 45.8 5.8

8 Sinopac Holdings 2 16.6 2.1

9 Waterland Sec 1 14.8 1.9

10 Fubon Financial 4 13.6 1.7

Total 48 788.9


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COUNTRY REPORT VIETNAM

Tris, will hold a two-day subscription on July 9-10.

Kasikornbank and Phatra Securities are joint lead managers and underwriters.

› PTTGC PLOTS RETURN

PTT GLOBAL CHEMICAL plans to sell five-year bonds to raise up to Bt10bn in a return to the debt market after a near-two-year absence.

The Thai petrochemical company, locally rated AA+ by Fitch, has hired Bangkok Bank, Bank of Ayudhya, Kasikornbank, Krungthai Bank and Siam Commercial Bank for the deal.

A general offering will be launched after the notes are priced, likely in July. Subscription is tentatively scheduled for August 14-21.

PTTGC is expected to step up its capital expenditure, with plans including the construction of a propylene oxide and polyols plant and an olefin reconfiguration project. Fitch projects PTTGC’s capex to

increase to around Bt43bn this year from last year’s Bt32.7bn.

The company, owned by state-owned oil giant PTT, last visited the baht bond market in August 2017 when it printed Bt10bn of four-year 3.05% bonds.

VIETNAM


› TPBANK PLANS OFFSHORE TIER 2

TIEN PHONG COMMERCIAL JOINT STOCK BANK, rated B1 by Moody’s, has mandated MUFG as sole bookrunner to arrange investor meetings in Singapore and Hong Kong from July 10.

A Reg S offering of US dollar Tier 2 subordinated debt securities may follow, subject to market conditions.

The bank is seeking to issue US$200m Tier 2 notes, according to filings on the Ho Chi Minh stock exchange.

The proposed notes have an expected rating of B2 by Moody’s, and will have a tenor of 10 years with a call option after five years.

Coupons can be deferred if paying them will result in a net loss for the bank that financial year, but interest will accrue on skipped coupons.

Vietnamese banks need to meet Basel II capital standards by 2020.

› VIETNAMESE BANK EYES DOLLARS

VIETNAM PROSPERITY JOINT STOCK COMMERCIAL

BANK has mandated BNP Paribas, JP Morgan and Standard Chartered as joint global coordinators and bookrunners to arrange investor meetings in Hong Kong, Singapore and London from July 3.

A Reg S offering of US dollar senior unsecured debt securities may follow, subject to market conditions.

The bonds have an expected rating of B1 by Moody’s, in line with the issuer, and will be drawn from a US$1bn euro MTN programme.

Vietnam Prosperity Bank implemented the Basel II regime in May this year, becoming one of the first banks in Vietnam to do so.

The last Vietnamese bank to sell US dollar bonds was Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) in 2012, and the sovereign last issued in dollars in 2014.

SYNDICATED LOANS

› NO VA LAND ENTERS SYNDICATION

NO VA LAND INVESTMENT GROUP, one of the leading property developers in Vietnam, has launched a US$150m three-year loan into general syndication after attracting five lenders in the senior phase.

Credit Suisse is the original mandated lead arranger and bookrunner, while Industrial and Commercial Bank of China, Taichung Commercial Bank, Taiwan Business Bank and Taiwan Cooperative Bank came in as joint MLABs. Vietcombank is the onshore facility agent, security agent and lender.

The deal, which has a US$100m greenshoe, pays an interest margin of 425bp over Libor and has an average life of 2.8 years.

MLAs with commitments of US$20m and above earn a top-level all-in pricing of 460.71bp via a participation fee of 100bp, while lead arrangers coming in for US$15m–$19m receive an all-in pricing of 457.17bp via a 90bp fee. Arrangers joining with US$10m–$14m receive an all-in pricing of 450bp via a 70bp fee.

Bank meetings will take place in Ho Chi Minh City on July 10 and Taipei on July 11. The deadline for commitments is August 22.

In April 2017, the borrower raised a US$30m 30-month loan. Maybank was the MLAB on that deal, which attracted two other lenders, according to LPC data.

Top bookrunners of all Thai baht bonds1/1/19 – 30/6/19

Amount

Name Issues Bt(m) %

1 Bangkok Bank 29 88,804.6 20.0

2 Kasikornbank 32 80,190.8 18.0

3 Krung Thai 25 66,144.5 14.9

4 Siam Commercial 18 50,678.5 11.4

5 CIMB Group 15 42,953.1 9.7

6 Thanachart Capital 5 40,590.7 9.1

7 MUFG 6 25,650.6 5.8

8 UOB 5 14,750.0 3.3

9 Phatra Sec 8 9,491.3 2.1

10 Government Savings Bank 3 7,873.8 1.8

Total 65 445,229.8

*Market volume

Proportional credit


Top bookrunners of Thailand syndicated loans1/1/19 – 30/6/19

Amount

Name Deals US$(m) %

1 SMFG 1 395.9 100.0

Total 1 395.9


Proportional credit


Thailand global equity and equity-related1/1/19 – 30/6/19

Amount



2 Krung Thai 1 140.9 20.5

3 Bualuang Sec 1 23.5 3.4

4 Asia Plus Sec 1 23.1 3.4

5 Phillip Sec 2 7.6 1.1

6* Finansia Syrus Sec 2 6.5 0.9

6* KTB Investment & Sec 2 6.5 0.9

8* Siam Commercial 1 6.2 0.9

8* Kasikornbank 1 6.2 0.9

8* KGI Financial 1 6.2 0.9

Total 9 686.6


Top bookrunners of all Vietnamese dong bonds1/1/19 – 30/6/19

Amount

Name Issues Vnd(m) %

1 Vietcombank 1 200,000.0 100.0

Total 1 200,000.0

*Market volume

Proportional credit


Vietnam global equity and equity-related1/1/19 – 30/6/19

Amount


1 Jefferies LLC 1 201.3 61.8


Total 3 325.5



ASIA DATA

LAST WEEK’S ECM DEALS

Stock Country Date Amount Price Deal type Bookrunner(s)

CIMC Vehicles China 03/07/19 HK$1.7bn HK$6.38 IPO (primary) Haitong International, ICBC, Nomura.

Source: IFR Asia

MERRILL LYNCH ASIAN DOLLAR INDEX

Index Description Index level 1 week total return 1 month total return 3 months total return OAS

ADIG Asian-dollar high-grade index 423.439 0.536 1.802 4.025 135

ADHY Asian-dollar high-yield index 660.127 0.732 2.558 2.492 519

AGIG Asian-dollar government high-grade index 397.591 0.629 2.286 4.874 116

AGHY Asian-dollar government high-yield index 785.910 1.061 4.177 2.542 410

ACIG Asian-dollar corporate high-grade index 449.837 0.505 1.640 3.740 143

ACHY Asian-dollar corporate high-yield index 541.634 0.679 2.297 2.518 537

Source: Merrill Lynch

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