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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

APRIL 13 2019 ISSUE 1085 www.ifrasia.com

BONDS

First 50-year yen bond highlights bid for duration in low-rate Japan05

BONDS

Societe Generale capitalises on Singapore savings with first AT107

EQUITIES

Sporting goods store MAP Active revives interest in Indonesian ECM08

PEOPLE & MARKETS

Citigroup’s Asia Pacific chief adds to flurry of leadership changes12

Sustainable finance thrives Down Underwith debuts for Woolworths and IDB

Asian issuers in control as manic week for bond sales goes off without a hitch

Japan Post set for third and final statesell-down after government invites bids

MOBILIZING CAPITAL MARKETS FOR SUSTAINABLE INFRASTRUCTUREIFR presents a panel discussion on the role of the institutional

Steve Garton, this seminar will

The seminar includes a buffet lunch and is FREE TO ATTEND for all delegates at the 52nd ADB Annual Meeting in Fiji.

International Financing Review Asia April 13 2019 1

Upfront OPINION INTERNATIONAL FINANCING REVIEW ASIA

Race to the top

Irrational exuberance may be making a comeback in Asia's bond markets.

Last week alone, Asian issuers printed a massive US$14bn of US dollar bonds, including over US$5bn of high-yield debt, with barely a whisper about oversupply.

Investors moaned about Indian high-yield borrowers not paying enough, but then bought their deals anyway. Bank

cannibalising demand. A Mongolian miner that defaulted

international bond market. Indian non-bank lenders are now queuing up to sell US

dollar bonds because onshore investors won’t lend to them at attractive rates anymore. Low-rated companies like Bollywood producer Eros International have resurrected

plans for dollar bonds that failed to take off two years ago, and perpetual bonds are back on the table.

Add to that the longest ever corporate bond in Japan and a record SoftBank retail offering and it's fair to say there are warning signs that the market is approaching a top.

It's also notable that there hasn’t really been much positive news to drive investors into risk-on mode. Global growth is slowing and there is no progress at all on the China-US trade talks. The only thing driving demand is low rates and the hope that Trump will bully the Fed into cutting rates later this year.

It's a similar story in equities, where investors piling money into loss-making tech stocks got a reality check from the second-day slide in newly listed Lyft.

In the absence of good news to sustain the rally, there is a real risk that market conditions will take a sudden turn for the worse, either when the US economy starts to justify talk of a recession or the Fed starts talking about raising rates again.

With all that in mind, it’s no wonder Asian issuers want to get their deals done as quickly as they can.

Cheques in the post

The Japanese government is doing its part for Asia's equity capital markets again this year, with more giant offerings from the Japan Post group set to

dominate 2019 volumes. Even these multi-billion-dollar deals, however, are no guarantee of liquidity.

The three-pronged listing of Japan Post's banking, insurance and holding companies in 2015 did a masterful job of generating excitement around the gradual privatisation of a low-growth state enterprise.

Since the initial enthusiasm - especially around JP Insurance, arguably the most promising growth story of the three - interest has waned. The stable prices and thin volumes suggest the bulk of the shares have ended up with the kind of long-

trade shares. Mrs Watanabe probably used some of her postal

Low liquidity makes it challenging for the government to pare its stake further, but it also shows a way forward for future offerings.

Only JP Holdings, the parent company, trades in any kind of volume, and that is more because of the US$11.5bn follow-on in September 2017 than the initial public offering.

months of 2017; the following year's average was over 8.2m. At close to 700 days' trading, the roughly US$3bn

secondary follow-on in JP Insurance, due to price this week, should have a similar impact on that stock's liquidity.

The government's next JP Holdings sale will also be massive, at around 175 days' trading if it sells the full US$12bn. But JP Holdings could also buy back stock to support the placement, as it did in 2017. At some point the holding company also needs to sell some of its stake in Japan Post Bank, raising a similar challenge.

The next JP Holdings sell-down will also take the government's stake below 50%, completing the privatisation process. That will move Japan closer to its goal of creating a deeply liquid group of attractive stocks that will encourage more savers to invest in the market, but there are no shortcuts.

It’s fair to say there are warning signs that the market is approaching a top.

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2 International Financing Review Asia April 13 2019

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EMAIL ADDRESSES

21Vianet Group 19

Aboitiz Power Corp 39

Adira Dinamika Multi Finance 37

AFG 2019-1 Trust 18

Aflac Life Insurance Japan 37

Agile Group Holdings 24

Alibaba Group 23

Amman Mineral Nusa Tenggara 9

AMP Capital 19

AMP Group 17

Anheuser-Busch InBev 25

Asian Development Bank 38

Australian Finance Group 18

Bajaj Energy 36

Bajaj Finance 8

Bangkok Expressway and Metro 43

Bank of China 4, 11, 20

Baozun 26

Beijing Roborock Technology 25

Bloomage Biotechnology 25

BoCom Leasing Management

Hong Kong 24

CanSino Biologics 28

CCB Leasing (International) Corp 24

Chailease Holding 43

Cheung Kei Center 31

China Aoyuan Group 25

China Evergrande Group 4, 9

China National Nuclear Power 29

China New Higher Education Group 28

CK Hutchison Holdings 4, 30

Copenhagen Infrastructure Partners 43

CPI Ronghe Financial Leasing 24

DBS Group Holdings 40

Duiba 27

Eros International 33

Everbright Securities 23

Fantasia Holdings Group 20

Frasers Property 41

Gaw Capital Partners 31

Government Housing Bank 43

Grand River Development 42

Greenland Financial Holdings Group 21

Guangdong Songyang Recycle Resources 29

Guangdong Yueyun Transportation 28

Guotai Junan Securities 27

GWA Group 19

Hansoh Pharmaceutical Group 28

HDFC Bank 33

Heartland Bank 38

Hebei Highway Development 28

Hengli Group 31

Hero FinCorp 8

Hollysys Automation Technologies 26

Home Credit Group 30

Huai’an Water Conservancy

Holding Group 21

Huaibei City Construction

Investment Holding Group 21

Hunan Yussen Energy Technology 28

Huya 26

IFC Development 30

Indian Railway Finance Corp 10

Indonesia Eximbank 37

IndusInd Bank 33

Inter-American Development Bank 5

Jakarta Eye Centre 9

Japan Oil Gas & Metals National 38

Japan Post Holdings 6

Japan Post Insurance 6

JSW Steel 34

KfW 17

Korea Resources Corp 42

Lakala Payment 29

Larsen & Toubro 34

La Trobe Financial 17, 18

La Trobe Financial Capital Markets

Trust 2019-1 17

Leong Hup International 8

LG Chem 4, 42

Liberty 18

L&T Finance 9

Magma Fincorp 9

Mahindra and Mahindra Financial Services 8

MAP Aktif Adiperkasa 8

Marlow Foods 39

Maybank Islamic 38

Methven 19

Metro Excel 24

Metropolis Healthcare’ 36

MicroPort Scientific 25

MIE Holdings 22

Minera y Metalurgica del Boleo 42

Mitsubishi Estate 5

Modern Land (China) 22

Mongolian Mining Corp 10

Multibank 42

Muthoot Homefin 9, 34

Nanjing Chervon Auto Precision Technology 29

New World China Land 32

NIIT Technologies 35

Ningxia Baofeng Energy Group 29

NTPC 10, 36

Olam International 40

Oto Multiartha 37

Pacific Radiance 41

Peking University Founder Group 21

Pelabuhan Tanjong Priok 9

Pepper 18

Pepper Group 18

Pepper I-Prime 2019-1 18

Perkebunan Nusantara III 37

Perseus Mining 19

Perusahaan Gas Negara 37

Piramal Capital and Housing Finance 8

Polycab India’s 36

Power Finance Corp 10, 34, 36

Power Grid Corp of India 10

Property Perfect 43

Province of Quebec 17

Qingdao Huicheng

Environmental Technology 29

QSR Brands 8

Quasar Engineering 31

ReadyTech 19

REC 34

Redsun Properties Group 22

Reliance Industries 35

Rentenbank 17

Resimac 18

Samson Oil & Gas 19

Semen Indonesia 36

Shandong Yuhuang Chemical 20

Shanghai Juneyao Airline Hong Kong 32

Shanghai MicroPort Endovascular MedTech 25

Shanghai Zhonggu Logistics 28

Shennan Circuits 29

Shenwan Hongyuan Group 26

Shenzhen New Land Tool

Planning & Architectural Design 29

Shriram City Union Finance 9

Shriram Transport Finance 8

Sino Biopharmaceutical 24

Skyworth Digital 29

Small Industries Development

Bank of India 35

SMBC Aviation Capital 37

Societe Generale 7, 17

SoftBank Group 38

Soho Global 9

Southwest Securities International Securities 22

So-Young International 28

Spark New Zealand 39

Srei Infrastructure Finance 9

Sunac China Holdings 22

Suncorp-Metway 17

Suzhou Planning & Design

Research Institute 29

Tewoo Group 21

Thai Airways 43

Toray Industries 38

Toyota Finance New Zealand 39

Toyota Motor Credit Corp 37

TPI Polene 43

Trade Me 39

Trade Me Group (Titan

Acquisitionco New Zealand) 39

TungKong 27

TungKong Ruiyun Data Technology 27

United Overseas Bank 40

Vedanta Resources 4, 33

Visionvera Information Technology 25

Viva Biotech 27

Volkswagen Financial

Services Australia 17

Waskita Karya 37

Wheelock Finance 32

Woolworths Group 5

Wuxi Construction and

Development Investment 23

Xianhe 30

Xinyuan Real Estate 23

Yes Bank 36

Yichang High-Tech Investment Development 23

Yuexiu Real Estate Investment Trust 29

Yunji 27

Yuyao Economic Development Zone

Construction Investment and Development 23

Zengame Technology 28

Zhejiang Windey 29

Zhenjiang City Construction

Industry Group 23

COMPANY INDEX


ContentsINTERNATIONAL FINANCING REVIEW ASIA

APRIL 13 2019 ISSUE 1085

COVER STORIES

BONDS

04 Manic week for Asian bond salesAsian international bond issuance is at fever pitch, as borrowers rush to use falling credit spreads and global investors chase returns in a low-yield environment.

BONDS

05 ESG bonds thrive Down UnderAustralia showcased its ESG credentials again last week with two original bond offerings from the Inter-American Development Bank and Woolworths Group.

BONDS

05 Japan welcomes first 50-year bondWith the first 50-year senior bond of ¥15bn, Mitsubishi Estate took the yen bond market into new territory, tapping demand for duration in low-rate Japan.

NEWS

06 Japan’s postman rings thriceJapan’s government has started its third and final mammoth sell-down in the postal and financial giant Japan Post Holdings in a deal worth around US$12bn.

07 SocGen capitalises on Singapore savings SocGen sold its first 2019

bank capital deal to a rousing reception in Singapore.

08 MAP re-activates Indonesian ECM MAP Aktif Adiperkasa wrapped up a

Rp4.2trn re-IPO in Indonesia, reviving major share sales in the country.

08 Indian NBFCs target dollar funding India’s non-banking financial sector

is lining up USD issues with tight spreads offshore and falling hedging costs.

PEOPLE & MARKETS

12 Citi loses Asia Pacific CEOCitigroup’s Asia Pacific chief executive resigned unexpectedly after almost four years in the role, adding to a string of leadership changes at the US bank.

13 StanChart fined US$1.1bn for Iran breaches StanChart has been fined

US$1.1bn by the US and UK for Iran sanctions and other compliance flaws.

14 JP Morgan, Nomura plot different JV paths JP Morgan and Nomura are

pursuing very different strategies for their new Chinese securities JVs.

12 Who’s moving where JP Morgan has selected Takenori Yoneda to head

up corporate banking in Japan after Takasuke Sekine left earlier this year.

16 In brief MUFG is set to scale back its bond and equity operations in

London and New York as part of a restructuring of its global markets division.

ASIA DATA

44 This week’s figures

17 AUSTRALIA

Troubled Australian financial

AMP Group returned to the

Swiss market with a SFr140m

0.8% 4.25-year senior

unsecured bond issue.

19 CHINA

21Vianet Group last Tuesday

priced US$300m of 2.5-year

senior unsecured bonds to fund

a tender offer, drawing orders of

over US$1.4bn.

30 HONG KONG

Hong Kong conglomerate CK

Hutchison Holdings has priced

US$1.5bn dual-tranche senior

unsecured bonds after drawing

over US$2.8bn final orders.

33 INDIA

Bollywood film company Eros

International has hired two to

arrange fixed income investor

meetings in Hong Kong,

Singapore, London and the US.

36 INDONESIA

Semen Indonesia plans to raise

Rp4.9trn from two-part bonds,

with ranges of 8.50%–9.25%

for a five-year and 8.75%–

9.50% for a seven-year tranche.

37 JAPAN

SMBC Aviation Capital last

Monday priced a US$500m

five-year bond at 99.868 with

a coupon of 3.55% to yield

3.579%, at the tight end.

38 MALAYSIA

Maybank Islamic has raised

M$1bn from the sale of 10 non-

call five Islamic bonds that will

qualify as Tier 2 capital. The

notes will pay 4.5%.

38 NEW ZEALAND

Asian Development Bank

priced a NZ$200m seven-year

Kauri bond on April 5 with joint

lead managers ANZ and TD

Securities.

39 PHILIPPINES

Marlow Foods, a unit of Monde

Nissin, has closed a debut

£123m five-year borrowing, with

Asian banks largely supporting

the deal.

40 SINGAPORE

DBS Group Holdings priced a

US$750m three-year senior

unsecured bond offering at

99.946 with a coupon of 2.85%

to yield 2.869%.

42 SOUTH KOREA

Korea Resources Corp priced

US$400m five-year senior

unsecured bonds at Treasuries

plus 102.5bp, drawing orders of

over US$2.85bn.

42 TAIWAN

Grand River Development has

launched a US$100m three-

year mezzanine to part-finance

the construction of Taipei Sky

Tower in Taipei’s Xinyi district.

43 THAILAND

Thailand’s state-owned

Government Housing Bank is

planning to market bonds in

tenors of three to 15 years to

raise up to Bt20bn.

COUNTRY REPORT

14

News

Manic week for Asian bond sales Bonds New issues hold up in secondary, despite glut of supply

BY DANIEL STANTON,

FRANCES YOON

Asian international bond issuance has reached fever pitch, as borrowers rush to take advantage of falling credit spreads and global investors continue to chase returns in a low-yield environment.

Asian issuers sold US$14bn of G3 bonds last week, excluding Japan and Australasia, the most since the second week of April 2018, according to Refinitiv data.

April is typically a busy period for bond issues as companies return to the market with refreshed financial results, and bankers say this month could be the busiest April on record, rivalling the US$38bn sold in the same month last year.

“People realise that markets are good,” said an origination banker who worked on multiple deals that priced last week. “The current environment is sustainable

because of fund inflows, and it doesn’t seem like the Fed is going to raise rates soon.”

Emerging-market debt funds recorded inflows in 12 of the past 13 weeks, according to research from Bank of America Merrill Lynch.

Issuers from Asia rushed to the bond market on Monday as they tried to seize a brief window before Saudi Aramco’s expected US$12bn offering and key central bank announcements.

Eight Asian issuers printed US$7.3bn of bonds on Monday, including a US$2bn multi-tranche offering from CHINA

EVERGRANDE GROUP and US$1.5bn from Hong Kong conglomerate CK HUTCHISON HOLDINGS.

Perhaps surprisingly, there were no casualties among the primary offerings, and most performed well in secondary on Tuesday as Aramco gathered orders.

LG CHEM’s dollar bonds tightened 5bp–8bp, while China Evergrande Group’s

bonds were seen slightly above reoffer.

“The market is mature enough that it can handle US$7bn in one day,” said a DCM syndicate banker. “I don’t think anyone’s deal got damaged as a result of all the supply. It shows Asia is developing into a very liquid, deep market.”

Monday’s activity followed issuance of US$11.9bn the previous week, according to IFR data.

Deal activity sped up again on Wednesday, when BANK

OF CHINA priced a US$3.8bn-equivalent transaction across five currencies and eight tranches.

Six deals priced the same day, raising US$5.4bn, but a banker on the BOC deal said that did little to curb appetite for the Chinese lender.

“This deal blew out the door,” he said. “Markets are hot. There is pent-up demand from a lack of quality paper, including Chinese financials.”

Indian mining group VEDANTA

RESOURCES rounded out the week with a US$1bn high-yield bond late on Thursday that also priced well inside initial guidance. (See India Debt capital markets.)

HERE TO STAY?

With the European Central Bank and Federal Reserve signalling a dovish outlook for interest rates, bankers are confident that the conducive backdrop for primary supply will continue.

The first banker did note that secondary levels have tightened aggressively since the start of the year, and that gains could slow from now on.

“It’s hard to see a spread rally from here. It’ll only happen if we see a let-up in primary supply,” he said.

The JP Morgan US dollar Asia Credit Index, which has around a five-year average maturity, has rallied since the start of the year, with the Z spread tightening 53bp to 197bp. The rally has stalled recently, however, since hitting 195bp on March 19.

The iTraxx Asian investment-grade CDS index has also retreated 2bp since hitting a 12-month tight of 63.75bp on March 19, but is still 32bp tighter since the start of the year.

Signs of strain in the Chinese high-yield property sector are also showing, as aggressive pricing strategies have tripped up a few deals so far this month.

“There is some degree of indigestion already especially in the Chinese property sector, although markets are still conducive for primary supply,” said a Hong Kong-based investor. “There is reinvestment demand, but deals have priced without much of a concession for the past month.”

Japan Post sell-down 06 SocGen AT1 07 MAP Active re-IPO 08


Evergrande forever 09 Mongolian Mining 10 India’s Samurai snub 10

ESG bonds thrive Down Under Bonds Soaring Aussie demand attracts more Green and Social issues

BY JOHN WEAVERS

The Australian capital market showcased its environmental, social and governance (ESG) credentials again last week with two original bond offerings from the INTER-AMERICAN DEVELOPMENT

BANK and WOOLWORTHS GROUP.Woolworths, rated Baa2/

BBB (Moody’s/S&P), attracted a stunning order book in excess of A$2bn (US$1.42bn) for Friday’s debut Green bond, the first such issuance by an Australian retailer and the first by a supermarket globally under the Climate Bonds Initiative’s recently approved framework for that sector.

Demand was such that the A$400m 2.85% five-year note priced at 99.965 for a yield of 2.8575%, well inside 130bp–135bp guidance at asset swaps plus 120bp.

The size of the bond was limited only by the green assets

it is funding, primarily solar panels and in-store LED lighting. ANZ, Citigroup and JP Morgan were joint leads.

“Australia’s large green investor base and elevated demand for non-discretionary retailers in times of slower economic growth underpinned the transaction,” said a banker on the deal. “It also enjoyed plenty of scarcity value as a rare corporate issue and, specifically, Woolworths’ first local offering in over seven years.”

Woolworths previously sold a A$500m seven-year domestic MTN in 2012, the 6.0% March 21 2019, which matured last month.

Two days earlier the Triple A rated IDB printed its first Kangaroo bond under the EYE programme, a social financing platform that aims to promote education, youth and employment.

The proceeds of the A$500m

five-year bond, via ANZ, CBA and JP Morgan, will finance eligible projects in Latin America and the Caribbean.

The 1.95% April 23 2024s priced at 99.929 for a yield of 1.965%, 35bp wide of asset swaps and 50.5bp over the April 2024 ACGB. Pricing was also in line with IDB’s standard Kangaroo curve and its existing EYE US dollar curve.

“The Kangaroo market was chosen for IDB’s first EYE issuance outside of the US dollar market because it offers diversity and volume, underpinned by a rapidly expanding investor base,” said a syndication manager involved in the transaction.

The fourth biennial review by the Global Sustainable Investment Alliance released on April 2 showed Australasia has the world’s highest uptake of responsible investing, with

63% of total assets under management across Australia and New Zealand following a responsible investment approach.

The Responsible Investment Benchmark Report 2018 previously reported A$866bn of responsible investments under management in Australia as of December 31 2017, ahead of further substantial growth in 2018.

Last week’s two trades take this year’s ESG issuance in Australia to A$3.24bn following the record A$1bn five-year SSA Green Kangaroo by Asian Development Bank, a A$1.25bn Green five-year from Queensland Treasury Corp and A$90.9m of Green ABS originated by Flexigroup.

Green, Social and Sustainable issuance from Australia, including Aussie dollar deals and Australian credit bond sales offshore, reached A$8.4bn-equivalent in 2018 from 11 issuers in the state government, banking, education, SSA and consumer lending sectors.

Japan greets first 50-year bond Bonds Mitsubishi Estate pushes boundaries as yield curve flattens

BY TAKAHIRO OKAMOTO

Japanese property developer MITSUBISHI ESTATE took the yen bond market into uncharted territory last week with the first 50-year senior bond.

Mitsubishi Estate, rated A2/A+/AA– (Moody’s/S&P/R&I), sold ¥15bn (US$134m) of 50-year bonds on Friday, tapping into growing demand for duration in low-rate Japan.

The ultra-long maturity breaks new ground in the yen market, where even the government has yet to go beyond a 40-year tenor. Only hybrid securities have priced with longer maturities, but the shorter call dates and subordinated structures are not directly comparable.

Coming in the wake of a flattening in the Japanese government yield curve, the deal attracted investors looking to extend the duration of their portfolios and allowed the issuer to lock in cheap funding for longer.

Since 50-year JGBs do not exist, market participants were keen to see how the bonds would price. While there are many complicated ways to extrapolate the yield curve, a banker on the deal explained that arrangers had simply used the compound yields on the current 30 and 40-year JGBs to estimate the 50-year level.

The bonds priced at a compound yield of 1.132%, or 54bp over a hypothetical

0.592% 50-year JGB yield (based on the 30-year yield of 0.518% and 40-year of 0.551%).

That was a pleasant surprise for the issuer, as the yield came below that of two of the three 40-year bonds Mitsubishi Estate issued in 2016, 2017 and 2018.

Demand also exceeded expectations. The inital target, when Mitsubishi Estate started sounding out investors at mid-50bp on April 8, was around ¥10bn. The size was raised to ¥11bn when marketing started at 54bp–55bp on April 10, and the books ultimately slightly exceeded ¥15bn.

The banker on the deal declined to disclose which types of investors, or how many, had participated. Three sources

suspected the bonds were bought by life insurers, especially foreign ones, who they think need to extend the duration of their portfolios as yen rates have shown no sign of going higher.

“If you simply seek yield, all you need to do is buy [much shorter-dated] bail-in-able bonds or subordinated bonds issued by banks,” said a bond investor at a major domestic insurance company. “So, yield hunt is probably not the reason.”

The spread between 30 and 40-year JGB yields has been tightening since the beginning of the year and has even accelerated since early April. On a simple yield basis, the spread had narrowed to a mere 0.5bp as of Friday.

Nomura was the bookrunner on the deal, underwriting ¥13bn, with SMBC Nikko and Mitsubishi UFJ Morgan Stanley taking ¥1bn each.


For daily news stories visit www.ifrasia.com

Japan's postman rings thrice Equities Up to US$12bn stake on offer in last of three mega-sales

BY CANDY CHAN

The Japanese government has set the ball rolling on its third and final mammoth sell-down in the country’s postal and financial giant JAPAN POST

HOLDINGS in a deal which could be worth around US$12bn.

The Finance Ministry last Tuesday invited banks to bid for a role in the share sale, which is expected to hit the market as early as this autumn.

The sell-down will be the government’s last disposal in JP Holdings. Since it is required by law to hold at least a one-third stake, there is a high chance that it will look to cut its stake from the current 56.9% to 33.3%.

Based on JP Holdings’ market capitalisation of ¥5.61trn (US$50.5bn) as of last Thursday, selling a 23.6% stake will be worth around US$12bn. At that size, the deal is likely to be the largest equity offering in Asia Pacific this year.

JP Holdings shares dropped to an all-time low of ¥1,200 last Wednesday in reaction to the potential sale. Despite rebounding to ¥1,248 a day later, the stock is still well below the 2015 IPO price of ¥1,400 and the government’s latest sell-down price of ¥1,322 in 2017.

A sell-down at the current prices will not please investors who bought into the company at IPO and in the 2017 follow-on, but bankers believe this will not discourage the government from proceeding with the sale.

“Banks will have to present the best size, method and timing to launch the deal,” said one ECM banker.

Banks have until April 19 to apply, and a round of interviews will take place by May 8. The MoF plans to select four bookrunners for the domestic tranche and two bookrunners for the international tranche.

The sell-down is expected to be similar to the 2017 follow-on led by Daiwa, Goldman Sachs and Nomura.

“It would be a big event. There will likely be oversupply of stocks in the market when the share sale comes,” said another banker.

“As the process moves forward and with more certainty on the timeline, (other) issuers will have a better idea not to launch their deals neck and neck with the government’s,” the banker said.

The first ECM banker, however, does not expect the JP Holdings sell-down to distort the market as issuers generally are cash-rich and the pipeline for capital raisings this year is light.

The government took in US$12bn from a three-pronged listing of JP Holdings and its subsidiaries Japan Post Bank and Japan Post Insurance in November 2015. It then raised US$11.5bn in 2017 from a

follow-on share offering in JP Holdings.

Ultimately, the state plans to raise a total of US$35bn from the sell-down of its stake in the holding company to one-third, helping fund reconstruction for areas damaged in the 2011 tsunami.

INSURANCE BOOKBUILDSeparately, JP Holdings itself is on track to raise around ¥331bn (US$2.9bn) from part of its stake in JAPAN POST INSURANCE

through a secondary follow-on offering, after retail and institutional books were fully covered last week.

The international portion, at 30% of the total deal size, was covered early last week, and the 67% domestic retail tranche filled ahead of Friday’s close. The 3% for Japanese insitutions was also covered.Bookbuilding finished last Friday. Pricing will be between April 15-17 at a 2%-4% discount to the share price on the day.

News


Shares in JP Insurance fell 1.1% during the four-day bookbuild, underperforming a 0.5% gain in the benchmark Nikkei 225 Index, but are still up 6.3% since it announced the offering on April 4 – mainly because of a ¥100bn buyback.

The sale is attractive to investors because of the company’s strong brand, nationwide franchise and range of insurance products, according to a person close to the deal.

“It is a trusted brand especially for the older population,” said the person.

Based on the closing price on April 10, JP Insurance was valued at an Price/EV of 0.37x, according to the person. Peers Dai-ichi Life, Sony Financial and T&D traded at 0.3x, 0.46x and 0.28x respectively.

The base deal is an offer of up to 130.8m secondary shares, and there is a 15% overallotment option of up to 19.6m shares. That is around 30m down on the original announcement on April 4, after JP Holdings sold some of its shares in the buyback, but still a massive 696 days’ trading, based on average volumes since the start of the year. The original terms proposed the sale of up to 161m shares with an overallotment option of up to 24m shares.

The sale is expected to cut the stake held by parent JP Holdings to about 66% from 89% before the announcement.

JP Insurance said the deal would advance the privatisation of Japan’s postal services and lift liquidity in the group’s shares.

Both JP Holdings and JP Insurance are subject to a 180-day lock-up.

Daiwa, JP Morgan and Mitsubishi UFJ Morgan Stanley are the joint global coordinators on the deal, and also international joint bookrunners and lead managers with Bank of America Merrill Lynch.

Daiwa, JP Morgan, Mitsubishi UFJ Morgan Stanley, Mizuho, Monex, Nomura, SBI and SMBC Nikko are on the domestic tranche.

SocGen bags Singapore savings Bonds Competitive funding lures more European banks to local AT1 market

BY KIT YIN BOEY

SOCIETE GENERALE sold its first bank capital deal of the year to a rousing reception in Singapore, burnishing the island state’s reputation as the go-to place for global banks looking to sell subordinated paper.

The French bank, rated A1/A/A, raised S$750m (US$554m) from its first Additional Tier 1 offering in Singapore dollars, pricing a perpetual non-call five at par to yield 6.125%.

The choice of Singapore dollars saved the issuer 50bp–70bp in funding costs compared to a US dollar deal, according to the lead managers.

Uncertainties over whether the European Union would agree to extend the UK’s exit beyond April 12 had no impact on bookbuilding last Tuesday, showing how little the

Brexit issue mattered to local investors. The EU eventually granted an extension to end-October early on Thursday.

SocGen’s significant saving, thanks to a yield-hungry investor community amenable to highly structured bonds, continues a theme that has been running through the Singapore bond market since last year. UBS, which sold S$700m of perpNC5 notes at

5.875% in November, obtained similar benefits.

Banks said market technicals have improved in Singapore since UBS visited at the end of last year. Bank hybrids have all rallied strongly since they were sold in the second half of last year. UBS’s 5.875% notes have tightened to 5%, while HSBC’s 5% AT1 notes, sold in September, have firmed to 4%.

“Singapore is the market for AT1 bonds at the moment, more than the US dollar market where spreads are wider,” said one lead on the deal.

“The arbitrage is a big advantage for European banks at the moment… It is not for all European banks, but for those in need of capitalisation or replacement of capital, it is an opportunity to obtain competitive funding here.”

Another lead manager agreed, adding that there has been an increase in discussions with European banks on AT1 bond offerings, “and we hope to get more off the ground”.

A major appeal for investors is the 6.125% coupon, the highest ever on an AT1 issue in Singapore, though SocGen has little reason to be disappointed as the references used showed the pricing was inside its existing curve.

UBS’s 5.875% AT1 bonds callable 2023 were used as the main reference. The notes were quoted at 5% on Monday, which was 80bp–90bp inside its US dollar curve. SocGen’s outstanding US dollar AT1 notes callable 2023 were at 7.31%, so the same 80bp–90bp differential would imply a yield of 6.25% in Singapore dollars for a shorter 2023 call date.

Investors piled more than S$1.7bn into the book at initial guidance of 6.5% area, and few dropped out after the leads pulled guidance 37.5bp tighter. Final orders were over S$1.55bn from more than 61 accounts.

Private banks bought 81%,

leaving 11% for fund managers and 8% for banks and corporate investors. Singapore accounted for 85% of the deal, with others taking 15%.

Demand was less impressive in Australia two days later when SocGen immediately

followed its Singapore deal with a A$300m 15-year non-call 10 Tier 2 that priced flat to guidance at 4.5%. The deal pulled in A$390m of orders at final terms.

SocGen’s first Singapore AT1 is its second bank capital deal in Singapore, following a S$425m 10NC5 Tier 2 at 4.3% in May 2016.

The deeply subordinated AT1 bond, expected to be rated Ba2/BB+ by Moody’s/S&P, will have a 5.125% CET1 temporary write-down trigger. The coupon will reset in year five to the prevailing Singapore dollar SOR plus the initial credit spread of 420.7bp. There is no step-up. Settlement is on April 16.

SocGen was global coordinator and sole structuring adviser as well as joint bookrunner with DBS, Standard Chartered Bank and UOB.



SocGen’s significant saving, thanks to a yield-hungry investor community amenable to highly structured bonds, continues a theme that has been running through the Singapore bond market since last year.

“Singapore is the market for AT1 bonds at the moment, more than the US dollar market where spreads are wider. The arbitrage is a big advantage for European banks at the moment ‘… It is not for all European banks, but for those in need of capitalisation or replacement of capital, it is an opportunity to obtain competitive funding here.”

NBFCs target dollar funding Bonds Shadow banks look at offshore markets as domestic credit squeeze continues

BY KRISHNA MERCHANT

India’s non-banking financial companies are lining up US dollar bond issues to take advantage of tight spreads in the offshore market and falling hedging costs, as domestic funding remains tight.

The queue of potential deals will test foreign demand for the sector in the wake of last year’s default at Infrastructure Leasing & Financial Services, and bankers said that smaller NBFCs may struggle to get any deals done.

SHRIRAM TRANSPORT FINANCE, which priced a US$400m three-year debut in February, started meeting investors in New York, Boston and Los Angeles last week to return with a

benchmark 144A/Reg S senior secured dollar bond.

BAJAJ FINANCE, HERO FINCORP, PIRAMAL CAPITAL AND HOUSING

FINANCE and MAHINDRA AND

MAHINDRA FINANCIAL SERVICES are all understood to have had talks with banks ahead of potential dollar debuts, according to DCM bankers.

“All non-banking financial companies are trying to access the dollar debt market,” said Shantanu Sahai, head of debt finance and DCM for India at Nomura.

“In the pecking order, NBFCs of large business groups will be able to raise funds from offshore dollar bonds/loans first, followed by private equity-owned NBFCs,” he said. “The second phase of NBFCs might

start with smaller sizes like US$100m–$200m as they want a degree of certainty that the deal will go through.”

Sahai expects a sustained pipeline because of low interest rates offshore, decent appetite among global investors seeking returns in emerging markets, low rupee hedging costs and expectations the rupee may appreciate further.

Hedging costs for Indian companies have dropped by 60bp–70bp after the Reserve Bank of India announced on March 16 that it would conduct long-term forex swaps to increase liquidity. The RBI will hold a second US$5bn forex swap auction on April 23 after it completed the first one on March 26.

“It is a perfect time for any company to borrow from the dollar bond market,” said a credit analyst from a foreign bank. “The market is hot right now.”

Some market participants are cautious about lower-rated NBFCs, however, with Shriram Transport’s swift return raising questions. “Investors would rather see companies establish themselves in the capital markets gradually,” said a second credit analyst.

Some fund managers feel the pricing of recent high-yield issues has not reflected the underlying credit risk.

“Shriram’s bonds are currently trading at expensive levels to what we would deem as fair value,” said Dhiraj Bajaj, head of Asia credit at Lombard Odier. “Most of the similar Asian high-yield credits, especially from Indonesia and China, are trading at around 7% levels.”

Shriram Transport’s 2022

MAP re-activates Indonesian ECM Equities Share sale boosts liquidity while Malaysian deals struggle

BY S ANURADHA

MAP AKTIF ADIPERKASA (MAP Active) wrapped up a Rp4.2trn (US$298m) re-IPO in Indonesia last week, reviving major share sales in the country at a time when other floats in South-East Asia are facing challenges.

Montage, a subsidiary of funds advised by CVC Asia Pacific, sold 648.5m shares, representing 22.8% of the sports goods retailer’s capital, at the bottom of a Rp6,500–Rp7,750 range. Before the sale, CVC owned 29.5% of the company.

“The backing of CVC, a presence in the right sector and the positive economic outlook for Indonesia have worked in its favour,” a banker on the deal said.

A reasonable valuation also helped attract investors given the lack of ECM activity in Indonesia and the impending April 17 elections. There have been no major IPOs since last

May, when a falling currency and stock market drove away investors. Things are beginning to look up, however, with the Jakarta Stock Exchange Composite Index up 3.8% year

to date and the rupiah up 6.9% from its October lows.

Banks had visibility on the book at launch with demand coming firmly at the lower end of the range.

“The bankers wanted to push investors higher on the range but they [investors] backed away,” a banker away from the deal said.

The final price translates to a 2019 P/E of 20.2x. Regional speciality retailers trade in the high 20s and low 30s.

LOWER VALUATIONS

IPO investors are becoming more price-sensitive in South-East Asia, as QSR BRANDS, another CVC-backed issuer, found out. The Malaysia-based KFC and Pizza Hut franchisee decided to defer its IPO of up to US$500m, even though the deal was only at the pre-marketing stage, when investors indicated they were not comfortable with the valuation. The company was targeting a 2019 P/E multiple of 25 but investors were only interested below 20, especially after QSR’s recent weak first-quarter earnings.

Books were scheduled to

open in late April.Citigroup, Credit Suisse,

Maybank and RHB are global coordinators, and bookrunners with Affin Hwang, AmInvestment Bank, CIMB and CLSA.

Meanwhile, poultry breeder LEONG HUP INTERNATIONAL is banking on cornerstone investors to bankroll a downsized US$250m Malaysian IPO it is marketing at a 2019 P/E multiple of 20.

The company is likely to sell almost the entire institutional tranche, excluding the portion reserved for investors approved by the Ministry of International Trade and Industry Malaysia, to cornerstone investors.

“A cornerstone tranche of more than 50% is not a good sign. It just shows lack of confidence in building the book,” a Hong Kong-based ECM banker said.

Pre-marketing is currently under way and books are scheduled to open in the third

News


“The backing of CVC, a presence in the right sector and the positive economic outlook for Indonesia have worked in [MAP Active’s] favour.”

week of April.The company was originally

looking at an IPO of up to US$600m, but poor stock market conditions in Asia have led to lower valuations.

Credit Suisse, Maybank and RHB are joint global coordinators and bookrunners with AmInvest, DBS, Hong Leong, HSBC and OCBC.

PIPELINE BUILDING

In Indonesia, the IPO pipeline is slowly building. State-owned port terminal operator PELABUHAN TANJONG PRIOK is planning to launch a US$100m–$200m IPO to the third quarter. The company had originally planned the issue for April but wants the general elections to be over before launching.

Copper and gold miner AMMAN MINERAL NUSA TENGGARA is planning a US$500m–$600m IPO later this year or next year. Healthcare company SOHO GLOBAL and JAKARTA EYE CENTRE are also planning IPOs this year but the offer sizes have not yet been disclosed.

For MAP Active, around 50 accounts, comprising international long-only

institutions and local investors, participated in the transaction with the top 15 accounts allocated around 80% of the deal. The majority of the investors were foreigners.

The company floated in Jakarta in July 2018, selling a 15% stake in an all-primary deal to raise Rp898bn at Rp2,100 a share. CVC did not sell shares at the time, prefering to hold out for better market conditions.

As well as providing an exit route at more than three times the IPO price, the secondary offering will improve liquidity in the stock.

MAP Active is a unit of Jakarta-listed Mitra Adiperkasa, which runs the Topshop, Marks & Spencer, Sogo and Seibu department stores in Indonesia.

It has over 850 shops in Indonesia selling sports and children’s goods. The company sells over 50 local and international brands such as Adidas, Converse, Levi’s, Hasbro, Reebok and Timex.

Deutsche Bank and UBS were the joint global coordinators and bookrunners with Credit Suisse and Indo Premier Securities.

Evergrande sails through HY crowd

Bonds Latest high-yield benchmark takes 2019 proceeds to

US$5.6bn

BY FRANCES YOON, CAROL CHAN

CHINA EVERGRANDE GROUP raised a further US$2bn in a crowded high-yield bond market last Monday, highlighting the depth of demand for big, liquid deals at near double-digit yields.

The B1/B+ (Moody’s/S&P) rated developer priced a US$1.25bn 9.5% three-year, a US$450m 10.0% four-year non-call two and a US$300m 10.5% five-year non-call three, all at par.

The bonds, which priced in line with final guidance, held above reoffer in secondary trading, even as the market digested a deluge of primary deals, including Saudi Aramco’s US$12bn offering.

The three tranches were bid at 100.125, 100.513 and 101.275 on Tradeweb on Thursday, with the smallest tranche outperforming.

That was a marked contrast to the poor early performance of Evergrande’s new issues in 2018, when it drew criticism for pricing deals that were too big for the weaker market to absorb.

A banker on the deal said that the announcement of a capped US$2bn deal size and the early release of final guidance added an extra touch of transparency to the deal, catering to investor feedback that asked for more clarity on deal sizes.

Evergrande is one of China’s most frequent offshore issuers, and has now raised US$5.6bn from overseas investors since the beginning of the year.

“People realise that this is the behemoth of China property, and they cannot be ignored,” said the banker. “Their bonds are so liquid, and it’s really a case of investing in Evergrande as a proxy to China property, as opposed to looking at it as an individual risk play.”

The banker said he was surprised to see international institutional investors, including

those in Europe, place chunky orders even with the competing supply. Friends and family appetite was also said to have come via private bank orders.

Order books were said to have peaked at US$3bn.

“Sunac was also in the market. With both issues offering some new issue premium, Evergrande decided to go straight with final guidance and enough premium to attract investors,” said another banker on the deal. Sunac China sold US$750m of 4.5-year non-call 2.5 bonds on Monday.

Evergrande’s orders from bookrunners, including interest from friends and family, were around US$1bn, the second banker said. He also stressed that Evergrande Chairman Hui Ka Yan did not buy the bonds this time, unlike an offering in October last year in which he supported more than half the deal.

The banker said that of the three tranches, the five-year non-call three tranche was the most generous, with an estimated 50bp–60bp of new issue premium.

As in Evergrande’s previous deals, however, the company’s outstanding bonds had sold off heavily as rumours of a deal hit the market. The 8.25% March 2022s – a higly liquid US$2bn benchmark maturing just three weeks ahead of the new 9.5% notes – had been quoted at 7.92% on March 22, and were bid around 9.1% when the new issue finally emerged.

The new Reg S notes have expected ratings of B2/B (Moody’s/S&P).

Credit Suisse, Bank of China, CEB International, Haitong International and UBS were joint global coordinators, joint lead managers and joint bookrunners.

Bank of America Merrill Lynch was added to this list after the marketing of the bonds began.



dollar notes were trading at a cash price of 100.5 to yield 5.51% last Thursday, according to Refinitiv data. The three-year notes were issued at par to yield 5.7% in February.

Analysts at DBS and Emkay expect Shriram Transport Finance to deliver growth of 10%–12% over the medium to long term, much slower than what it used to be, according to an April 9 research note.

ONSHORE SQUEEZE

NBFCs are still facing higher funding costs in the domestic market. Local AAA rated NBFCs pay around 121bp over government securities, compared with 80bp before IL&FS defaulted, according to Jefferies. Domestic banks are already heavily exposed to the sector, which accounts for around 7%-8% of their total loan books, and are already huge buyers of their securitised

portfolios, said Karthik Srinivasan, group head of financial sector ratings at Icra.

The shift to the dollar market, however, comes with risks attached.

“With tighter onshore and commercial paper markets for the sector, these companies are keen to have longer debt maturity profiles and new lenders,” said Bajaj.

“If the dollar funding route shuts for NBFCs because of a sell-off in the high-yield market, first-time issuers may find it difficult to refinance because they do not have diversified funding sources.”

At the same time, some NBFCs are still tapping the domestic market, with SREI

INFRASTRUCTURE FINANCE, MUTHOOT

HOMEFIN INDIA, L&T FINANCE, SHRIRAM

CITY UNION FINANCE and MAGMA

FINCORP lining up public bond issues totalling Rs30.50bn (US$440m).

Indian Samurai market fizzles Loans Long-term loans find few takers after recent Japanese borrowing spree

BY CHIEN MI WONG, WAKAKO SATO

Indian companies are finding it harder to raise yen-denominated Samurai loans as Japanese lenders show signs of fatigue after a borrowing spree targeting Japan’s low borrowing rates and abundant bank liquidity.

Top firms from the sub-Continent have raised US$2.65bn of Samurai loans in the last 18 months, mostly at maturities of seven years or more, to reduce borrowing costs and extend maturities, but appetite for the deals is waning.

“Everyone has had enough of Indian Samurai deals,” said a

Tokyo-based senior banker said.NTPC, India’s largest power

utility, started the rush for Samurai loans in late 2017, but its second visit in early April was tougher. Only Aozora Bank joined its US$300m-equivalent 10-year Samurai loan in general syndication.

In March, state-owned POWER

GRID CORP OF INDIA also drew a weak response to its debut ¥22bn (US$201m) 12-year term loan, the longest maturity seen on a Samurai loan to date. Only Aozora and Bank of Yokohama committed to the deal in general syndication.

Both deals point to a slowdown in Samurai loans as Japanese lenders struggle with

Indian country limits.“We are asking regional

banks to expand their country limits for India but it is not so easy,” the Tokyo-based senior banker said.

As a result, POWER FINANCE CORP and INDIAN RAILWAY FINANCE CORP have postponed syndication of loans totalling US$450m indefinitely.

Japan’s four megabanks prefunded a five-year US$150m-equivalent Samurai loan for Power Finance Corp and a US$300m-equivalent seven-year deal for IRFC, but general syndication is now on hold.

The next test of demand is likely to come from privately-owned Indian conglomerate

Reliance Industries, which is currently testing the market with a US$2.25bn deal.

The deal includes tranches totaling ¥55.5bn and pays all-in pricing of 88.5bp and 91.5bp based on interest margins of 72.5bp and 75.5bp over yen Libor, with average lives of 5.25 and 5.5 years respectively. (See India Syndicated loans.)

“There is some sense of fatigue,” a Singapore-based loans banker said. “We will have to time the launch of future transactions properly to ensure we will be able to draw liquidity and close a successful deal.”

LONG TENORS LANGUISH

Japanese lenders continue to seek overseas assets in search of higher returns, but tightly-priced loans with long 10-year

Mongolian Mining lifts burden Bonds Coal miner takes out restrictive covenants, lengthens maturity

BY DANIEL STANTON

MONGOLIAN MINING CORP has turned the page on its 2017 debt restructuring with a new issue and bond tender that lifted onerous covenants and freed up cashflow.

After pricing a US$440m unsecured new issue on April 3, MMC wrapped up a tender issue last week that will take out almost all of its senior secured bonds.

The response beat the issuer’s expectations, allowing it to take advantage of surging demand for high-yield debt to give it more flexibility.

“We considered a bond exchange in the beginning, driven by factors including market conditions, since the market was quite choppy at that time and we thought a new issue might be difficult,” said Ulemj Baskhuu, chief financial officer at Mongolian Mining Corp.

The coking coal miner defaulted on its debt, including

US$600m of offshore bonds, in 2016. The following year it came to an agreement with creditors, which included issuing dollar-denominated senior secured bonds and perpetual securities.

Since then, a recovery in the the price of coking coal and rebound in MMC’s secured bonds left it in a position to return to the offshore bond market and take out debt with restrictive covenants.

MMC priced US$440m of five-year non-call three senior unsecured bonds at par to yield 9.25%, via bookrunners JP Morgan and Morgan Stanley, which also managed the tender.

Price guidance started at 9.5% area, before tightening to 9.375% area on the way to a final order book of over US$740m.

The 144A/Reg S notes have expected ratings of B–/B (S&P/Fitch) and will be issued by MMC and its wholly owned subsidiary Energy Resources.

The final yield meant that MMC’s new five-year non-call three issue priced inside the secondary yield of 9.3% for like-rated Mongolian Mortgage Corp’s three-year bonds sold in March. It then jumped a point in secondary trading.

SWITCH AND SAVE

The new issue funded a tender offer for MMC’s US$412.5m senior secured bonds due 2022 and US$195m perpetual bonds. At the same time, MMC ran a consent solicitation to amend the senior notes, eliminating some covenants, restrictive provisions and events of default.

MMC accepted around US$397.8m in principal amount of senior secured bonds under the tender offer, equal to 96.46%, and US$23.9m of perps, it said on Tuesday. It will pay US$1,050 per US$1,000 of senior bonds and US$510 per US$1,000 of perps, so the total cash outlay, including accrued interest, is a little over

US$430m. Holders of around 50% of the old bonds chose to roll into the new issue.

“It was a fantastic result,” said Florian Schmidt, founder of Frontier Strategies, which advised MMC. “The objectives of the company were achieved, terming out their debt into a new five-year maturity and releasing the hard collateral they had posted for the restructured notes, relaxing ultra-tight covenants and effectively eliminating the cash sweep.

“Investors got paid a fair net present value of the cash sweep premium, and in addition they get assurance of a cash coupon, instead of a PIK toggle linked to the coal price.”

CASH SWEEP

Price discovery for the tender was a complex process because the senior secured bonds came with contingent value rights and could be repaid by a cash sweep mechanism depending on the company’s performance

News


– a component that was hard to value because investors had to calculate the probability of it paying out over the remaining life of the bonds. Nomura’s sales and trading desk wrote that since MMC had generated free cashflow in 2018 and was growing its cash balance, it expected the company to start paying the cash sweep premium from this year.

The issuer initially offered to pay US$1,010 per US$1,000 in principal amount for the senior bonds, including a US$50 early bird premium, but raised the offer after hearing bondholders’ feedback. On March 25, MMC announced that holders of US$303.176m, or 73.5%, of the senior bonds had agreed to participate in the tender, after raising the offer price by US$40 per US$1,000.

It was not possible to speak to major bondholders about the tender terms before the announcement, as that would have meant wall-crossing them and preventing them from trading the bonds. As three or four investors held the majority of the bonds, trading would

have ground to a halt.That concentration was also

one of the reasons for doing the tender, which gave existing bondholders an opportunity to exit if they wanted.

“By doing this exercise, we also wanted diversification,” said MMC’s Baskhuu. “We appreciate our investors, but the restructured bonds have been very illiquid and some investors complained they couldn’t get hold of the bonds.”

The handful of outstanding 2022s will still be eligible for the cash sweep.

There is a benefit to having some of the senior secured bonds outstanding: if all of them had been taken out, the coupon on the perps would have stepped up to 10%, from zero at present.

The outcome of the new issue and bond tender leaves MMC able to build up its cash reserves.

“We don’t have any major capex investment required, we don’t have major payment obligations and loans that need to be refinanced, so we are comfortable and don’t expect to raise funds in the near future,” said Baskh.

BOC back with biggest BRI bond

Bonds Fifth Silk Road deal bolsters confidence in China’s infrastructure initiative

BY CAROL CHAN, FRANCES YOON

BANK OF CHINA signalled ongoing support for China’s Belt and Road Initiative on Wednesday with its fifth ‘Silk Road bond’, raising US$3.8bn-equivalent across five currencies and eight tranches.

State-owned BOC, rated A1/A/A, sold Reg S senior bonds in US dollars, euros, Australian dollars, offshore renminbi and Hong Kong dollars through five branches, ranging from Sydney to Luxembourg.

The deal is the largest multi-currency offering from a financial institution in Asia Pacific so far this year, and the biggest international bond from any bank in Asia ex-Japan. It is also the biggest offshore senior deal on record from a Chinese commercial bank.

“Launching eight tranches in five currencies and coordinating with five branches simultaneously was challenging. We’ve worked from around 6am yesterday until around 4am this morning. But overall the deal went through smoothly and the robust order book also showed the strong support from investors,” said a banker on the deal.

The response to BOC’s fifth Silk Road bond comes as a vote of confidence in China’s massive infrastructure initiative.

Demand for the deal was also helped by the thin supply of senior bonds from Chinese banks this year, robust market conditions and BOC’s sound credit profile, which allowed the bank to price all the tranches inside its secondary curve. (See China Debt capital markets.)

BOC claims to have extended over US$130bn of credit to BRI countries and worked on over 600 major projects from 2015 to 2018. It first issued Silk Road bonds in June 2015, raising

US$3.55bn-equivalent in US dollars, euros, Singapore dollars and offshore renminbi, and followed up with multi-currency deals in April 2017 and April 2018, as well as a US dollar issue in May 2017.

BOC’s Hong Kong branch sold a US$550m 3.125% five-year and US$300m 3.625% 10-year at Treasuries plus 88bp and 120bp, respectively, well inside initial guidance of 120bp area and 160bp area.

The 10-year dollar tranche priced at the tightest spread for a 10-year Reg S deal from a Chinese bank, according to a second banker. The 40bp tightening from initial guidance relected the small issue size, with final orders more than six times the final print. The tranche was also the first 10-year note offering from a Chinese commercial bank since March 2018.

The Hong Kong branch also sold HK$6bn (US$765m) of 2.45% two-year notes at par, 25bp inside initial guidance of 2.70% area. This is the largest Hong Kong dollar deal from a Chinese commercial bank.

BOC also through Luxembourg branch sold US$500m three-year floating-rate note at three-month Libor plus 72bp and the Frankfurt branch sold €500m (US$564m) 0.25% three-year senior note at mid-swaps plus 48bp.

The Sydney branch issued A$600m (US$430m) of 3.5-year floating-rate notes at three-month BBSW plus 100bp.

The Macau branch issued Rmb2.5bn (US$372m) 3.10% one-year and Rmb2bn 3.30% three-year offshore renminbi notes.

The bonds, to be issued off the bank’s US$40bn MTN programme, all have expected ratings of A1/A/A, on par with BOC.



plus tenors are losing their appeal.

“The 10-year tenor is too long and pricing is no longer attractive,” a banker at a Japanese regional bank said.

India’s state owned companies have enthusiastically embraced long-term fundraising in Japan’s cheap and highly liquid loan market. Tightening cross-currency swaps and pent-up demand for higher-yielding assets also opened a window for international borrowers to save on their funding costs.

Power Grid’s 12-year loan is the longest unsecured Samurai loan for an Indian company. The deal offered top-level all-in pricing of 110.8bp based on an interest margin of 98bp over yen Libor and an average life of 9.75 years.

NTPC’s latest deal pays top-

level pricing of 114.5bp based on a margin of 102bp and weighted average remaining life of 10 years.

The company’s ¥39.42bn (then US$370m) 10-year Samurai loan of April 2018 previously had the longest tenor, and attracted eight banks in general syndication.

The strong response to that loan contrasts with the weak response to NTPC’s current loan, despite a 10bp uplift in pricing.

The yen-denominated loan had the minimum 10-year tenor required to raise funds via offshore debt in compliance with the Reserve Bank of India’s external commercial borrowing rules at the time. The RBI lowered its minimum maturity requirement for most borrowers to five years in December 2018.

People&Markets

Citi loses Asia Pacific CEOUS bank’s president Jamie Forese also steps downCITIGROUP

Francisco Aristeguieta,

Tim Monger

Jamie Forese

Paco Ybarra

LATAM BEGINNINGS

OTHER DEPARTURES

THOMAS BLOTT


TOP STORY PEOPLE MOVES

Who’s moving where...

JP MORGAN has

selected Takenori Yoneda to head up

corporate banking in

Japan after Takasuke

Sekine left the US

bank earlier this year.

Yoneda has been

with JP Morgan since

2011, where he has

focused on coverage

of Japanese corporate

clients in South-East

Asia, India, China and

Australia.

Yoneda previously

worked at Sumitomo

Mitsui Banking

Corporation.

He will take up his

new role on June

1 and reports to

Oliver Brinkmann,

Asia Pacific head of

corporate banking,

and Steve Rinoie,

senior country officer

for Japan.

Soon Jin Lim, head

of structuring for

South-East Asia, India

and Australia in the

Asia Pacific financing

group at CREDIT SUISSE,

is leaving the bank.

Lim’s departure is

the third in recent

weeks from Credit

Suisse’s APAC

financing group. In

mid-March, Juliet

Siette, a director

with responsibility

for hedge funds

and institutional

investor sales, and

Jinzi Huang, a vice

president with

responsibility for loan

syndication, mainly

for Greater China,

resigned. Both were

based in Hong Kong.

A Credit Suisse

spokesperson

declined to comment.

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StanChart fined US$1.1bn for Iran breachesSTANDARD CHARTERED

ROCKY RIDE

STEVE SLATER

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DEUTSCHE BANK has

hired Jennifer Scott-Gray from Westpac

Banking Corporation

to head up

transaction banking

in Australia.

Based in Sydney, she

will report to Anthony

Miller, Deutsche’s

Australia CEO, and

David Lynne, head

of fixed income and

currencies and head

of global transaction

banking for Asia

Pacific. She is due to

start in May.

Scott-Gray was

previously global

head of trade finance

sales as well as

global head of trade

finance for Australia

at Westpac. She

previously worked at

Citigroup and BNY

Mellon.

Flavian Sim, a

former loans banker

with BNP Paribas,

has joined NATIONAL

BANK OF KUWAIT

as vice president

for corporate and

institutional banking.

Sim started work

last week in

Singapore and

reports to Michael

Lim, assistant

general manager

for corporate and

institutional banking.

Around a year ago,

Sim left BNP Paribas

after a 15-year

stint, where he was

managing director in

loan capital markets

origination, with

responsibility for

Singapore, South

Korea, Vietnam and

other South-East

Asian countries.

“The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.”


People&Markets

JP Morgan, Nomura plot different JV pathsJP MORGAN and NOMURA

SIMILAR PARTNERS

capital position so it makes sense to start

THOMAS BLOTT

Please send job moves to [email protected]

BAML announces shake-up in Australia, JapanBANK OF AMERICA MERRILL LYNCH

Joe Fayyad

James Barrett-Lennard

Tamao Sasada

Reiko Hayashi

THOMAS BLOTT


BNP Paribas loses senior bankers in Asia

BNP PARIBAS

Cho-teng Kooi Ashish Bali and Karen Heng

Wayne Green

Corina Tong

PRAKASH CHAKRAVARTI, APPLE LAM

CS names APAC trading solutions headCREDIT SUISSE Yves-Alain Sommerhalder

Carsten Stoehr

Ken Pang

Soon Jin Lim

THOMAS BLOTT


People&Markets

IN BRIEFMitsubishi UFJ Financial GroupGlobal markets restructuring

MITSUBISHI UFJ FINANCIAL GROUP is considering

scaling back its bond and equity sales and

trading operations in London and New York

as part of a broader restructuring of its global

markets division, Reuters reported citing two

sources.

MUFG, Japan’s biggest bank by assets, will also

overhaul its Japanese equity business at home

and overseas.

MUFG has yet to finalise the plans, the sources

said, declining to be identified because the

information was not yet public. The size of

the likely reductions was not clear. It was also

unclear how many people are employed in the

affected divisions.

A representative for MUFG said the bank was

progressing in its structural reform plans but

declined to comment further.

The bank aims to redeploy staff elsewhere,

avoiding a material reduction in headcount, the

sources said.

Under its mid-term plan announced last year,

MUFG has been focused on strengthening its

global markets business, which offers bonds,

stocks, currencies and derivative sales and

trading to institutional and corporate clients.

It has been working to bring the group, which

falls under its core banking unit, under the same

management as its Mitsubishi UFJ Morgan

Stanley Securities joint venture and build its

global presence.

However, MUFG’s ambitions have been stymied

by tough competition from US and European

banks and, particularly for bond trading, a

difficult market after years of low interest rates.

VietnamS&P raises sovereign rating one notch

S&P said on April 5 it had raised VIETNAM’s

sovereign credit rating to BB from BB–. It

maintained its stable outlook.

The US rating agency cited strong economic

growth, improvements in the government’s

institutional framework, growing foreign

direct investment inflows and a manageable

external debt burden as reasons for the

upgrade.

S&P’s upgrade brings its issuer rating for

Vietnam in line with that of Fitch and one notch

higher than that of Moody’s.

Last August, Moody’s raised the Vietnam’s

sovereign credit rating to Ba3 from B1 with a

stable outlook.

Last May, Fitch raised the country’s sovereign

rating to BB from BB–. The outlook is also

stable.

Regulators eye changes to derivatives rules

COMMODITY

FUTURES TRADING COMMISSION

CHRIS WHITTALL


COUNTRY REPORT Australia 17 China 19 Hong Kong 30 India 33 Indonesia 36 Japan 37 Malaysia 38

New Zealand 38 Philippines 39 Singapore 40 South Korea 42 Taiwan 42 Thailand 43

AUSTRALIA

DEBT CAPITAL MARKETS

› AMP PRINTS UNDERWHELMING SWISSIE

Troubled Australian financial AMP GROUP, rated A2/A– (Moody’s/S&P), returned to the Swiss market on April 3 with a SFr140m (US$140m) 0.8% 4.25-year senior unsecured bond issue via Credit Suisse and UBS.

The leads were unable to move on from initial mid-swaps plus 125bp–130bp guidance before pricing at the tight end of the range for a sizeable new issue concession of 15bp–20bp over AMP’s 0.75% December 19 2022 bond.

AMP Group raised SFr110m from the original sale of December 2022s in June 2018. This priced 85bp wide of mid-swaps having met some pushback from Swiss investors given the offering’s initial 65bp–70bp soundings.

The bond was subsequently tapped for SFr50m in September last year, also with a 85bp mid-swaps margin.

Swiss investors were allotted all of the new bond with asset managers taking 42.5%, private banks 30%, insurance companies 11.8%, bank treasuries 9.7%, pension funds 5.8% and corporates 0.2%.

AMP has struggled to get domestic and offshore bond deals away as investor baulk at the financial group’s prominent role in Australia’s financial scandals.

AMP Group finally got a US dollar deal over the line on March 7, but it had to pay up for a modest-sized, short-dated single note rather than the dual-tranche offering that was abruptly pulled eight days earlier.

AMP sold a revived US$300m 2.5-year Reg S bond after a planned accompanying five-year note was withdrawn when S&P cut the issuer’s rating from A to A– on March l, while maintaining the credit’s negative outlook.

AMP, a non-profit life insurer and mutual society before it was demutualised in 1998, is widely seen as the biggest casualty of the Royal Commission inquiry in terms of lost business, reputation and management fallout.

› SUNCORP NAVIGATES BUSY MARKET

Leading non-major bank SUNCORP-METWAY (A1/A+/A+) returned to the US market for the first time in 17 months last Monday with a well received US$500m 144A/Reg S

five-year sale via Citigroup, HSBC, JP Morgan and RBC Capital Markets.

Despite a glut of competing supply, Suncorp attracted a sizeable US$1.2bn order book, which allowed the leads to move on from 120bp area initial price thoughts and price the 3.3% April 15 2024s at Treasuries plus 103bp.

This represented a 5bp new issue concession over Suncorp’s 2.8% May 2022s and was around 15bp-20bp back of Aa3/AA–/AA– rated Australian major bank secondary levels.

It was also close to the high 90s area where a A1/AA–/AA– rated New Zealand major would currently come, according to syndication desks.

Suncorp previously visited the 144A market in November 2017 with a US$500m 2.375% three-year note. This priced at Treasuries plus 68bp, or around 18bp wide of major Australian bank secondary levels.

› VW AUSTRALIA ENGINEERS A$500M DEAL

VOLKSWAGEN FINANCIAL SERVICES AUSTRALIA, rated A3/BBB+ (Moody’s/S&P), issued a chunky A$500m four-year senior unsecured bond last Wednesday arranged by joint lead managers Mizuho and TD Securities.

The 3.1% April 17 2023s priced at 99.935 for a yield of 3.1175%, inside 160bp area guidance at asset swaps plus 155bp.

The regular issuer raised A$350m last August from a sale of 3.5-year medium-term notes having printed a A$400m three-year note four months earlier.

› GERMAN AGENCIES RAISE A$200M

Two triple A rated German government-guaranteed agencies raised a combined A$200m from the Kangaroo market last week, with both trades arranged by sole lead Nomura.

On Monday, RENTENBANK tapped its 3.25% April 12 2028 bond for A$50m to increase the size of the line to A$955m.

The reopening priced at 107.296 to yield 2.346%, 41bp wide of asset swaps and 49.5bp over the May 2028 ACGB.

Two days later KFW added A$150m to the now A$1.7bn 4.0% February 2025 line. This priced at 110.591 for a yield of 2.0725%, 41bp and 47.75bp wide of asset swaps and the April 2025 ACGB.

› QUEBEC OPENS 10-YEAR LINE

The PROVINCE OF QUEBEC (Aa2/AA–/AA–) priced an upsized A$100m 10-year Kangaroo bond

last Thursday via RBC Capital Markets and TD Securities.

The 2.6% October 18 2029s priced at 99.317 to yield 2.675%, equivalent to 62bp over semi-quarterly asset swaps and 80bp over the November 2029 ACGB.

The deal was increased from a minimum size of A$65m.

› SOCGEN TIER 2 NETS A$300M

SOCIETE GENERALE (A1/A/A) raised A$300m from a 15-year non-call 10 subordinated Tier 2 note sale last Thursday off the bank’s EMTN programme.

The subordinated note, which is expected to be rated Baa3/BBB/A–, pays a 4.5% coupon and priced at par, equivalent to a 10-year mid-swaps spread of 245.4bp.

Societe Generale was global coordinator and joint bookrunner with ANZ, Nomura and TD Securities.

STRUCTURED FINANCE

› LA TROBE SELLS EIGHTH RMBS

Non-bank lender LA TROBE FINANCIAL sold its eighth non-conforming RMBS last Thursday, the A$750m (US$535m) LA TROBE

FINANCIAL CAPITAL MARKETS TRUST 2019-1, whose size was increased from an indicative A$500m.

Macquarie was arranger and joint lead manager with CBA, HSBC, NAB, Natixis and UOB.

The A$135m Class A1S and A$90m Class A2S notes with 0.33 and 1.30-year WALs were pre-placed at one-month BBSW plus 85bp and 185bp.

The A$390m A1L and A$38.25m A2L notes, with 2.72 and 3.98-year WALs priced 142bp and 220bp wide of one-month BBSW.

The A$30.75m Class B, A$24.75m Class C and A$17.25m Class D, all with 3.65-year WALs, priced 245bp, 330bp and 425bp over one-month BBSW.

The retained A$11.25m Class E and A$6.75m Class F notes, with 2.83 and 4.02-year WALs, priced at one-month BBSW plus 630bp and 800bp.

The structure was completed by A$6m of equity notes.

The Class A1 and A2 notes have 30% and 12.9% credit support. The Class B to F notes have 8.8%, 5.5%, 3.2%, 1.7% and 0.8% support, respectively.

La Trobe issued its previous non-conforming RMBS last November, a no-


grow A$750m offering through La Trobe Financial Capital Markets Trust 2018-2.

The Class A1L notes of La Trobe’s new RMBS paid 2bp more than the A1L notes sold five months ago while the new Class B, C, D and E note spreads came 10bp, 20bp, 15bp and 15bp wider than their equivalent tranches.

› AFG UPSIZES PRIME ISSUE

AUSTRALIAN FINANCE GROUP issued its seventh prime RMBS offering on April 5, the upsized A$500m AFG 2019-1 TRUST.

NAB was arranger and joint lead manager with ANZ and UOB for the securitisation, which had an indicative size of A$350m.

The A$95m Class A1 and A$355m Class A2 notes, with 0.4 and 3.1-year WALs, priced inside initial 85bp–95bp area and 130bp area guidance at one-month BBSW plus 83bp and 128bp.

The A$32.5m Class AB, A$7m Class B,

A$5.5m Class C and A$2.25m Class D notes, all with 4.4-year WALs, priced 215bp, 250bp, 310bp and 400bp wide of one-month BBSW versus respective guidance in the 220bp, 250bp. low 300bp and 400bp areas.

Pricing was not disclosed for the A$1.25m Class E notes, while the transaction was completed by A$1.5m of retained Class F notes.

The non-bank lender previously accessed the market in June 2018 with a A$350m AFG 2018-1 Trust prime RMBS issue.

The 2018-1 Trust Class A1, Class A2, Class AB, Class B, Class C and Class E notes priced 70bp, 120bp, 175bp, 195bp, 290bp and 390bp wide of one-month BBSW or 13bp, 8bp, 40bp, 55bp, 20bp and 10bp tighter than the latest equivalent tranches.

› PRIME PEPPER SELLS A$750M

Non-bank mortgage lender PEPPER GROUP returned to the RMBS market last Thursday

with a capped A$750m-equivalent dual-currency issue through PEPPER I-PRIME 2019-1.

NAB was arranger and joint lead manager with CBA and Standard Chartered Bank for the Australian dollar tranches and joint lead with Citigroup for the US dollar note.

The A$225m Class A1a and US$266.5m Class A1-ul notes with 2.6 and 1.0-year WALs priced at one-month BBSW plus 135bp and three-month Libor plus 35bp, respectively.

The A$90m Class A2, A$18.5m Class B, A$15.5m Class C, A$10.5m Class D, A$7m Class E and A$4.5m Class F notes priced 210bp, 235bp, 300bp, 400bp, 600bp and 750bp wide of one-month BBSW.

The A$4m Class G notes were retained.The A1 notes have 20% credit support

while the Class A2 to F notes have 8%, 5.53%, 3.47%, 2.07%, 1.13% and 0.53% support, respectively.

The new Class A1a note priced 5bp wide

Aussie RMBS spree continues Structured Finance Mortgage specialists step up funding despite house-price fall

Australian mortgage lenders continue to

enjoy easy access to the securitisation market

despite concerns over falling house prices

and surging supply, with only junior RMBS

tranches commanding higher spreads.

The lighter-regulated non-bank sector has

dominated the Australian RMBS market in

2019, in part because of slower credit growth

among the country’s major banks in the wake

of the Royal Commission.

So far this year five non-banks have raised

A$4.3bn (US$3.1bn) from seven prime

and non-conforming RMBS, including two

A$750m offerings last week from PEPPER and

LA TROBE.

Two more firms, LIBERTY and RESIMAC, are

currently in the market with plans to raise

A$700m and A$730m, respectively.

In stark contrast there has been only one

bank issue in 2019 – Westpac’s jumbo A$3bn

funding-only print – with nothing from

regional or mutual banks that have access

to alternative sources of funding through

deposits and senior and covered bond

issuance.

“Securitisations are most non-banks’

primary funding tool which they have been

actively accessing following a slow start

to 2019 as Australian issuers adjusted

to meet new European regulations

introduced on January 1,” said Sarah

Samson, head of securitisation at National

Australia Bank.

HOUSE PRICE PAIN

The latest spike in supply has met little

pushback from investors, despite concerns that

non-banks are expanding their share of the

mortgage market at a time when house prices

have started to decline after years of gains.

Prices are down 9.3% nationally from

the peak in 2017, according to Moody’s, and

the rating agency sees more pain ahead,

especially in Sydney and Melbourne where it

now forecasts 9.3% and 11.4% falls in 2019

compared to the 3.3% and 6% reductions

predicted in January.

“We have seen a flurry of pre-Easter issues

that have gone well with many oversubscribed

and upsized deals where senior notes often

priced inside guidance,” Samson said.

Senior notes remain supported by a

reliable and sizeable bid from bank balance

sheet managers looking for a Triple A rated,

repo-eligible asset that offers a bit of juice.

The state of the housing market, however,

has created more caution among real money

investors in subordinated RMBS tranches –

as last week’s deals illustrate.

The Class A1L notes within La Trobe’s

non-conforming RMBS paid 142bp over one-

month BBSW, just 2bp more than the same

tranche last November, while the Pepper

I-Prime 2019-1 Class A1a note priced at 130bp

or 5bp more than last October’s Pepper

I-Prime 2018-2 sale.

There was more price movement in the

sub tranches with La Trobe’s new Class

B, C, D and E note spreads coming 10bp,

20bp, 15bp and 20bp wider than its previous

offering at 245bp, 330bp, 425bp and 630bp,

respectively.

The new Pepper A2, B, C, D, E, F notes

priced at 210bp, 235bp, 300bp, 400bp,

600bp and 750bp over bank bills or 25bp,

15bp, 25bp, 25bp, 25bp and 75bp more than

the equivalent spreads six months earlier.

ARREARS STAY LOW

Analysts see little risk of further widening

unless falling house prices translate into a

surge of missed mortgage payments. So far,

arrears remain stable and low in comparison

to global peers with prime home-loan arrears

of just 1.45% in January, according to S&P.

Arrears – and, ultimately, mortgage

defaults – are expected to stay low in the

absence of any spike in unemployment and/

or rising interest rates, neither of which

seems likely.

The jobless rate has fallen to an eight-year

low of 4.9% while the next Reserve Bank of

Australia rate move is now predicted to be

downwards.

“RMBS investors are well protected from a

loss perspective while most portfolios tend to

be well diversified across the country and not

solely focused on Sydney and Melbourne,”

Samson said.

JOHN WEAVERS


COUNTRY REPORT CHINA

of last October’s Pepper I-Prime 2018-2 sale.The new A2, B, C, D, E, F notes paid 25bp,

15bp, 25bp, 25bp, 25bp and 75bp more than the equivalent spreads six months earlier.

SYNDICATED LOANS

› PERSEUS SIGNS LOAN FOR GOLD MINE

Australian gold miner PERSEUS MINING has signed a term sheet for a US$150m loan from three banks to fund its Yaoure Gold Mine in West Africa, the company said last Monday.

The US$150m revolving cash facility is from Macquarie Bank, Nedbank and Societe Generale.

The interest on the loan will vary with the company’s leverage and is initially set at 425bp over Libor.

The company declined to provide details on the tenor of the loan.

The estimated capital cost for developing the gold mine is US$265m and will be funded from the loan, US$80m of cash and bullion on hand, additional contributions from future operational cash flows and up to US$40m in proceeds from exercising of warrants maturing on April 19.

The funding is subject to Perseus being granted with the exploration permit from the government of Cote d’Ivoire, which is expected to be considered on Wednesday, and final board approval.

Besides the Yaoure Gold Project in central Cote d’Ivoire, Perseus has one other gold mine in operation – the Sissingue Gold Project – and has licences for exploring Mahale, Mbengue and Napie.

The company plans to begin full-scale development of the Yaoure Gold project in late April, and expects first gold production in December 2020. In January, it awarded an engineering and supply contract to Lycopodium for US$95.1m.

Perseus had US$44.5m of existing debt with Macquarie Bank as of March 31 2019.

› SAMSON TAPS MORE EXPENSIVE REFI

SAMSON OIL & GAS has raised US$33.5m through a much more expensive loan to refinance an existing facility with a covenant breach since December 2016, the company said in a statement.

AEP I FINCO LLC, a unit of US-based middle-market lender Anvil Energy Partners, is providing the five-year loan to Samson Oil & Gas.

The interest margin on the new loan is 1,050bp over Libor, far higher than the 600bp margin on the US$23.9m facility from Mutual of Omaha Bank that was refinanced.

Samson Oil & Gas first reported the breach on general and administrative covenants on the old loan in early 2017 and managed to win an extension of its maturity to October 2018 from October 2017. Mutual of Omaha Bank did not take any action against the borrower despite a forbearance agreement between the two expiring on January 15 this year.

› AMP CAPITAL TAPS CLUB FOR ANU BUY

AMP CAPITAL is raising about A$600m (US$426m) from a club of at least 10 banks for its acquisition of the Australian National University’s student accommodation concession.

The loan has a tenor of seven years and offers 130bp–135bp over BBSY.

The 10 banks are ANZ, Agricultural Bank of China, Bank of China, Hana Bank, Industrial & Commercial Bank of China, ING Bank, KEB HANA Bank, MUFG, National Australia Bank and Sumitomo Mitsui Banking Corp.

AMP Capital said last week that two of its funds – AMP Capital Diversified Infrastructure Trust and AMP Capital Core Infrastructure Fund – are buying the ANU’s student accommodation concession in a transaction valued at over A$700m.

The deal includes a 34-year concession for over 4,184 beds across 10 residences on the ANU campus in Canberra. The concession was originally established in 2016 and includes existing long-term outsourced facilities and management arrangements, while the ANU retains responsibility for operations.

AMP is buying the concession from equal owners Infratil and Commonwealth Superannuation Corp.

The deal is expected to be completed in mid-April.

› GWA ADDS A$25M TO REVOLVER

Building fixtures supplier GWA GROUP has added A$25m to an existing three-year syndicated revolving credit facility to fund its acquisition of METHVEN, the company said last Wednesday.

The expiry date of the original A$225m facility is October 2020.

GWA paid A$112m to buy all of the shares in Methven. The acquisition was announced in December and was completed Wednesday.

Following the acquisition, GWA expects its net debt to Ebitda to be around 1.6x.

As of December 31, Methven had drawn NZ$30.8m (US$21m) from two loans from Bank of New Zealand for NZ$30m and £2.5m (US$3.2m) respectively and maturing in July 2021.

EQUITY CAPITAL MARKETS

› READYTECH TO RAISE A$50M FROM IPO

READYTECH, an Australian maker of educational and payroll software, is set to raise A$50m (US$35.6m) from an ASX IPO after downsizing the deal from an earlier proposal of up to A$98.5m.

At A$50m, the float will be the biggest Australian IPO so far this year.

The deal, which now comprises 11.3m new shares and 21.9m secondary shares, is being marketed at A$1.51 a share. The offer price translates to a 2019 forecast EV/Ebitda of 10.9 and a market capitalisation of A$121m.

The original terms were A$17m of primary shares and A$73m–$82m of secondary shares in an indicative price range of A$1.90–$2.54 apiece.

ReadyTech’s owner, private equity firm Pemba Capital Partners, will keep a stake of about 43.2% after the IPO.

ReadyTech CEO Marc Washbourne will cut his stake from 7.3% to 5% post IPO.

Trading in the shares will start on April 23.

ReadyTech operates four software-as-a-service platforms in areas such as predictive analytics and behavioural science. It has over 3,600 clients in the education and employment sectors, according to the company’s website.

Macquarie Capital and Wilsons Corporate Finance are lead managers on the float.

CHINA


› 21VIANET FUNDS TENDER

21VIANET GROUP last Tuesday priced US$300m of 2.5-year senior unsecured bonds to fund a tender offer, drawing orders of over US$1.4bn.

The new issue priced at 99.722 with a coupon of 7.875% to yield 8.000%, inside initial guidance of 8.5% area.

Asian accounts bought 96% of the new Reg S bonds and European accounts 4%. By investor type, asset managers and fund managers took 92%, banks 5%, private banks and corporates a combined 2%, and insurers 1%.

The Reg S benchmark bonds are expected to be rated B1/B+/B+, in line with the issuer.

Credit Suisse and Barclays were joint global coordinators. They were also joint


bookrunners with Orient Securities (Hong Kong).

The Chinese internet data centre services provider will use part of the proceeds to refinance offshore debt, including funding a cash tender for its US$300m 7.0% notes due August 17 2020. The issuer accepted US$150.839m of bonds under the offer and will pay US$1,006.25 per US$1,000 in principal amount.

CS and Barclays were also dealer managers for the tender offer.

State-owned science park operator Tus-Holdings, which is controlled by Tsinghua University, held a 21.4% stake in Nasdaq-listed 21Vianet and 51.0% of its voting rights at the end of December.

› FANTASIA RAISES US$200M

FANTASIA HOLDINGS GROUP, rated B2/B (Moody’s/S&P), has raised US$200m from a bond offering for debt refinancing and general corporate purposes.

The Hong Kong-listed Chinese real estate company priced the 11.750% three-year non-call two senior notes at 98.472 to yield 12.375%, the tight end of final guidance of 12.375%-12.500% and inside initial guidance of 12.625% area.

The Reg S issue has expected ratings of B3/B (Moody’s/S&P).

UBS, Barclays, CMBC Capital, Guotai Junan International and Haitong International were joint global coordinators as well as joint

lead managers and joint bookrunners with China Everbright Bank Hong Kong branch, CMB International and Deutsche Bank.

› FITCH FLAGS YUHUANG REFI RISK

Fitch said last Thursday that SHANDONG

YUHUANG CHEMICAL faces a heightened refinancing risk on its onshore and offshore bonds that mature later this year and early in 2020.

The Chinese chemicals producer has Rmb1.5bn (US$223m) of onshore bonds that will be due or put by bondholders between May and December 2019 and US$300m 6.625% offshore bonds due in March 2020. But the credit rating agency said

BOC prints eight-tranche BRI bond Bonds Five-currency offering draws strong demand across all tranches

BANK OF CHINA, rated A1/A/A, sold US$3.8bn-

equivalent of Reg S senior bonds in US

dollars, euros, Australian dollars, offshore

renminbi and Hong Kong dollars through five

branches last week to support projects under

China’s Belt and Road Initiative. ( See News.)

The lender’s Hong Kong branch sold a

US$550m 3.125% five-year and US$300m

3.625% 10-year at Treasuries plus 88bp

and 120bp, respectively, well inside initial

guidance of 120bp area and 160bp area.

BOC, Citigroup, Credit Agricole, Mizuho Securities, China Construction Bank (Asia), ICBC, JP Morgan, MUFG, Scotiabank and

UBS were joint lead managers and joint

bookrunners.

The five-year tranche attracted final orders

of over US$1.8bn from 55 investors. Asia took

97% of the notes and Europe 3%. By investor

type, 84% went to banks and 16% to asset

managers and fund managers.

Final orders for the 10-year tranche

exceeded US$2bn from 54 accounts.

Geographically, 93% went to Asia and 7% to

Europe. By investor type, 57% went to banks,

19% to central banks, sovereign wealth funds

and insurance, and 24% to asset managers

and fund managers.

The 10-year dollar tranche priced at the

tightest spread for a 10-year Reg S deal

from a Chinese bank, according to a banker.

The 40bp tightening from initial guidance

reflected the small issue size, with final

orders more than six times the final print.

The Hong Kong branch also sold HK$6bn

(US$765m) of 2.45% two-year notes at par,

25bp inside initial guidance of 2.70% area.

This is the largest Hong Kong dollar deal

from a Chinese commercial bank.

Final orders for the tranche passed

HK$9.3bn from 48 buyers. Asia took 99% of

the notes and offshore US 1%. By investor

type, 63% went to banks, 25% to central

banks, 11% to funds and insurance, and 1% to

private banks.

BOC, Citigroup, Bank of Communications,

Commonwealth Bank of Australia, ICBC,

Nomura and Wells Fargo Securities were joint

lead managers and joint bookrunners.

DIVERSE DEMAND

Meanwhile, the Luxembourg branch priced

a US$500m three-year floating-rate note at

three-month Libor plus 72bp, inside initial

95bp area guidance. BOC, Citigroup, Credit Agricole, Mizuho Securities, Bank of America Merrill Lynch, Commerzbank and ING were

joint lead managers and joint bookrunners.

Final orders for this tranche were over

US$2bn from 50 investors. Geographically,

85% went to Asia, 13% to Europe and 2%

to offshore US. By investor type, 57% went

to banks, 29% to central banks, sovereign

wealth funds and insurance, and 14% to asset

managers and fund managers.

The Frankfurt branch raised €500m

(US$564m) from a 0.25% three-year senior

note at mid-swaps plus 48bp, inside initial

70bp area guidance. BOC, Citigroup, BNP Paribas, Commerzbank, Deutsche Bank, LBBW

and UniCredit were joint lead managers and

joint bookrunners. Books were said to have

hit €1.8bn at final spread, excluding interest

from leads. European investors took up 83%

of the bonds.

The Sydney branch priced A$600m

(US$430m) 3.5-year floating-rate notes

at three-month BBSW plus 100bp, inside

initial 104bp area guidance. BOC, Citigroup,

ANZ, Commonwealth Bank of Australia and

Macquarie Bank were joint lead managers

and joint bookrunners.

Final books were over A$1bn from 49

investors. Australia took 78% of the notes

and Asia 22%. By investor type, 90% were

bank balance sheets, 5% middle market and

private banks, 3% asset managers, and 2%

trading and hedge funds.

The Macau branch issued Rmb2.5bn

(US$372m) 3.10% one-year and Rmb2bn

3.30% three-year offshore renminbi notes,

both at par and 30bp inside initial guidance

of 3.40% area and 3.60% area, respectively.

The issue was the largest credit bond

issuance in the Dim Sum bond market since

China’s exchange rate regime reform in

August 2015.

Orders for the one-year tranche finished

at over Rmb3.4bn from 43 investors.

Geographically, 88% went to Asia and 12% to

EMEA. By investor type, 66% went to banks,

16% to funds and insurance, 12% to central

banks, and the rest to private banks.

For the three-year tranche, final orders

exceeded Rmb2.5bn from 38 accounts.

Asia took 67% of the notes, EMEA 31%,

and offshore US 2%. By investor type, 52%

were banks, 32% were funds and insurance

companies, and 16% were private banks and

others.

BOC, Citigroup, China Citic Bank International, China Construction Bank (Asia), Credit Agricole, DBS Bank, HSBC, KGI Asia

and Standard Chartered Bank were joint lead

managers and joint bookrunners on the Dim

Sum tranches.

CAROL CHAN, FRANCES YOON



its liquidity on hand is not enough for its repayment needs, while the bond markets still appear be closed to the company.

Yuhuang has been repaying its maturing onshore bonds with internal cash since a liquidity crisis emerged in mid-2017 at Hongye Chemical Group, with which it has an agreement under which both companies guarantee the other’s bank loans. The rating agency noted that Yuhuang has not been able to tap onshore or offshore debt capital markets since the crisis unfolded at Hongye, which is undergoing a restructuring process.

The chemicals producer’s liquidity on hand will be just enough to cover domestic bond repayments, with little margin for error, Fitch said.

It said that Yuhuang plans to re-tap the onshore bond market in the second half of this year after Hongye’s restructuring is completed. But its ability to raise funds will depend on market conditions and investor sentiment, including how they respond to the restructuring.

It said it is likely to downgrade Yuhuang’s rating if it fails to make progress towards refinancing its offshore US dollar bond by mid-2019 or if its 1H19 free cashflow generation falls short of its expectations.

Fitch currently has a B rating with a negative outlook on Yuhuang.

› TEWOO PLACED ON RATINGS WATCH

Fitch has placed TEWOO GROUP’s BBB issuer rating on rating watch negative to reflect the potential deterioration in the state-owned Chinese commodities trader’s access to funding in the short to medium term.

The action follows media reports that Tewoo is seeking to extend maturities of debt owed to its key lenders to ease a liquidity crunch. The news caused some selling of Tewoo’s US dollar bonds.

Fitch has also placed the BBB ratings on Tewoo’s three outstanding US dollar senior unsecured notes and the BBB– rating on its US$450m 5.80% senior perpetual capital on ratings watch negative.

The rating agency says that Tewoo’s management has informed it that it does not face immediate liquidity needs and no banks have deemed loans to Tewoo as non-performing, and as a result, its business operations remain normal.

However, Fitch notes that even a temporary curtailment of access to liquidity “may disproportionately affect the operations of a commodities trader like Tewoo”. Hence, the ratings watch negative will remain in place until Tewoo “provides satisfactory evidence that its liquidity position has not materially worsened,” Fitch said.

According to Fitch, Tewoo has received reform instructions in early April from the Tianjin State-Owned Assets Supervision and Administration Commission and this will affect some of Tewoo’s subsidiaries. It is currently in the process of separating bank loans for each subsidiary that will be restructured, with terms of the loans currently being renegotiated.

Fitch said it may downgrade Tewoo’s rating if there is evidence that its access to funding has deteriorated and/or there is weaker likelihood of support from Tianjin SASAC.

Tewoo’s 5.80% perp, which had slumped 10 points when the news came out on April 3, were quoted at 73.00/74.00 on April 10 afternoon, according to Refinitiv data. Its 4.50% 2019s were quoted at 90.50/91.00, and its 4.625% 2020s at 88.75/89.25 while its 5.50% 2022s were at 81.001/82.00.

› FOUNDER GROUP PRINTS 3.5-YEAR

PEKING UNIVERSITY FOUNDER GROUP has priced US$300m 3.5-year senior unsecured notes at par to yield 7.45%, tightening from initial guidance of 7.875% area.

Nuoxi Capital is the issuer of the unrated Reg S notes while Founder Group is the guarantor.

The Chinese state-owned conglomerate plans to use the proceeds for general corporate purposes.

Final statistics were not available at the time of writing but orders were said to be over US$1.5bn, including interest from leads, at the time of releasing final guidance.

Founder Securities (Hong Kong) Capital, China International Capital Corp, Barclays, CLSA, DBS Bank, Guotai Junan International, Haitong International and CMBC Capital were joint global coordinators. They were also joint lead managers and joint bookrunners with Central Wealth Securities Investment, Orient Securities (Hong Kong) and China Securities International.

Peking University owns 70% of Founder Group and Beijing Zhaorun Investments Management, a holding company of the group’s employees, controls the remaining 30%. Founder Group has interests in information technology, healthcare and pharmaceuticals, finance and securities, bulk commodities trading, education and training.

› GREENLAND FINANCIAL SELLS 364-DAY

GREENLAND FINANCIAL HOLDINGS GROUP has priced US$200m 364-day senior unsecured notes at par to yield 6.375%, the tight end of final guidance of 6.4% (+/-2.5bp) and well inside initial 6.875% area guidance.

The Reg S unrated notes will be issued by indirect wholly owned subsidiary Lv’an Chuangxing. The bonds will have the benefit of two separate keepwell deeds provided by Greenland Financial Holdings and Greenland Holding Group (Ba1/BB/BB–).

Proceeds will be used for general working capital purposes.

Final statistics were not available at the time of writing but orders were said to be over US$1.2bn at the time final guidance was released.

Hong Kong-listed China Fortune Financial Group said in a stock exchange filing that it has subscribed to US$15.9m of the notes.

Haitong International, HSBC, CMB International and CMBC Capital were joint global coordinators as well as joint lead managers and joint bookrunners with China Industrial Securities International, Orient Securities (Hong Kong), China Securities International, China Citic Bank International and BOSC International.

› HUAI'AN WATER TAPS FOR DOLLAR BOND

HUAI’AN WATER CONSERVANCY HOLDING GROUP, rated BBB– (stable) by Pengyuan International, has hired banks for a proposed offering of US dollar senior unsecured fixed-rate notes, subject to market conditions.

Shenwan Hongyuan HK is sole global coordinator as well as joint lead manager and joint bookrunner with Huatai Financial Holdings (Hong Kong) and Industrial Bank Hong Kong branch.

The issuer, which undertakes water conservancy, greening, and engineering project construction, met investors in Hong Kong and London last week.

The proposed notes have an expected rating of BBB– from Pengyuan International.

› HUAIBEI CITY CONSTRUCTION RETURNS

HUAIBEI CITY CONSTRUCTION INVESTMENT HOLDING

GROUP has priced US$150m three-year credit-enhanced bonds at par to yield 5%, in line with price guidance.

The deal was its second offshore bond offering after last November’s debut US$300m 5.2% three-year bond issue.

The Reg S unrated bonds have the benefit of an irrevocable standby letter of credit to be issued by Huishang Bank, the same structure as last year’s issue.

Proceeds will be used to refinance onshore debt and for other general working capital purposes.

Guotai Junan International was the sole global coordinator and joint bookrunner with Mizuho Securities, Guoyuan Capital and Industrial Bank Hong Kong branch.

Huaibei City Construction is the


investment and financing vehicle for urban development under the State-owned Assets Supervision and Administration Commission of Huaibei city in Anhui province.

› MIE GOES AHEAD WITH EXCHANGE

MIE HOLDINGS is proceeding with a bond exchange offer that will delay an April redemption despite receiving insufficient approval from bondholders.

The company said in an exchange filing that it received valid tenders of US$265,251,000 in aggregate principal amount of the existing notes, representing approximately 84% of the US$315.916m 7.5% bonds.

MIE had said the offer required 90% approval to go ahead with the exchange, which would switch bondholders into new 13.75% senior notes due 2022.

The Chinese oil and gas explorer and producer extended the deadline four times and sweetened the deal in order to reach the required threshold ahead of an April 25 maturity.

It had warned that a failure to reach the approval threshold could prompt it to pursue alternative arrangements that could include a debt restructuring, which could result in bondholders receiving less than they would under the exchange offer.

The company will now issue US$248,394,000 in new notes last Friday, leaving US$50,665,000 in existing notes remaining. Those notes will have to be redeemed on April 25.

MIE had struggled to amass sufficient approvals since the offer was first announced on March 1.

Originally, MIE offered US$100 in cash and US$900 in principal amount of new notes, plus accrued interest, for each US$1,000 of bonds tendered by the early bird deadline of March 15, and US$20 in cash and US$980 in new notes for those who tendered after that but before the offer deadline expired on March 22.

On March 25, MIE extended both deadlines to March 29, meaning that all bondholders who submitted would be given the terms originally offered to those who submitted by the early bird deadline. It also said it would make an offer to buy back up to US$30m of the new notes after completing the sale of a Canadian business.

DF King is information and exchange agent.

› MODERN LAND SETS MINIMUM YIELD

MODERN LAND (CHINA), rated B2/B (Moody’s/Fitch), has announced the tenor and minimum yield for a new US dollar bond

issue, part of an exchange offer for its senior notes due 2019.

The tenor of the new issue is 2.5 years and the minimum yield is 12.85%.

Modern Land has invited holders of its US$500m 6.875% senior notes due October 20 to exchange them at par, plus accrued interest, for new notes. It is also considering raising new money from the offering.

The Hong Kong-listed Chinese developer has set the maximum acceptance amount under the exchange at US$200m, having previously said it would be US$300m.

Any new money raised will be used to refinance bonds, finance acquisitions or development, and for general corporate purposes.

The deadline for the exchange offer is April 16 and settlement is expected on or about April 25.

Credit Suisse, Guotai Junan International and Morgan Stanley are dealer managers and DF King is information and exchange agent for the exchange offer.

Modern Land (China) said the exchange offer would help to extend its debt maturity profile and strengthen its balance sheet and cashflow management.

› PHILIPPINES EYES SECOND PANDA BOND

The Philippines is considering raising up to US$500m in the Chinese domestic market from its second Panda bond issue with tenors of three to five years, National Treasurer Rosalia V. de Leon said.

The issue might come next week or the week after. Bank of China is the lead underwriter, according to people with knowledge of the matter.

The country is awaiting approval from China’s National Association of Financial Market Institutional Investors for the issue.

In March last year, the Philippines sold Rmb1.46bn three-year Panda bonds at 5%.

› REDSUN PAYS DOUBLE DIGITS

REDSUN PROPERTIES GROUP, rated B/B/BB– (S&P/Fitch/Lianhe Global), has raised US$300m from a bond offering for debt refinancing and general corporate purposes.

The 9.95% three-year non-call two senior unsecured notes were priced at 97.071 to yield 11.125%, inside initial guidance of 11.375% area.

The deal drew over US$1.25bn in orders from 61 accounts, including those from the joint lead managers. Asia bought 99% of the notes, and the rest went to European accounts.

By investor type, asset and fund managers and insurers bought 71%, banks and financial institutions 22% and

corporates and private banks 7%.The Reg S issue has expected ratings of B/

BB– (Fitch/Lianhe Global).China International Capital Corp, Barclays,

Credit Suisse and Guotai Junan International were joint global coordinators. They were also joint lead managers and joint bookrunners with UBS, Deutsche Bank, HSBC, Haitong International, CMB International, Bank of East Asia, Orient Securities (Hong Kong), HeungKong Financial and SPDB International.

› SW SECURITIES INTL SELLS NOTES

Hong Kong-listed brokerage SOUTHWEST

SECURITIES INTERNATIONAL SECURITIES has priced US$200m two-year senior unsecured notes at par to yield 6.9%, inside initial guidance of 7.25% area.

The Reg S unrated issue drew final orders of over US$670m from 45 accounts. Asia took 99% of the notes and Europe 1%. By investor type, 75% went to fund managers, 23% to banks and 2% to private banks.

The notes will have the benefit of a keepwell deed provided by Shanghai-listed parent company Southwest Securities, which is indirectly owned by Chongqing SASAC.

Proceeds will be used for offshore debt refinancing and to supplement working capital.

Southwest Securities International, BNP Paribas, Haitong International, CLSA and Standard Chartered Bank were joint global coordinators. They were also joint bookrunners and joint lead managers with BoCom International, China Citic Bank International, China Everbright Bank Hong Kong branch, CMBC Capital, CMB International, Founder Securities (Hong Kong) Capital, Huatai Financial Holdings (Hong Kong), ICBC International and Orient Securities (Hong Kong).

› SUNAC CHINA PRICES SENIOR BONDS

SUNAC CHINA HOLDINGS, rated Ba3/BB–/BB, has priced US$750m senior bonds after drawing over US$1.5bn final orders from 71 accounts.

The 7.95% 4.5-year non-call 2.5 bonds were priced at 98.891 to yield 8.25%, inside initial guidance of 8.50% area.

The Reg S issue has expected ratings of B1/B+/BB.

Asia took 86% of the notes and Europe 14%. By investor type, 50% went to fund managers, 27% to banks and financial institutions, and 23% to private banks.

The Hong Kong-listed Chinese real estate company plans to use the proceeds mainly for debt refinancing.

HSBC, Morgan Stanley, China Citic Bank International, China Industrial Securities International, CMB International, Deutsche Bank,



Guotai Junan International, ICBC International and Nomura were joint global coordinators, joint lead managers and joint bookrunners.

› WUXI CONSTRUCTION PRINTS

WUXI CONSTRUCTION AND DEVELOPMENT INVESTMENT, rated BBB/BBB+ (S&P/Fitch), last Wednesday priced US$300m 4.5% senior unsecured Reg S bonds at 99.723 to yield 4.6%, in line with final guidance.

Orders were over US$3.2bn from 62 accounts, including demand from the leads. Asia took 99% of the Reg S notes and Europe 1%.

By investor type, banks and financial institutions booked a combined 79%, fund managers and sovereign wealth funds a combined 19%, and private banks 2%.

Xihui Haiwai I Investment Holdings is the issuer of the notes, which will carry a guarantee from Wuxi Construction and are expected to be rated BBB+ by Fitch.

Standard Chartered, OCBC, China Minsheng Banking Corp Hong Kong branch, Cinda International, Industrial Bank Hong Kong branch, CNCB HK Capital and Shanghai Pudong Development Bank Hong Kong branch were joint global coordinators. They were also joint bookrunners with BoCom International, Bank of China, Huatai Financial Holdings (Hong Kong), BOSC International and Bank of Communications.

Proceeds will be used to refinance offshore debt.

Wuxi Construction is wholly owned by the Wuxi municipal government and is the main government-related entity that carries out urban infrastructure construction in the city.

› XINYUAN ISSUES TO FUND TENDER

XINYUAN REAL ESTATE, rated B/B (S&P/Fitch), on April 4 priced US$200m of 2.5-year senior unsecured notes at par to yield 14.2%, having tightened from initial price guidance of 14.5% area.

Strong anchor interest was received after meetings last Wednesday, according to leads.

The benchmark Reg S issue has expected ratings of B–/B (S&P/Fitch).

Proceeds will mainly be used to fund a concurrent tender offer to buy back its US$276.6m of 8.125% senior notes due August 30, or other purchases or redemptions of outstanding notes, and for general corporate purposes.

Xinyuan later said it had accepted US$119.989m of bonds under the tender offer. The NYSE-listed Chinese property developer will pay US$1,005 per US$1,000 in principal amount.

UBS, Bank of America Merrill Lynch, Barclays,

Guotai Junan International and Haitong International were global coordinators and bookrunners for the new issue, and dealer-managers for the tender offer.

› YICHANG LGFV SELLS ADDITIONAL BONDS

Chinese local government financing vehicle YICHANG HIGH-TECH INVESTMENT DEVELOPMENT, rated BB+ by Fitch, has reopened its 7.50% senior unsecured notes due December 20 2021 for a tap of US$150m, bringing the total outstanding to US$200m.

It sold the additional bonds at 100.704 to yield 7.2%, inside initial guidance of 7.50% area.

Proceeds from the tap will be used for general corporate purposes.

The original notes were priced at par last December. The Reg S notes are rated BB+ by Fitch.

China Minsheng Banking Corp Hong Kong branch was the sole global coordinator on the reopening. It was also joint lead manager and joint bookrunner with Societe Generale, Haitong International, Huatai Financial Holdings (Hong Kong), Industrial Bank Hong Kong branch and Tensant Securities.

YHID, which is owned by the Yichang municipal government, invests in and builds public works, such as land and urban development, industrial parks and social housing, in the Yichang High-Tech Development Zone in Hubei province.

› YUYAO IN DOLLAR MARKET

YUYAO ECONOMIC DEVELOPMENT ZONE CONSTRUCTION

INVESTMENT AND DEVELOPMENT was last Friday marketing US dollar three-year bonds at initial guidance of 6.2% area.

Final pricing had yet to be announced when IFR went to press.

The unrated Reg S issue was capped at US$100m. Yuyao Shuncai Investment Holding is guaranteeing the senior unsecured bonds.

Guotai Junan International and Haitong Bank were joint global coordinators. They were also joint bookrunners with Giraffe Capital and BOSC International.

Proceeds will be used to refinance existing debt and for onshore project development.

Yuyao Shuncai Investment Holding is the main asset management and capital operation platform of Yuyao municipal government in Zhejiang province, and is directly controlled by Yuyao State-owned Assets Supervision and Administration Commission. The issuer is a wholly owned subsidiary focused on land development and property construction in Yuyao, mainly within the Yuyao Economic Development Zone.

› EVERBRIGHT SECURITIES PLANS CP

EVERBRIGHT SECURITIES is planning a Rmb3bn 90-day commercial paper offering this week, according to a filing on the Shanghai Clearing House.

The paper, to be issued in China’s interbank market, will be available to offshore investors through the Bond Connect link.

The CP is part of a Rmb12bn debt programme the issuer registered with the National Association of Financial Market Institutional Investors.

Proceeds will be used to replenish capital.China Merchants Bank is the lead

underwriter. Bank of China, Industrial and Commercial Bank of China and China Bohai Bank are joint underwriters.

Bookbuilding will take place on April 16 and settlement will be on April 17.

China Chengxin International assigned a AAA rating to the issuer and a A-1 rating to the CP.

› ZHENJIANG CITY ISSUES CP

ZHENJIANG CITY CONSTRUCTION INDUSTRY GROUP, a local government financing vehicle in Jiangsu province, issued Rmb500m 240-day unsecured short-term commercial paper at 4.5% last Monday.

China Everbright Bank is the lead underwriter and lead bookrunner. Bank of Nanjing is joint underwriter.

Proceeds will be used for general corporate purposes and debt repayment.

Shanghai New Century Credit Rating has assigned AA+ to the issuer.

Financing costs for the issuer have fallen 30bp compared with short-term CP of the same maturity issued on February 19, as the market expects China Development Bank to provide some support to the Zhenjiang government to deal with its debt problems, said a Beijing-based manager with a securities company.

China Development Bank has been in talks with the Zhenjiang government on providing loans as cheap as 4.9% per year to help repay debt built up mainly by its LGFVs, according to people familiar with the matter.

SYNDICATED LOANS

› ALIBABA SEEKS PRICING CUT, EXTENSION

Chinese e-commerce giant ALIBABA GROUP is seeking an amendment and extension of its US$4bn five-year bullet term loan signed in May 2016.

Credit Suisse, the sole coordinator of the


A&E exercise, sent invitations to lenders earlier this month.

Alibaba is looking to cut the interest margin to 85bp over Libor, a 25bp reduction from the current margin of 110bp.

Lenders are being offered a 25bp fee for the A&E exercise, which will extend the maturity date by a further five years from the amendment date.

The deadline for responses is April 26.The original facility had 25 lenders,

including the eight original MLABs ANZ, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Mizuho Bank and Morgan Stanley, when it closed syndication in 2016. Citigroup was the facility agent. Lenders were offered a top-level all-in pricing of 123bp based on the margin of 110bp over Libor.

Alibaba’s last visit to the loan market was in May 2017 with a US$5.15bn five-year club loan. ANZ, BNP Paribas, Citigroup, Credit Suisse, DBS Bank, Deutsche, Goldman Sachs, HSBC, ING Bank, JP Morgan, MUFG, Mizuho and Morgan Stanley were the lenders on that deal, which offered an all-in pricing of 102bp based on a margin of 95bp over Libor.

› BOCOM LEASING PAYS TIGHTER MARGIN

BOCOM LEASING MANAGEMENT HONG KONG, a unit of Bank of Communications Financial Leasing, is paying a tighter margin on a US$200m three-year Green loan than on its parent’s onshore US$275m loan currently in the market.

The US$200m bullet term loan pays 100bp over Libor, against 108bp for the paren’ts loan.

Banks have been invited to join as mandated lead arrangers with tickets of US$30m or more for a top-level all-in pricing of 118bp based on an upfront fee of 54bp, as lead arrangers with commitments of US$20m–$29m for an all-in of 115bp through a fee of 45bp and as arrangers with tickets of US$10m–$19m for an all-in of 113bp based on a 39bp fee. Commitments are due by April 26.

Mizuho Bank is the sole MLAB, while BoCom Financial Leasing is providing a keepwell agreement for the Green loan.

The onshore US$275m three-year term loan for the parent pays a higher interest margin of 108bp over Libor and a top-level all-in pricing of 120bp based on a remaining average life of 2.675 years. However, the top-level fee of 32bp is lower. The MLABs on that deal are HSBC, Standard Chartered and Sumitomo Mitsui Banking Corp, and syndication is ongoing.

The US$200m loan will be used in

accordance with BoCom Leasing’s Green Finance Framework. A pre-issuance stage certificate from the Hong Kong Quality Assurance Agency will be obtained prior to the first drawing of the facility.

BoCom Financial Leasing is rated A2 (Moody’s), while both BoCom Financial Leasing and BoCom Leasing Management

› CDB FL UNIT WANTS BIGGER NINJA

METRO EXCEL, a fully owned unit of China Development Bank Financial Leasing, is expected to increase its three-year Ninja loan to US$300m from a US$200m target.

Bank of Communications Tokyo branch has joined as mandated lead arranger and Shinkin Central Bank as a lender. A few more banks are in the process of obtaining internal approvals.

Mizuho Bank is the sole mandated lead arranger and bookrunner of the transaction, which comprises a yen tranche and a US dollar portion.

The all-in pricing is in the low 100s. An investor presentation meeting was held in Tokyo last Tuesday. The deadline for responses is April 25.

Funds are for Metro Excel’s general funding requirements. CDB Financial Leasing is providing a keepwell agreement.

Hong Kong-based Metro Excel is CDB Financial Leasing’s core operating platform for its overseas non-aircraft leasing business.

CDB Financial Leasing is rated A1/A/A+.

› CCB LEASING SEEKS US$300M REFI

CCB LEASING (INTERNATIONAL) CORP has launched an unsecured US$300m three-year bullet term loan.

Funds are for refinancing a bridge loan signed by the borrower on January 24 and for general corporate purposes.

HSBC, Mizuho Bank and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners of the latest financing, which pays an interest margin of 92bp over Libor. CCB Financial Leasing is providing a keepwell deed.

Banks have been invited to join as lead arrangers with commitments of US$50m or more for a top-level all-in pricing of 113bp based on an upfront fee of 63bp, as arrangers with tickets of US$30m–$49m for an all-in of 110bp through a fee or 54bp and as senior managers with US$10m–$29m for an all-in of 105bp based on a 39bp fee.

A bank presentation was held on April 11 in Hong Kong and commitments are due by May 10.

CCB Leasing (International), which is rated A (S&P), is a sister company of the

keepwell provider, which is in turn rated A1/A/A.

Shanghai and Hong Kong-listed China Construction Bank owns both the borrower and the keepwell provider.

› AGILE SEEKS US$200M LOAN

Hong Kong-listed property developer AGILE

GROUP HOLDINGS is seeking a US$200m three-year amortising term loan.

Industrial & Commercial Bank of China Singapore branch is sounding banks on the deal, which is expected to have an average life of 2.5 years.

Last December, Agile raised a HK$1.75bn (then US$224m) three-year term loan from five banks. ICBC Macau was the MLAB of the deal, which paid a top-level all-in pricing of 538bp based on an interest margin of 380bp over Hibor and an average life of 2.65 years.

Agile, which has projects in Hong Kong, cities in China and Kuala Lumpur, is rated Ba3/BB (Moody’s/S&P).

› SINO BIOPHARM SIGNS US$1BN LOAN

Hong Kong-listed pharmaceutical company SINO BIOPHARMACEUTICAL signed a US$1bn three-year term loan on April 9, according to a stock exchange filing.

Change of control covenants require Tse Ping and his family members, Cheng Cheung Ling, and Theresa Y Y Tse and her family members to together remain the largest shareholder, owning at least 35% of the borrower, and Tse Ping to remain a member of the company’s board of directors.

The role of chairman must also be taken up by a family member of Tse Ping or Theresa Y Y Tse. Theresa Y Y Tse is currently chairwoman of Sino Biopharm.

Bank of China (Hong Kong), Bank of Communications Hong Kong branch, Hang Seng Bank and HSBC were the mandated lead arrangers and bookrunners on the deal, which attracted 32 banks in syndication. The top-level all-in pricing was 185bp based on an interest margin of 135bp over Libor and an average life of 2.7 years.

Funds are to refinance a US$300m loan signed in September 2016 and for general corporate purposes.

› CPI RONGHE SIGNS US$232M LOAN

CPI RONGHE FINANCIAL LEASING signed a two-year loan at US$232m with nine lenders last Monday.

BNP Paribas, Sumitomo Mitsui Banking Corp and Westpac were the mandated lead arrangers and bookrunners of the bullet financing, which has a one-year extension option.



The interest margin is 120bp over Libor, but it will step up to 150bp if the one-year extension is exercised. Lenders were offered a top-level all-in pricing of 145bp via a 50bp management fee.

The deal was launched at US$300m on a best-efforts basis.

Funds are for refinancing and general corporate purposes.

The borrower last raised a US$305.6m-equivalent debut loan last November. Deutsche Bank was the MLAB of that financing, which offered a top-level all-in pricing of 150bp based on a margin of 120bp and a 60bp fee.

CPI Ronghe is a subsidiary of SPIC Capital Holdings, which in turn is a fully owned subsidiary of China’s state-owned State Power Investment.

CPI Ronghe is mainly engaged in leasing power and clean-energy equipment.

For full allocations, see www.ifrasia.com.

› AOYUAN SIGNS FOUR-BANK CLUB

Hong Kong-listed property developer CHINA

AOYUAN GROUP signed a three-year term loan at US$164m-equivalent on April 9, according to a stock exchange filing on April 12.

Nanyang Commercial Bank was the coordinator and facility agent. The other lenders are Bank of East Asia, Hang Seng Bank and Industrial Bank.

All lenders are mandated lead arrangers and bookrunners.

The currency splits are HK$1.131bn (US$144m) and US$200m.

The all-in pricing was 555.6bp based on an interest margin of 495bp over Libor or Hibor, an upfront fee of 150bp and an average life of 2.475 years.

Certain subsidiaries of Aoyuan are providing joint and several guarantees.

At least 80% of the funds drawn from the loan must be used for refinancing and

the remainder will be for working capital, capital expenditure and general corporate purposes.

Ownership covenants require Guo Zi Wen and Guo Zi Ning to remain chairman and vice chairman, respectively, of Aoyuan and together to remain the largest shareholder owning at least 40% of the borrower and maintain management control over it.


› AB INBEV NEARS HK FILING

ANHEUSER-BUSCH INBEV, the world’s largest brewer, may apply to the Hong Kong stock exchange as early as this month for a listing of its Asian operations, according to people familiar with the situation.

The company plans to raise at least US$5bn

Twenty-one file for tech board Equities Aspirants plan to raise a combined US$2.5bn from IPOs on new board

Twenty-one more companies filed for IPOs

on the Shanghai tech board between April 4

and April 11, to raise a combined Rmb16.9bn

(US$2.5bn).

BLOOMAGE BIOTECHNOLOGY, which delisted

from the Hong Kong bourse in November

2017, has filed to the Shanghai Stock

Exchange for a proposed Rmb3.2bn

(US$470m) tech board IPO.

The deal is set to be the second largest

proposed float on the new board behind that

of cloud service provider Ucloud Technology,

which plans to raise Rmb4.7bn.

Bloomage, which produces hyaluronic

acid used in medical and skin care products,

is offering 49.6m A-shares, or not less than

10% of its enlarged capital. There is a 15%

greenshoe.

Proceeds will be used to renovate an R&D

centre, build a new production centre in

Tianjin province, and expand the company’s

headquarters in Jinan, Shandong province.

According to its pre-prospectus,

Bloomage’s net profit was Rmb424m in

2018, a 91% increase year on year, on revenue

of Rmb1.26bn.

Huatai United Securities is the sponsor.

VISIONVERA INFORMATION TECHNOLOGY,

a provider of high-definition video

communication products and services, has

filed to the SSE for a proposed tech board

IPO.

The company plans to raise Rmb1.8bn

through an offer of 40.01m A-shares, or 10%

of its enlarged capital.

According to its pre-prospectus, Visionvera’s

net profit was Rmb475m in 2018, up 585%

year on year, on revenue of Rmb1.15bn.

Proceeds will be used to replenish

a reserve fund for development and

technology, to fund three HD video

communication projects and marketing, to

build or rent a new building for headquarters,

and to replenish working capital.

China Securities is the sponsor.

BEIJING ROBOROCK TECHNOLOGY, backed by

Hong Kong-listed Xiaomi, has filed to the

Shanghai Stock Exchange for a proposed

Rmb1.3bn tech board IPO.

The company plans to offer 16.7m

A-shares, or 25% of its enlarged capital.

Roborock Tech designs and develops

intelligent hardware such as smart cleaning

robots and authorises third-party production.

The proceeds will be used on a data

platform, the launch of a new cleaning robot

project, the development of commercial

cleaning robot products, and to replenish

working capital.

Roborock Tech received an investment

from Xiaomi five months after its founding in

July 2014, becoming one of the members of

the so-called Xiaomi ecological chain.

Founder Chang Jin has a 30.99% stake in

the company, followed by Shunwei Capital

and Tianjin Jinmi as the next two largest

shareholders. Shunwei Capital, which was

co-founded by Xiaomi founder Jun Lei, owns

a 12.85% stake, while Tianjin Jinmi, an entity

controlled by Xiaomi, owns 11.85%.

Citic Securities is the sponsor.

SHANGHAI MICROPORT ENDOVASCULAR MEDTECH is

the first tech board aspirant that is a spin-off

of a Hong Kong-listed MICROPORT SCIENTIFIC.

The endovascular devices manufacturer

plans to raise Rmb651m through the offer

of 18m A-shares, or not less than 25% of its

enlarged capital. There is a 15% greenshoe.

Proceeds will be used on two artery related

medical instrument projects, a marketing

network and IT service, and to replenish

working capital.

MicroPort Scientific holds a 62% stake in

the company.

The parent company said it would not give

assured entitlements to the majority of its

shareholders for the proposed spin-off as

they are not classified as qualified investors

for the tech board under Chinese regulations.

Guotai Junan and Huajing Securities are

the joint sponsors of the deal.

As of April 11, within 19 working days

since the tech board started accepting

applications, 65 companies have filed to the

SSE to raise a combined Rmb62bn.

Twenty-seven companies have received

the first enquiries from the SSE on their

applications.

KAREN TIAN, FIONA LAU


before the summer holidays, the people said. The size of the float has not been determined, and will depend on the stake on offer and the valuation of the business.

Banks have pitched for a valuation of as high as US$70bn for the Asia Pacific operations, said the people. Analysts at Jefferies, however, valued the regional business at US$45bn in a report in January. AB InBev said Asia Pacific generated Ebitda of US$3.08bn in 2018, up 12.8% on the previous year. The region accounted for 18% of the group’s business by volume and 14% of its profit.

“The company is likely to sell about a 20% stake so as to raise a meaningful amount of funds to ease its debt burden,” said a banker who pitched for the float.

“In line with our culture, we always look at opportunities to optimise our business and drive long-term growth. There is, however, no decision as to whether we might undertake an IPO or any other potential transaction relating to our Asia Pacific business,” a representative for AB InBev said in a statement. “We are very committed to

our business as a long-term investor in the Asia-Pacific region and remain excited about the potential of this geography.”

Belgium-based AB InBev, the company behind Budweiser, Corona and Stella Artois, had a market capitalisation of €129bn (US$145bn) on Monday. It is looking to deleverage towards an “optimal capital structure” of around 2x net debt to Ebitda, from 4.6x at the end of 2018.

JP Morgan and Morgan Stanley are leading the proposed float.

› SHENWAN HONGYUAN LAUNCHES HK IPO

Chinese brokerage SHENWAN HONGYUAN

GROUP last Thursday started bookbuilding for a Hong Kong IPO of up to HK$9.8bn (US$1.25bn).

The Shenzhen-listed company is selling 2.5bn shares, or 10% of the enlarged share capital, in an indicative range of HK$3.63–$3.93 per share.

The price range represents a 2018 P/B of 1.01–1.08 and a 2019 forecast P/B of 0.91–0.98. It also represents a 41%–45% discount

to the company’s A-share closing price of Rmb5.66 (US$0.84) last Wednesday.

The institutional books have been covered after the first day of bookbuilding, according to people close to the deal.

There is a 15% greenshoe.There are 13 cornerstone investors taking

up a combined US$829m or about 69% of the float based on the mid-point of the price range.

They are ICBC Asset Management Scheme Nominee (US$300m), Huaxia Life Insurance (US$100m), China Life Insurance (Group) (US$80m), China Reinsurance (Group) (US$50m), New China Life Insurance (US$50m), State-Owned Enterprise Structural Adjustment China Merchants Buyout Fund (US$50m), Suning International (US$50m), Sichuan Development (US$49m), Taiping Life Insurance (US$30m), China Saite (HK) (US$30m), Changjiang Pension Insurance (US$20m), Pacific Asset Management (US$10m) and PICC (US$10m).

The deal is scheduled to price on April 18 and the shares will start trading on April 26.

Hollysys tumbles on ADS sale Equities Surprise sale and vague use of proceeds worry investors

Nasdaq-listed HOLLYSYS AUTOMATION

TECHNOLOGIES saw its shares tumble 23% to

US$17.97 last Tuesday after it announced

a follow-on offer of 7.8m new American

depositary shares.

While multiple Chinese companies have

been successfully raising funds in the US on

the back of strong stock markets, Hollysys

left the market perplexed as to why it needs

the money and its plan backfired.

In a research report, JP Morgan cut

the automation systems maker from

“overweight” to “neutral” as the “the

surprising equity issuance plan may cast

doubt on capital discipline”.

It said the proposed issue would lead to a

13% dilution for existing shareholders, and

expressed surprise at the fundraising plan

since Hollysys has an underutilised balance

sheet and decent cash generation.

The company had a net US$240m of

cash on hand at the end of 2018. Its forecast

annual operating cashflow for the financial

year ending in June 2019 is US$120m,

against insignificant capex plans based on

existing guidance, said the report.

In a filing, Hollysys said it planned to use

the proceeds to expand its product offerings,

invest in research and development and

production capacity, broaden its sales

and marketing channels, for potential

acquisitions or investments and other general

corporate uses.

JP Morgan expects the market to react

negatively until further clarity is provided on

the intentions behind the equity raising.

Hollysys shares rebounded 4.3% last

Wednesday.

The deal, which was originally scheduled

to price after the US market closed last

Tuesday, will now price on April 16. There is

also a 15% greenshoe.

Citigroup is the sole bookrunner.

TWO MORE DEALS

Hollysys’s troubles contrast with recent

capital raisings in the US, where investors

have welcomed a string of Chinese follow-

ons and convertible bonds this year.

Another two Chinese companies, HUYA and

BAOZUN, raised a combined US$717m in the

US in the past two weeks.

Last Tuesday, a follow-on in NYSE-listed

game streaming company Huya raised

US$442m. The offer, comprising 18.4m ADSs

(74% primary/26% secondary), was priced at

US$24 per share. NYSE-listed social media

company YY was the seller.

The final price represents a discount of

1.4% to the close of US$24.33 last Tuesday.

There is a 15% greenshoe with the same

primary and secondary split.

Huya raised US$180m from an IPO last

May. As of last Wednesday, the shares were

up 93% from the IPO price.

Citigroup, Credit Suisse, Goldman Sachs

and Jefferies were the joint bookrunners.

Meanwhile, Nasdaq-listed e-commerce

solutions provider Baozun raised US$275m

through a five-year put-three convertible

bond on April 5. The base deal was

US$225m with an upsize option of US$50m

that was fully exercised.

Baozun loaned ADS to bond purchasers to

enable a US$90m delta placement.

The coupon on the CB was fixed at 1.625%

from the 1.375%–1.875% range and the

conversion premium at the bottom of the

30%–35% range. The company will use

the proceeds for working capital and other

general corporate purposes, including debt

repayment and potential acquisitions.

The delta placing comprised 2.25m shares

sold at US$40 each. The placement price

was at a 9.6% discount to the pre-deal close

of US$44.25. The stock loan facility for the

bonds extends to up to 4.23m ADS.

Credit Suisse and Deutsche Bank were the

joint bookrunners.

FIONA LAU



The proceeds will be used to replenish working capital and fund business development.

ABC International, Goldman Sachs, ICBC International and Shenwan Hongyuan HK are the joint sponsors.

› GUOTAI JUNAN SEC BUILDS WAR CHEST

GUOTAI JUNAN SECURITIES has raised HK$3.17bn from an upsized primary share placement in Hong Kong.

The Hong Kong and Shanghai-listed Chinese brokerage sold 194m shares at a fixed price of HK$16.34 per share.

The deal was launched with a base size of 166m shares and an upsize option of 73m share that was partially exercised.

The placement price represents a 7.4% discount to the company’s pre-deal close of HK$17.64 last Tuesday.

Books were comfortably oversubscribed with support from existing shareholders and new investors. There was participation from international long-only funds, hedge funds, family offices and Chinese institutional investors.

There is a 90-day lock-up on the company.Proceeds will be used to supplement the

brokerage’s capital base, replenish working capital and support business development.

Guotai Junan International was the sole global coordinator and joint bookrunner with UBS.

› VIVA BIOTECH PRE-MARKETS IPO

VIVA BIOTECH started pre-marketing for a Hong Kong IPO of about US$200m–$300m last Thursday.

Pre-marketing will run until April 17.The Chinese company provides drug

discovery or incubation services to biotech startups.

According to a regulatory filing, Viva Biotech’s offerings includes research, hit screening, lead optimisation and drug candidate determination. It also makes equity investments in potential biotechnology startups.

As of the end of 2018, it had over 350 early-stage biotechnology and pharmaceutical clients worldwide.

The company posted a profit and total comprehensive income of Rmb91m in 2018, up 19% year on year.

CICC is the sole sponsor.

› YUNJI PRE-MARKETS NASDAQ IPO

Social e-commerce company YUNJI started pre-marketing last Wednesday for a Nasdaq IPO of about US$200m, according to people close to the deal.

Credit Suisse, CICC, JP Morgan and Morgan Stanley are the joint bookrunners.

The company is following in the footsteps of Pinduoduo, a Chinese discount e-commerce site which raised US$1.63bn

from a Nasdaq IPO in July.Founded in 2015, Yunji had more than 23

million buyers on its platform in 2018. Its gross merchandise value was Rmb22.7bn in 2018, up 136% from 2017.

The company posted a net loss of Rmb60m in 2018, compared with a Rmb106m loss in 2017.

Yunji allows registered users to open stores on its systems. The users promote their stores via WeChat and do not have to hold inventory as Yunji handles the supply chain.

› DUIBA PRE-MARKETS HK IPO

DUIBA, a Chinese mobile advertising company, last Monday started pre-marketing a Hong Kong IPO of about US$100m.

Pre-marketing will run until April 18, according to a term-sheet.

Founded in 2014, Duiba is a user management software as a service (“SaaS”) provider for online business and an interactive advertising platform operator in China.

The company posted a loss of Rmb292m in 2018 mainly because of incurred fair value losses on redeemable preference shares. Adjusted profit for the year was Rmb205m, compared with Rmb118m in 2017.

CMB International and HSBC are the joint sponsors.

SZSE questions tech board spin-off Equities Exchange enquiry highlights incomplete regulatory framework

The Shenzhen Stock Exchange has raised

concerns over a company’s plan to spin

off a fast-growing unit for a listing on the

new Shanghai tech board, saying that rules

regarding spin-offs in China are not yet

ready.

Shenzhen-listed printer TUNGKONG said last

Monday that it was considering a separate

listing for wholly owned cloud storage unit

TUNGKONG RUIYUN DATA TECHNOLOGY, with the

Shanghai tech board its preferred venue.

The new board, which was announced

in November by President Xi Jinping to

encourage domestic listings of innovative

companies, has attracted a long list of

IPO candidates since it started accepting

applications last month.

Although the queue includes other

companies with shareholders that are

already listed in China, TungKong is the first

to disclose plans for a spin-off on the new

tech board.

The statement from the company raised

eyebrows as China has not yet issued

regulations covering plans by A-share

companies to spin off a business and list it on

another domestic bourse.

There have been a few cases in which

listed companies have floated a business

on another board, but only after the parents

trimmed their stakes to well under 50%.

The establishment of the Shanghai tech

board has raised expectations that China will

soon allow spin-offs.

The China Securities Regulatory

Commission said in a document on the tech

board in January that “a listed company that

reaches a certain scale can legally spin off its

independent and qualified subsidiaries for a

listing on the tech board”.

But no detailed spin-off rules have been

announced since then.

The Shenzhen Stock Exchange has

asked TungKong to explain its plan for the

subsidiary when there is no clarity yet on the

rules for spin-offs.

The exchange also asked the company

to clarify whether TungKong Ruiyun would

continue to be profitable, whether it would

have a competing relationship with its parent

company and whether it is a core business of

the parent.

In a written response to the stock

exchange last Thursday, TungKong said

the company decided to propose a spin-off

even though rules on spin-offs are not ready

because fast-growing TungKong Ruiyun

Data has continuous funding needs. As such,

getting the unit ready for a listing could help

speed up the spin-off process once rules are

in place.

TungKong’s shares, which rose 2.2% to

Rmb21.80 on Tuesday, fell during the three

subsequent sessions to trade at Rmb20.52

shortly before the close on Friday.

KAREN TIAN, FIONA LAU


› HEBEI HIGHWAY PLANS US$400M IPO

HEBEI HIGHWAY DEVELOPMENT is planning to raise about US$300m–$400m from a Hong Kong IPO this year, according to people close to the deal.

CCB International, CICC and HSBC are leading the transaction.

The company operates and invests in six highways in Hebei. It posted a net profit of Rmb68m for the first half of 2018, up 17.7% year on year. Its total assets stood at Rmb51bn at the end of June last year.

› SO-YOUNG FILES FOR US IPO

SO-YOUNG INTERNATIONAL, a Chinese social network focused on plastic surgery, has filed for a US IPO to raise up to US$150m.

The Beijing-based company, founded in 2013, allows customers to share and rate their cosmetic surgeries through its app and websites and to select cosmetic surgeons to book procedures.

It had over 240 million average monthly viewers in the fourth quarter of 2018 and facilitated medical aesthetic treatment worth Rmb2.1bn last year, according to a filing.

The company posted a net income of Rmb55m in 2018, up from Rmb17m a year before.

So-Young counts Tencent Holdings, CDH Investments, Trustbridge Partners and Apax Partners among its shareholders.

Deutsche Bank and CICC are the underwriters of the float.

› CHINA NEW HIGHER EDUCATION TOPS UP

Hong Kong-listed CHINA NEW HIGHER EDUCATION

GROUP has raised HK$393m from a top-up placement after pricing the deal at HK$3.57 a share.

The company sold 110m primary shares, or 7.1% of the enlarged share capital, at a discount of 9.2% to the pre-deal close of HK$3.93 on April 9.

The deal was marketed in an indicative price range of HK$3.54–$3.64 each.

The books were oversubscribed multiple times with participation from international institutions and existing shareholders. Demand mainly came from Asia.

There is a 60-day lock-up on the company and the top-up vendor.

Proceeds will be used for debt repayment and general corporate purposes.

CLSA is the sole placing agent.

› HANSOH PHARMA RE-FILES HK IPO

HANSOH PHARMACEUTICAL GROUP has refiled an application for a Hong Kong IPO of about US$1bn and aims to list by the summer,

according to people close to the deal.The Chinese drugmaker’s earlier listing

application to the Stock Exchange of Hong Kong was filed in September and has expired.

Hansoh first planned a listing of up to US$1.5bn in 2016 via Morgan Stanley and UBS but it did not proceed with the deal.

The company has 13 main products focusing on the central nervous system, oncology, anti-infectives and diabetes.

The company posted a net profit of Rmb1.9bn last year, up from Rmb1.6bn in 2017.

Hansoh founder Zhong Huijuan and her daughter Sun Yuan own a 78% stake in the company. Zhong is the wife of Sun Piaoyang, who owns a 24% stake in Shanghai-listed Jiangsu Hengrui Medicine, the largest pharmaceutical company in Lianyungang, Jiangsu province.

Citigroup and Morgan Stanley are joint sponsors.

› ZENGAME TECHNOLOGY PRICES IPO

Mobile games developer ZENGAME TECHNOLOGY has raised HK$221m from a Hong Kong IPO after pricing the deal slightly above the mid-point of the indicative price range, according to people close to the deal.

The company sold 180m primary shares, or 18% of the enlarged share capital, at HK$1.23 each, versus the range of HK$1.12–$1.32.

The books were multiple times covered, with participation from long-only, strategic buyers, hedge funds and high-net-worth investors, according to one of the people. There was a good mix of international and domestic investors.

There is an overallotment option of 15% of the base deal.

The shares are slated to be listed on April 16.Cornerstone investors Li Weiwei and Yao Shuobin each committed HK$10m to the deal.

Most of the proceeds will be used to strengthen the company’s R&D and marketing capabilities, as well as to acquire other games businesses and expand into overseas markets. The remainder will be used for general corporate purposes and working capital.

Guotai Junan International is the sole sponsor of the deal.

› ZHONGGU LOGISTICS PLANS IPO

SHANGHAI ZHONGGU LOGISTICS, a container shipping company specialising in the domestic Chinese market, plans to raise Rmb1.5bn from a proposed Shanghai IPO.

The company is offering 81.9m A-shares, or not less than 10% of its enlarged capital.

Proceeds will be used to buy six container ships and more containers.

According to the French research institute Alphaliner, as of December 31 2018, the company ranked 15th in the world and in the top three in China for total shipping capacity.

CICC is the sponsor.

› HYET FILES FOR SHENZHEN IPO

HUNAN YUSSEN ENERGY TECHNOLOGY plans to raise Rmb1bn from a proposed Shenzhen IPO.

The company, which mainly engages in R&D and sales of chemical products based on LPG, plans to issue 28.4m A-shares, or 25% of its enlarged capital.

Proceeds will be used to replenish working capital and add a new chemical production line for its subsidiary, Yussen New Material.

Essence Securities is the sponsor.

› CANSINO BIO EXERCISES GREENSHOE

Chinese vaccine manufacturer CANSINO

BIOLOGICS has fully exercised an overallotment option following its Hong Kong IPO, lifting the total deal size to HK$1.35bn.

CanSino’s share price has almost doubled since its debut on March 28, closing at HK$42.20 last Wednesday, up 92% from the offer price of HK$22.00 a share.

The company fully exercised an overallotment option of 4.45m shares, representing about 7.8% of the base deal, at the issue price of HK$22 apiece. The base deal comprised 57.2m shares.

Tianjin-based CanSino, established in 2009, is developing 15 vaccine candidates in 12 disease areas. It has three near-commercial assets covering meningococcal diseases and the Ebola virus.

CLSA and Morgan Stanley are the sponsors.

› CSRC RESUMES REVIEW OF GYT

The China Securities Regulatory Commission has resumed its review of the proposed A-share IPO of Hong Kong-listed GUANGDONG YUEYUN TRANSPORTATION, according to an announcement from the company.

The review was suspended on February 18 because of an ongoing investigation by the CSRC of Beijing China Enterprise Appraisals, which had provided the company an asset valuation report in 2012.

According to local media reports, China Enterprise allegedly breached securities laws and regulations at the time of the acquisition of Advision Media by Guangdong Guangzhou Daily Media in 2014.

The bus service provider filed for a proposed Shenzhen IPO last September.



It plans to sell 88.9m A-shares to raise Rmb1bn. Citic Securities is the sponsor.

Yueyun Transportation shares closed at HK$3.22 on April 11, up 1.9%.

› THREE IPOS GET CSRC'S FINAL APPROVAL

The China Securities Regulatory Commission has given final IPO approvals to three companies with a combined fundraising target of Rmb2.5bn.

LAKALA PAYMENT, backed by Hong Kong-listed Lenovo Group, has the largest target of the three aspirants. The Chinese third-party payment company aims to raise Rmb1.3bn from a proposed Shenzhen ChiNext IPO by issuing 40.01m A-shares, or 10% of its enlarged capital.

The company cut its fundraising target from Rmb2bn, according to its prospectus.

Proceeds will be used to upgrade online payment channels and offline POS machines.

According to its pre-prospectus, Lakala’s net profit was Rmb606m in 2018 on revenue of Rmb5.7bn. This compares with net profits of Rmb464m and Rmb326m on revenues of Rmb2.8bn and Rmb2.6bn in 2017 and 2016, respectively.

The company is set to conduct pricing consultation on April 10 and 11.

The IPO price of the offer will be announced on April 12 and books will open for a day on April 16.

China Securities is the sponsor.NANJING CHERVON AUTO PRECISION TECHNOLOGY,

an automotive key component manufacturer, and wind turbine producer ZHEJIANG WINDEY plan Shanghai and Shenzhen ChiNext listings to raise Rmb651m and Rmb590m, respectively. CICC and Caitong Securities are their respective sponsors.

› FOUR CLEAR CSRC IPO HEARING

Four out of five companies attending a China Securities Regulatory Commission hearing on April 11 were cleared for A-shares IPOs worth a combined Rmb9.2bn.

The fundraising target of NINGXIA BAOFENG

ENERGY GROUP is the highest among the five.The coal chemicals producer plans to

raise Rmb8bn from a proposed Shanghai IPO, issuing up to 733m A-shares, or not less than 10% of its enlarged capital.

It plans to use Rmb7.4bn of the proceeds to upgrade a coke gasification production unit and Rmb600m to repay bank loans.

Baofeng Energy posted a net profit of Rmb3.7bn in 2018, up 26% from a year earlier, according to a filing.

Its controlling shareholder and chairman of the board Dang Yanbao also controls Hong Kong-listed China Baofeng (International).

Citic Securities is the sponsor.The other three companies which

cleared the hearing are QINGDAO HUICHENG

ENVIRONMENTAL TECHNOLOGY (Rmb348m), SHENZHEN NEW LAND TOOL PLANNING & ARCHITECTURAL

DESIGN (Rmb434m) and GUANGDONG SONGYANG

RECYCLE RESOURCES (Rmb456m). Their sponsors are Zhong De Securities, Haitong Securities and Yingda Securities, respectively.

SUZHOU PLANNING & DESIGN RESEARCH INSTITUTE was rejected at that hearing. It plans to raise Rmb270m from a ChiNext IPO. Soochow Securities is the sponsor.

› YUEXIU REIT EB GOES LOW

Yuexiu Property has raised HK$1.1bn from the sale of a bond exchangeable into shares of YUEXIU REAL ESTATE INVESTMENT TRUST.

The 363-day EB was marketed at a coupon/yield-to-maturity of 1%–2% and exchange premium of 2.5%–5.0%.

It was priced at a 1.875% coupon/yield-to-maturity and a 2.5% exchange premium.

The EB was sold at attractive terms for investors after a few REIT equity-linked deals in Asia Pacific had to be reoffered below par to attract demand.

Two weeks ago, Keppel Real Estate Investment Trust reoffered a S$200m (US$147m) five-year put-three CB at 98.5. In March, ASX-listed REIT Dexus had to reoffer a A$425m (US$302m) issue at 99.

Link REIT, which sold a HK$4bn Green CB a week earlier than Dexus, was believed to have exhausted most of the demand for REIT paper.

“We have too many REIT deals out there that are not working. We need something that works well for the issuers and investors,” said a person close to the Yuexiu deal.

Yuexiu Property needs to trim its position in Yuexiu REIT and an EB with such a low exchange premium basically means a very high chance of conversion. An EB also allows the issuer to offload its position at a premium to market prices.

In an announcement, Yuexiu Property said the EB is an attractive way to dispose of a certain number of units in Yuexiu REIT as it is expected to receive additional units from the REIT in the form of deferred consideration units in connection with the sale of Guangzhou International Finance Center to the REIT in 2012.

The stake which Yuexiu Property, together with its subsidiaries, holds in Yuexiu REIT will be lowered to 30.2% from 36.4% if the EB is fully exchanged.

The books were about three times covered with around 30 investors participating. The top 10 investors took about 75% of the deal.

Credit spread was assumed at 120bp,

stock slippage at 5% and bond floor at 98.8.DBS, HSBC and Nomura were the joint

bookrunners.The EB traded at 100.6/100.8 in the

secondary market last Wednesday.

› CNNP TO LAUNCH SIX-YEAR CB

Shanghai-listed CHINA NATIONAL NUCLEAR POWER plans to issue a six-year convertible bond to raise Rmb7.8bn.

Books will open on April 15.The CB will pay a coupon of 0.2% in year

one before stepping up to 2.0% in year six. The initial conversion price has been set at Rmb6.32, representing a discount of 0.15% to the company’s closing price of Rmb6.33 on April 10.

The CB has a AAA rating from United Ratings.

China National Nuclear Corporation holds a 70.4% stake in the company and has committed to subscribe to Rmb5.4bn or 69% of the CB.

The state-owned company will use the proceeds to expand two nuclear power plants in the coastal provinces of Jiangsu and Fujian.

Its shares closed at Rmb6.33 on April 11, unchanged from the previous day.

Citic Securities is the sponsor of the deal and joint bookrunner with CICC.

› SKYWORTH LAUNCHES SIX-YEAR CB

Shenzhen-listed SKYWORTH DIGITAL plans to open the books for a Rmb1.04bn six-year convertible bond on April 15.

The CB will pay a coupon of 0.4% in year one before stepping up to 4.0% in year six. The initial conversion price has been set at Rmb11.56, representing a discount of 0.3% to the company’s closing price of Rmb11.60 last Wednesday.

The CB has a AA rating from China Chengxin Securities Rating.

The multimedia terminal manufacturer will use the proceeds to upgrade TV terminal and intelligent driving assistance system projects.

Its shares were down 1.38% at Rmb11.44 on Thursday afternoon.

Citic Securities is the sponsor.

› SHENNAN CIRCUITS PLANS SIX-YEAR CB

SHENNAN CIRCUITS, a manufacturer of printed circuit boards, plans to offer a Rmb1.5bn six-year convertible bond.

The Shenzhen-listed company will use the proceeds on a printed circuit board investment project and to replenish working capital.

The CB proposal still needs approval from shareholders.


› XIANHE PLANS SIX-YEAR CB

Chinese paper manufacturer XIANHE has said it plans to issue a Rmb1.25bn six-year convertible bond. The initial conversion price will be not less than the average A-share price in the 20 trading days before the final CB prospectus is issued, it said.

Xianhe produces speciality paper, pulp, paper products, and relevant chemical additives. It will use the proceeds on a new material paper products and to replenish working capital.

The company raised Rmb583m from a Shanghai IPO last April.

The shares of the company opened at Rmb19.19 on April 10, down 2%. The CB proposal needs approval from shareholders.

HONG KONG


› CK HUTCHISON PRINTS DUAL-TRANCHE

Hong Kong conglomerate CK HUTCHISON

HOLDINGS has priced US$1.5bn dual-tranche senior unsecured bonds after drawing

over US$2.8bn final orders.A US$750m 3.250% five-year tranche and

a US$750m 3.625% 10-year tranche were priced at Treasuries plus 95bp and 120bp, respectively, inside initial guidance of 115bp and 145bp area.

The five-year tranche attracted final orders of over US$1.4bn from 90 accounts. Asia took 38% of the notes, the US 40% and Europe 22%. By investor type, 36% went to asset managers and fund managers, 36% to banks, 14% to insurers, pensions and central banks, 12% to corporate treasury, and 2% to private banks.

Final orders for the 10-year tranche were over US$1.4bn from 85 accounts. Asia took 36% of the notes, the US 34% and Europe 30%. By investor type, 45% went to asset managers and fund managers, 13% to banks, 38% to insurers, pensions and central banks, 3% to corporate treasury, and 1% to private banks.

CK Hutchison International (19) Limited is the issuer and the Hong Kong-listed parent company is the guarantor.

The 144A/Reg S issue has expected ratings of A2/A/A–, on par with the guarantor.

Proceeds will be used for debt refinancing and general corporate purposes, including capital expenditure.

Citigroup, Credit Agricole, Goldman Sachs,

Mizuho Securities and Morgan Stanley were joint bookrunners.

› IFC DEVELOPMENT PRINTS 10-YEAR

IFC DEVELOPMENT, rated A2/A (Moody’s/S&P), has priced US$500m senior unsecured notes after drawing over US$1.1bn final orders from 79 accounts.

The 3.625% 10-year bonds were priced at 98.933 to yield 3.754%, or Treasuries plus 125bp, well inside initial guidance of 145bp area.

IFC Development (Corporate Treasury) is the issuer and IFC Development is the guarantor.

The Reg S issue has expected ratings of A2/A (Moody’s/S&P).

Asia took 94% of the notes and Europe 6%. By investor type. 51% went to fund managers, 32% to banks, 10% to insurers and the public sector, and 7% to private banks and corporates.

IFC Development is a joint venture of Sun Hung Kai Properties, Henderson Land Development and Hong Kong and China Gas. Its principal asset is the IFC commercial complex in Hong Kong’s Central waterfront district.

Proceeds from the bond offering will be used to refinance borrowings and for general corporate purposes.

Home Credit Group launches €650m refi Loans Multi-national consumer finance company taps banks in Asia and Europe

Netherlands-based financial services provider

HOME CREDIT GROUP launched a €650m

(US$733m) bullet term loan last Monday.

HSBC is the global coordinator and

mandated lead arranger and bookrunner,

while Goldman Sachs International, ING Bank and Societe Generale are MLABs of the

financing, which is split between a two-year

tranche (tranche A) and a three-year portion

(tranche B).

The interest margins are 350bp and

380bp over three-month Euribor for tranches

A and B, respectively.

Banks have been invited to join tranche A

or B or both tranches with commitments of

€90m or more for the MLA title, €51m–€89m

for the lead arranger title and €50m or less

for the arranger title.

Tranche A pays upfront fees of 100bp

(MLAs), 75bp (lead arrangers) and 35bp

(arrangers). Portion B offers fees of 125bp,

97.5bp and 47.5bp for the respective

commitment levels.

Both tranches pay commitment fees of

35% of the respective margins and have a

one-year extension option. The entire deal

has a €200m greenshoe option.

A bank presentation will be held in Prague

on April 16. Commitments are due by May 10.

Funds are for refinancing a €650m facility

raised in June 2017 and to fund equity

injections into Home Credit Group’s Asian

subsidiaries.

Home Credit BV, a Netherlands-

incorporated subsidiary of Home Credit

Group, raised the €650m two-year term loan

in June 2017 from 16 lenders, including a few

banks in Asia, according to LPC data. The

MLABs were HSBC, Industrial & Commercial

Bank of China, ING and SG. The facility pays

an interest margin of 400bp over Euribor and

offered a top-level upfront fee of 100bp.

Last year, Home Credit Group became the

ultimate holding company of Home Credit

group companies, which it holds through

Home Credit BV, the previous ultimate

holding company of the group. The Home

Credit group comprises consumer finance

companies operating in China, Vietnam,

India, Indonesia, the Philippines, Russia,

Kazakhstan, the Czech Republic, Slovakia

and the US.

Last October, Home Credit Group replaced

Home Credit BV as the issuer of a Kc1.998bn

(US$88m) bond due in 2020.

The Asian operations of Home Credit Group

are also regular borrowers in the loan market.

In February, Tianjin-based Home Credit

Consumer Finance launched a one-year term

loan of up to Rmb1.8bn (then US$268m).

In the same month, Home Credit Vietnam

Finance launched a US$50m three-year term

loan.

Home Credit Indonesia made its debut in

the syndicated loan markets in January with a

Rp800bn (then US$57m) one-year loan.

Last October, HC Consumer Finance

Philippines signed a Ps6.5bn (US$124m)

one-year term loan with eight banks.

European investment company PPF Group

holds 88.62% of Home Credit Group.

APPLE LAM


COUNTRY REPORT HONG KONG

The company’s US$500m 2.375% bonds are due next month.

Bank of China, DBS Bank, HSBC, Mizuho Securities and Morgan Stanley were joint global coordinators and joint bookrunners on the transaction. They were also joint lead managers with SMBC Nikko.

SYNDICATED LOANS

› LOAN ADDED FOR CITYPLAZA BUY

Private equity firm GAW CAPITAL PARTNERS and HENGLI GROUP have signed a HK$1.57bn (US$200m) three-year mezzanine loan to partially finance their acquisition of office towers Cityplaza Three and Four in Hong Kong’s Taikoo district.

A group of investors including Standard Chartered, ICBC International and individual investors provided the mezz financing last week. It complements a HK$8.33bn three-year leveraged buyout senior facility that closed last month.

Ten banks joined mandated lead

arrangers and bookrunners StanChart and United Overseas Bank on the senior loan and are expected to be substituted into the deal in May.

The senior loan paid a top-level all-in pricing of 168bp based on an interest margin of 130bp over Hibor. The target properties form the security for the financing.

The borrower is Harmony Lotus, which is incorporated in Hong Kong.

The two sponsors announced that the HK$15bn acquisition was completed last Thursday.

Hong Kong-based Gaw Capital is focussed on real estate, while Hengli Group develops hotels, residential and commercial properties, refines oil and produces textiles.

› CHEUNG KEI PAYS UP ON FIVE-YEAR CLUB

Shenzhen-headquartered Cheung Kei Group is offering higher pricing for its HK$4.615bn five-year club loan than it did for a loan in 2016.

The latest facility offers all-in pricing of 190.9bp based on an interest margin of 180bp over Hibor, an upfront fee of 50bp

and an average life of 4.6075 years.Funds are to refinance a HK$3.15bn

five-year term loan signed in December 2016, which paid a lower all-in pricing of 150.75bp based on a margin of 140bp over Hibor and an average life of 4.65 years.

Both deals are secured by Cheung Kei Center in Hung Hom.

Hang Seng Bank is the coordinator of the latest club deal, which is ongoing. The borrower is CHEUNG KEI CENTER.

Repayments will take place through 17 quarterly instalments after a year’s grace period: 1% (12th, 15th, 18th, 21st, 24th, 27th, 30th, 33rd, 36th and 39th months), 2% (42nd, 45th, 48th, 51st, 54th and 57th months) and 78% (60th month).

Mandated lead arranger and bookrunner CMB Wing Lung Bank and three other banks participated in the 2016 loan, which comprised a HK$1.8bn portion for buying the property – then known as the East Office Tower and the East Retail Villa of One HarbourGate – for HK$4.5bn from Wheelock Properties (Hong Kong), while the remaining HK$1.35bn was for working capital.

Longreach seeks funding to buy stake Loans Hong Kong-based PE firm taps loan for purchase of stake in medical devices manufacturer

Hong Kong-based private equity firm

Longreach Group has launched a US$42.5m

five-year facility to back its acquisition

of a majority stake in medical devices

manufacturer QUASAR ENGINEERING.

Mandated lead arranger and bookrunner T

aishin International Bank has fully underwritten

the deal. It pre-funded the facility on April 2

after signing it on January 30.

The deal comprises a US$38m amortising

term loan (tranche A) and a US$4.5m

revolving credit facility (tranche B). It pays an

interest margin of 375bp over Libor and has a

remaining blended average life of 3.58 years.

Banks have been invited to join tranches

A and B on a pro-rata basis as MLAs with

commitments of US$10m or more for a

top-level all-in pricing of 416.9bp based on

an upfront fee of 150bp and lead arrangers

with tickets of US$5m–$9.5m for an all-in of

402.9bp through a fee of 100bp.

Commitments are due by May 10.

Tranche A was for financing the acquisition,

which was completed on April 2, and tranche

B is for general corporate purposes.

The family of Israeli entrepreneur and

Quasar Engineering’s founder, Boaz Amitai,

has retained a minority stake in the company.

Established in Hong Kong in 1988, Quasar

Engineering makes medical devices such as

cardiovascular diagnostic and therapeutic

catheters. It has a factory in Shenzhen and

another in Dongguan. QIL Engineering,

the company’s subsidiary based in Israel,

designs the group’s products and develops

manufacturing processes for new products.

Longreach Group, which also has

operations in Tokyo, invests in the

technology, food and beverage, business

process outsourcing, manufacturing, financial

and logistics sectors in Japan and Greater

China. It is also a shareholder of EnTie

Commercial Bank.

In February 2015, Longreach Group

raised a six-year loan of about ¥15bn (then

US$126m) to support its buyout of Japanese

bridal jewellery maker Primo Japan. MLAB

Mizuho Bank brought three banks into

the deal, which pays an interest margin of

slightly more than 200bp over yen Libor.

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The property was renamed Cheung Kei Center after the acquisition was completed.

Cheung Kei Group, a financial and property investment company owned by tycoon Chen Hongtian, has invested in properties in Hong Kong, Shenzhen, Shanghai, Foshan, Zhuhai and London.

› NEW WORLD CHINA LAND SEEKS LOAN

Property developer NEW WORLD CHINA LAND, the mainland Chinese property arm of Hong Kong-listed New World Development, has launched an unsecured HK$4.5bn facility.

New World Development is providing a guarantee for the loan, which is mainly for refinancing.

China Construction Bank (Asia) is the mandated lead arranger and bookrunner of the financing, which comprises a HK$1.5bn three-year bullet term loan, a HK$1.5bn five-year term loan and a HK$1.5bn five-year revolving credit facility. The MLAB is not syndicating the five-year tranches.

The three-year tranche pays an interest margin of 85bp over Hibor. Banks have been invited to join this portion as lead arrangers with commitments of HK$300m or more for a top-level all-in pricing of 103bp based on an upfront fee of 54bp or as arrangers with HK$100m–$290m for an all-in of 101bp through a fee of 48bp. Commitments are due by April 18.

The entire facility can be increased up to HK$6bn.

New World China Land raised a HK$4.5bn term loan in June 2015. MLABs Bank of China Hong Kong, DBS and HSBC brought in 12 banks. The three-year tranche of that deal paid a margin of 185bp over Hibor, while the five-year portion pays a margin of 215bp over Hibor. The blended all-in pricing was 220bp.

In September 2018, Hotelier Finance – a 50:50 joint venture between New World Development and Abu Dhabi Investment Authority – closed a HK$9.25bn amendment-and-extension exercise of a

five-year term loan of the same size, which had been originally signed in June 2015. Sole MLAB Credit Agricole CIB brought in nine new banks and six existing lenders. The deal was extended to mature in June 2023 from June 2020 and the all-in pricing was slashed to around 110bp over Hibor from around 200bp. Three Hong Kong hotels are providing security for that deal.

› WHEELOCK CLOSES CLUB

WHEELOCK FINANCE, a wholly owned unit of Hong Kong-listed Wheelock & Co, has completed a HK$2bn five-year sustainability-linked facility, according to a press release on April 4.

BNP Paribas and Mizuho Bank signed the borrowing, which is equally split into a term loan and revolving credit facility, as a two-bank club on March 29. The two lenders provided HK$1bn each.

According to the press release, both banks received the mandated lead arranger and bookrunner title, while BNP is also the sustainability coordinator and facility agent.

Funds are for general corporate purposes.The borrower’s environmental, social

and governance performance will be assessed by Sustainalytics, a provider of ESG research and ratings.

Wheelock & Co raised a HK$5.8bn five-year construction loan in June 2016 for developing the ninth phase of MTR Corp’s Lohas Park residential development in Hong Kong’s Tseung Kwan O district. The self-arranged club loan, which pays an interest margin of 90bp over Hibor, attracted Bank of China, Bank of East Asia, China Construction Bank, Standard Chartered and Sumitomo Mitsui Banking Corp.

Headquartered in Hong Kong, Wheelock & Co mainly develops properties in Hong Kong and invests in and develops properties in Singapore. Its Hong Kong-listed subsidiaries include Wharf (Holdings) and Wharf Real Estate Investment, while its other units are Wheelock Properties and

Wheelock Properties (Singapore). Wheelock Properties Singapore delisted from the SGX in October 2018 and Wheelock & Co owned about 97% of the Singaporean company at the end of 2018.

Wharf Holdings’ wholly owned unit Wharf Finance completed a HK$8bn five-year facility last month. MLABs DBS Bank, Mizuho and StanChart brought in four banks, including SMBC that joined as an MLAB. The top-level all-in pricing was 90bp based on a margin of 80bp over Hibor.

› JUNEYAO AIRLINES LAUNCHES LOAN

Shanghai-listed Juneyao Airlines has launched a HK$1.8bn three-year term loan.

The company is the guarantor, while its indirect wholly owned subsidiary SHANGHAI

JUNEYAO AIRLINE HONG KONG is the borrower.Standard Chartered is the mandated lead

arranger and bookrunner of the financing, which pays an interest margin of 160bp over Hibor and has an average life of 2.5 years.

Banks have been invited to join as MLAs with tickets of HK$300m or more for a top-level all-in pricing of 185bp based on an upfront fee of 62.5bp, as lead arrangers with HK$200m–$290m for an all-in of 180bp through a fee of 50bp and as arrangers with HK$100m–$190m for an all-in of 175bp based on a 37.5bp fee.

A site visit to Shanghai will be held on April 16 and commitments are due by May 31.

Headquartered in Shanghai, the privately owned guarantor operates short-haul flights between Shanghai and Hong Kong, Macau, Taiwan, Korea, Japan and Singapore.

Juneyao Airlines is about 63%-owned by Shanghai Juneyao (Group), which also invests in the financial, education, technology, real estate and food and beverage sectors. Juneyao Group also owns Guangzhou-based budget airline 9 Air that operates domestic flights within China.

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INDIA


› DOLLAR IS IN THE AIR FOR EROS

Bollywood film producer and distributor EROS INTERNATIONAL has hired Barclays and Citigroup as joint lead managers to arrange fixed income investor meetings and calls in Hong Kong, Singapore, London and the United States.

A US dollar 144A/Reg S note offering may follow, subject to market conditions.

The Indian company has expected corporate ratings of B1/B+ (Moody’s/S&P) with a stable outlook.

In a press release, S&P said its preliminary B+ rating on Eros is predicated on the company’s refinancing of its upcoming maturities and other

high-cost borrowings through its proposed senior unsecured notes of up to US$250m.

S&P said the stable outlook reflects its expectation that Eros’ adequate liquidity post refinancing and increasing share of recurring revenue from streaming service Eros Now will temper the impact of volatile operating cashflows and content spending over the next 12-24 months.

Eros accounts for roughly 30% of Bollywood box-office collections and about 40% of all Indian language films released in theatres in the UK and the US, according to the rating agency.

› INDUSIND SETS PRIVATE BENCHMARK

INDUSIND BANK, acting through its GIFT City branch, priced a US$400m three-year 3.875% bond at Treasuries plus 185bp.

Orders exceeded US$1.4bn from 130 investors. Asia bought 66% of the notes, and the rest went to EMEA.

Fund managers and insurers bought 46% of the notes, banks 42%, private banks 8% and the the public sector took up the rest.

Guidance was tightened from Treasuries plus 210bp area.

The privately owned Indian lender’s Reg S notes have ratings on par with the Baa3 (Moody’s) rated issuer.

Bank of America Merrill Lynch, Barclays, Citigroup, CLSA, HSBC, JP Morgan and Standard Chartered were joint bookrunners.

› HDFC SELLS BONDS FOR INFRASTRUCTURE

India’s HDFC BANK is targeting up to Rs500bn (US$7.1bn) from perpetual bonds, Tier 2 bonds and long-term bonds to be used for infrastructure and affordable housing, according to a filing on the exchanges.

India’s largest private sector bank plans to raise the funds in one or more tranches within the next year.

The bank’s board will consider the fundraising plan on April 20.

Vedanta continues Indian HY spree Bonds Strong backdrop helps another junk-rated company slash new issue concessions

VEDANTA RESOURCES sold a US$1bn dual-

tranche bond last Thursday despite growing

concerns of aggressive pricing on recent

Indian high-yield deals.

The 144A/Reg S deal comprised a

US$400m four-year note and a US$600m

seven-year non-call four that priced at par to

yield 8% and 9.25%, respectively.

Early responses were mixed. A Hong-Kong

based investor told IFR during bookbuilding

on Thursday that initial guidance of 8.25%

area and 9.375% area offered minimal new

issue concessions.

But increasing appetite for diversification

from global funds overrode concerns over

price, helping the Indian resources company

print tight to its secondary curve.

A banker on the deal said the 2023s still

offered one-eighth of a percent in new issue

concessions, based on the company’s 7.125%

May 2023s which were trading around

7.6% on April 4 when the mandate was

announced. He admitted that the 7NC4s paid

a minimal concession, based on calculations

that drew a two-year extension from its

existing August 2024s.

“There’s not much supply out of India,

compared to what we have seen from

China,” said the banker. “If investors want

diversification they don’t have a choice. It also

helps that Indian names are well regarded

among global investors, particularly the big

corporations.”

He also brushed off concerns of a crowded

maturity schedule in 2023, given that the

new bonds mature or become callable a

little more than a month before a US$500m

maturity on May 31. The banker said the

company may consider liability management

options, as it has done in the past.

“The focus of this exercise was really to

manage financing costs,” he said.

Another investor said that although he

owned other Vedanta bonds, he decided not

to buy the new issue because of concerns

about the structure. He was also irritated

by Vedanta’s recent decision to buy a stake

in Anglo-American from Volcan, the family

trust of Vedanta founder and chairman Anil

Agarwal.

Moody’s changed the company’s outlook

to negative from stable in February, citing

the heightened risk of cash movement

outside Vedanta following a US$561m

structured payment by the company’s

operating subsidiary to ultimate

shareholder Volcan.

The rating agency added that its

expectations for underlying operating

earnings have been lowered, which will lead

to elevated leverage for the ratings.

Moody’s did say, however, that the latest

offering proactively refinances Vedanta’s

amortising term debt maturities with a long-

term bond with bullet repayment, which

further reduces its cost of debt.

Vedanta’s deal comes as a flurry of Indian

high-yield deals have hit the market to take

advantage of regulatory changes that made

it easier for the country’s borrowers to go

offshore.

JSW Steel printed last week, while Eros

International and Shriram Transport Finance

have also mandated banks for proposed US

dollar offerings.

But the pace of tightly priced deals raises

the risk of more investor pushback in the

future.

“We feel the price levels for Indian high-

yield companies are at tight levels, similar to

those in 2014,” said Dhiraj Bajaj, head of Asia

credit at Lombard Odier.

“As deal supply from India increases,

investors will pick and demand a premium.”

Vedanta Resources Finance II is the

issuer and a wholly owned subsidiary

of Vedanta Resources, which will act as

guarantor.

The notes have expected ratings of B2/

B+ (Moody’s/S&P). The guarantor is rated

Ba3/negative by Moody’s and B+/negative

by S&P.

Distribution statistics were not available at

the time of writing.

Credit Suisse, JP Morgan and Standard Chartered Bank were joint global

coordinators, joint lead managers and joint

bookrunners.

FRANCES YOON


› JSW STEEL READIES RUPEE COMEBACK

JSW STEEL is planning to return to the domestic bond market after a gap of four years to issue a Rs30bn three-year notes through a special purpose vehicle for the acquisition of Bhushan Power & Steel, according to sources aware of the plans.

The deal will mark the first time that rupee bonds have been sold to acquire stressed assets under India’s insolvency and bankruptcy code. Bhushan Power was among the first companies referred by the Reserve Bank of India to a bankruptcy court for a debt resolution process under the new insolvency law.

Details on the exact structure of the deal have yet to be disclosed, but JSW Steel will issue the bonds through an SPV or a holding company that will part-fund the acquisition, sources said. The SPV will eventually be merged with JSW Steel.

“Investors will have ultimate recourse to JSW Steel because of its creditworthiness and to an extent will not be exposed to the risk at Bhushan Power which is a weaker credit,” a market source said.

JSW Steel recently raised US$700m from a five-year cash-for-steel pre-payment deal with global trading firm Duferco International, under which the company will repay the loan with steel cargo at the end of five years.

The Duferco deal will help fund JSW’s planned acquisition of Bhushan Power for Rs197.5bn. The bankruptcy court is holding a hearing for the power company’s operational creditors and is set to give a final ruling on the acquisition this month,

said a source aware of the developments.JSW Steel still needs to raise funds to

buy the stressed asset, so it will be looking at all funding options including domestic and offshore bonds and equity financing, according to a source.

In the offshore market, JSW Steel recently raised US$500m from five-year dollar bonds at par to yield 5.95%.

JSW Steel is yet to make an official announcement on the planned rupee bond sale.

› L&T RETURNS AFTER NEARLY FOUR YEARS

Indian industrial conglomerate LARSEN &

TOUBRO is planning to raise up to Rs15bn from three-year bonds at 7.87%, according to a market source.

The company is coming to the market after nearly four years. It last raised Rs10bn from five-year bonds at 8.4% in September 2015.

Crisil has assigned a AAA rating to the non-convertible debentures of L&T.

Axis Bank is heard to be the arranger for the deal.

The company is yet to make an official announcement on the planned bond sale.

› MUTHOOT HOMEFIN TO ISSUE BONDS

MUTHOOT HOMEFIN plans to raise up to Rs3bn from a public bond issue, according to the prospectus on the BSE.

The non-banking financial company has fixed the coupons at 9.25%, 9.50% and 9.75% for two, three-year two months and five-

year tenors, payable monthly. The coupons are 9.50%, 9.75% and 10.00%, respectively, for same tenors, payable annually.

Muthoot is targeting Rs1.5bn, plus a greenshoe option of the same amount.

Edelweiss Financial Services is the lead manager for the issue.

Crisil has assigned a AA rating to the notes.

› PFC SCRAPS TWO-PART BOND ISSUE

POWER FINANCE CORP scrapped the sale of Rs40bn two-part bonds after it did not get bids at the desired levels, according to market sources.

The state-owned issuer was seeking bids for three-year and five-year tranches on April 8. It was targeting Rs5bn, plus a greenshoe option of Rs15bn, from each tranche.

Crisil, Icra and Care assigned AAA ratings to the bonds.

The issuer is yet to make an official announcement on the withdrawal of the bond sale.

On March 27, PFC raised Rs10bn from Tier 2 bonds at 8.98%.

› REC INVITES BIDS FOR 10-YEAR BONDS

REC, formerly known as Rural Electrification Corporation, aims to raise up to Rs20bn from 10-year bonds, according to sources close to the plans.

It has asked investors to place bids on BSE’s electronic platform on April 15 from 10:00am to 11:00am India time in a closed bidding session.

JSW Steel cuts through picky HY market Bonds Five-year draws strong demand despite pushback on some high-yield offerings from India

JSW STEEL last Wednesday priced a US$500m

five-year senior unsecured bond offering at

par to yield 5.95%, having tightened from

initial guidance of 6.25% area.

Orders were over US$920m from 130

accounts, a solid result, despite signs that

investor appetite for some Indian high-yield

deals has been cooling lately.

For instance, GMR Hyderabad

International Airport fell short of its

US$350m target size and priced at the

higher end of guidance in its US$300m five-

year deal priced at 5.375% on April 3.

“In spite of the international debt

capital markets opening up, we have

seen instances of investor pushback on

price and tenor which wasn’t evident on

oversubscription levels for JSW Steel

and their ability to price the instrument

under the 6% handle,” said Amrish Baliga,

managing director and head of financing

from Deutsche Bank.

The bonds have expected ratings of Ba2/

BB (Moody’s/Fitch), in line with the issuer.

GMR Hyderabad’s bonds, rated a notch

higher at BB+/BB+ (S&P/Fitch), were quoted

at 5.5% in secondary trading, providing a

pricing reference.

Bankers said with so many Indian high-

yield issuers coming to market lately,

investors could afford to be selective.

A second source noted that JSW’s bonds

had been steady performers in secondary

trading recently, even as some others

fell below a cash price of 90, increasing

the credit’s appeal to real-money funds,

including Chinese investors.

“Yields are tight, but in a liquid

environment, 6% has become the new 8%,”

said the second source. “It’s also a proper

size and so it will be liquid in secondaries.”

Asian investors took 57% of the Reg S

bonds, EMEA accounts 36% and US offshore

accounts 7%. The bonds were bid at a cash

price of 100.15 on Friday.

By investor type, funds booked 81%, private

banks 10%, insurers and pension funds a

combined 5%, and banks 4%.

Deutsche Bank, ANZ, BNP Paribas,

Citigroup, Credit Suisse, First Abu Dhabi Bank, JP Morgan, Mizuho, SBI and Standard Chartered were joint bookrunners.

DANIEL STANTON, KRISHNA MERCHANT,

FRANCES YOON


COUNTRY REPORT INDIA

It is eyeing Rs5bn, plus a greenshoe of Rs15bn.

Care, Crisil, Icra and India Ratings have assigned AAA ratings to the notes.

On March 29, REC printed Rs21.51bn subordinated Tier 2 bonds at 8.97%.

REC is yet to make an official announcement on the planned bond sale.

› SIDBI PRINTS BONDS AT 7.59%

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA has raised Rs7.5bn from three-year six-month bonds at 7.59%, according to a filing on National Securities Depository Limited.

The notes have a put and call option on October 7 2020.

Care has assigned a AAA rating to the bonds.

On April 2, Sidbi scrapped the sale of three-year six-month bonds before the submission of bids.

SYNDICATED LOANS

› QUARTET FUNDING NIIT STAKE PURCHASE

Four banks are underwriting a leveraged buyout loan of up to US$306m for Baring Private Equity Asia’s purchase of a significant stake in India’s NIIT TECHNOLOGIES.

Deutsche Bank, ING Bank, Nomura and Standard Chartered are equally underwriting the five-year amortising loan, which supports BPEA’s purchase of an initial 30% stake in NIIT Technologies and an additional 26% through an open offer.

BPEA and its affiliated funds agreed on April 7 to buy the 56% stake for a total consideration of Rs48.90bn (US$704m) at Rs1,394 per share, NIIT Technologies said in an announcement. BPEA is buying the initial stake from parent company and Indian information technology giant NIIT and promoter entities.

The loan represents a leverage (net debt-

to-Ebitda) of mid 3x to low 4x, depending on the outcome of the open offer and the amount of debt required.

The underwriters could launch the loan into senior syndication before reaching out wider to retail lenders in general syndication.

The acquisition is conditional upon receipt of required regulatory approvals, including anti-trust and competition clearances from the Competition Commission of India.

Additionally, NIIT Technologies announced on April 7 its agreement to acquire WHISHWORKS IT Consulting, an IT services and consulting company specialising in MuleSoft and Big Data technologies. NIIT Technologies will buy a 53% stake initially, with the remaining equity to be acquired over the next two years through pay-outs linked to financial performance.

NIIT Technologies also signed an

Reliance launches part of financing Loans A US$750m portion of Jio’s jumbo US$2.25bn facility not being syndicated

Conglomerate RELIANCE INDUSTRIES has

launched into general syndication a

US$1.5bn-equivalent facility, which is part of

a larger US$2.25bn jumbo financing.

ANZ, Bank of America Merrill Lynch,

Barclays, Credit Agricole CIB, DBS Bank, First

Abu Dhabi Bank, HSBC, Mizuho Bank, MUFG,

Scotiabank, Standard Chartered, State Bank of

India, Sumitomo Mitsui Banking Corp, United

Overseas Bank and Westpac are the senior

mandated lead arrangers and bookrunners of

the deal, which has been fully underwritten.

Korea Development Bank joined the facility

as SMLAB, while Taipei Fubon Commercial

Bank and Bank of China have participated

as MLABs prior to the launch into general

syndication. JP Morgan joined as MLA.

RIL is the borrower of the US$1.5bn-

equivalent deal, while Reliance Jio Infocomm

is the borrower of the remaining US$750m

piece, which is not expected to be launched

into general syndication.

RIL’s financing comprises two facilities

– facility 1 has a US$650m tranche and a

¥38.85bn (US$350m) piece, while facility

2 has a US$350m portion and ¥16.65bn

tranche.

The US dollar and Japanese yen

tranches former facility – which has an

average life of 5.25 years – pays interest

margins of 106bp over Libor or 72.5bp

over yen Libor, respectively, while the

latter – which has an average life of 5.5

years – pays margins of 108bp over Libor

or 75.5bp over yen Libor, respectively.

Lenders receive the lead arranger title

for commitments of US$35m–$49m-

equivalent, the co-arranger title for tickets

of US$20m–$34m-equivalent or the lead

manager title for US$10m–$19m-equivalent

for participants in either facility 1 or 2.

For the facility 1, lead arrangers receive

top-level all-in pricings of 128.5bp and

88.5bp for the US dollar and yen tranches,

respectively, based on participation fees of

118.13bp and 84bp; co-arrangers get all-ins

of 126.5bp and 86.5bp, respectively based

on fees of 107.63bp and 73.5bp; while lead

managers receive all-ins of 124.5bp and

84.5bp based on fees of 97.13bp and 63bp,

respectively.

For the facility 2, lead arrangers receive

top-level all-in pricings of 131bp and

91.5bp for the US dollar and yen tranches,

respectively, based on participation fees of

126.5bp and 88bp; co-arrangers get all-ins of

129bp and 89.5bp, respectively based on fees

of 115.5bp and 77bp; while lead managers

receive all-ins of 127bp and 87.5bp based on

fees of 104.5bp and 66bp, respectively.

Bank presentations will be held in

Singapore on April 15, Taipei on April 17

and Tokyo on April 19. The deadline for

commitments is May 17, with signing slated

for early June.

Proceeds will be used for capital

expenditure purposes.

The group’s previous visit to the loan

market was in early November for a

US$2.63bn financing for RIL that had 44

banks participating, including 17 senior

MLABs. That deal comprised a US$187m

two-year and 11-month bullet loan tranche A,

which was not syndicated, a US$966m three-

year amortising tranche B and a US$1.48bn

four-year and 11-month amortising tranche

C. The top-level all-in pricing was 91.5bp or

111bp based on the margin of 69bp and 90bp

over Libor and remaining average lives of

2.792 and 4.392 years for tranches B and C,

respectively.

A year earlier in December 2017, RIL and

Jio together raised a US$2.5bn-equivalent

refinancing with 30 banks, including 17

MLABs. The deal was split into a 2.5-

year loan of US$815m and €150m (then

US$185m) (facility 1) for RIL, and separate

US$1bn 4.75-year (facility 2) and US$500m

5.58-year (facility 3) portions for Jio. RIL is

guarantor on the Jio tranches.

RIL’s US dollar and euro tranches paid

top-level all-in pricing of 76bp and 46bp

based on margins of 56bp and 37bp over

Libor and Euribor, respectively, and a

remaining average life of 2.375 years. Jio’s

facility 2 and facility 3 offered top-level

all-in pricing of 105bp and 110bp based on

margins of 84bp and 92.5bp over Libor, and

remaining average lives of 4.33 and 5.42

years, respectively.

RIL is rated Baa2/BBB+/BBB−.

EVELYNN LIN, CHIEN MI WONG


agreement to sell its entire 88.99% stake in Esri India Technologies, a geographic information system software and solutions provider, to the other existing equity shareholder Environmental Systems Research Institute.

NIIT Technologies provides data & analytics, automation, cloud, and digital services to the banking and financial services, insurance, travel and transportation sectors.

› NTPC SAMURAI ATTRACTS ONE

India’s largest power utility company, NTPC, has signed a US$300m-equivalent 10-year Samurai loan, attracting only Aozora Bank in general syndication. (See News.)

Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp were the mandated lead arrangers and bookrunners of the financing, which offered a top-level all-in pricing of 114.5bp based on an interest margin of 102bp over Tibor and a weighted average remaining life of 10 years.

Pricing on the latest loan is higher than that on a ¥39.42bn (then US$370m) facility completed in April last year. That loan offered a top-level all-in pricing of 105bp based on a margin of 95bp over Tibor and a weighted average remaining life of 10 years. It was the first unsecured decade-long borrowing in the offshore loan market for an Indian credit. Mizuho, MUFG and SMBC were the MLABs of the Samurai loan, which attracted eight lenders in general syndication.

Established in 1975, NTPC – formerly National Thermal Power Corp – is rated

› PFC SENDS RFP FOR FACILITY

State-owned POWER FINANCE CORP has sent out a request for proposals for an up to US$500m financing.

The deal, which has a US$300m greenshoe option, could comprise tenors ranging from three to five years. The borrower is also open to a Green loan.

The deadline for proposals is April 22.PFC signed a US$150m-equivalent five-

year Samurai loan in January. Mizuho Bank and MUFG are the mandated lead arrangers of the bullet facility, which has been equally pre-funded and will launch into general syndication at a future date.

PFC is rated Baa3/BBB–/BBB–. In December, Moody’s put the company on review for a downgrade, while S&P put it on negative watch after the Indian government approved in principle PFC’s proposed acquisition of the government’s 52.6% stake in REC.

› YES BANK HOLDS NON-DEAL ROADSHOW

YES BANK held a non-deal roadshow in Taipei last Monday.

CTBC Bank was the coordinator of the exercise.

In September last year, Yes Bank raised a US$400m three-year loan. BayernLB, Commerzbank, CTBC Bank, First Abu Dhabi Bank, Korea Development Bank, State Bank of India, United Overseas Bank and Westpac were the mandated lead arrangers and bookrunners of the financing, which paid a top-level all-in pricing of 114.48bp based on an interest margin of 95bp over Libor and an average life of 2.67 years.

Yes Bank, rated Ba1 (Moody’s), is India’s fourth-largest private sector bank in terms of assets.


› BAJAJ ENERGY PLANS IPO LATER IN 2019

BAJAJ ENERGY has filed a draft prospectus for an IPO of up to Rs55bn (US$792m) and is targeting the launch for later this year.

The company said in the draft prospectus that Rs52bn of primary shares and Rs3bn secondary shares would be sold. Owner Bajaj Power Ventures is the vendor of the secondary shares.

Edelweiss, IIFL Holdings and SBI Capital are the bookrunners and IDBI Capital is the co-bookrunner.

Bajaj Energy owns power capacity of 2,430 megawatts.

The company’s revenue in the financial year that ended on March 31 2018 was Rs9bn versus Rs14bn in 2017. Net profit fell to Rs417m from Rs883m. A delay in tariff payments by Uttar Pradesh Power Corp and a shortfall in fuel supplies affected earnings.

ReNew Power (US$1bn–$1.3bn), Sembcorp Energy (Rs50bn) and Acme Solar Holdings (Rs15bn) have also announced IPOs, but none of them have materialised because of volatile stock market conditions and a lack of investor interest in Indian power companies.

› POLYCAB IPO BOOKS COVERED 52 TIMES

Wire and cable maker POLYCAB INDIA’S up to Rs13bn IPO was covered 52 times when the books closed last Tuesday.

Data on the National Stock Exchange show the institutional tranche was covered 92.44 times, the high-net-worth investor tranche 110.42 times and the retail tranche 4.65 times.

The offering is the latest Indian IPO to see its books covered ahead of the closing date.

Around Rs4bn primary shares and 17.6m secondary shares were sold at Rs533–Rs538 per share. The IPO is likely to be priced at the top of the price range.

The top of the range implies a 2020 P/E multiple of 14.5, compared with the sector average of 22.

Founders Inder Jaisinghani, Ajay Jaisinghani, Ramesh Jaisinghani and Girdhari Jaisinghani are among the vendors of the secondary shares along with International Finance Corp. IFC currently owns 15% of the company.

The company’s revenue from operations rose to Rs69bn in the financial year that ended on March 31 2018, from Rs60bn in 2017. Net profit rose to Rs3.7bn from Rs2.3bn.

Axis, Citigroup, Edelweiss and Kotak are the joint global coordinators and bookrunners with IIFL Holdings and Yes Securities.

› METROPOLIS IPO BOOKS COVERED

The books for METROPOLIS HEALTHCARE’s Rs12bn IPO were subscribed 5.84 times when they closed on April 5.

Data on the National Stock Exchange show the institutional tranche was covered 8.88 times, the high-net-worth investor tranche 3.03 times and retail 2.21 times.

The IPO was priced at the top of a Rs877–Rs880 range.

Around 13.7m secondary shares were sold in the IPO.

Credit Suisse, Goldman Sachs, HDFC Bank, JM Financial and Kotak are the bookrunners.

INDONESIA


› SEMEN INDONESIA PLANS TWO-TRANCHE

SEMEN INDONESIA is planning to raise Rp4.9trn (US$240m) from two-part bonds, according to a source close to the plans.

The cement maker has given indicative coupon ranges of 8.50%–9.25% for a five-year tranche and 8.75%–9.50% for a seven-year piece.

The company has mandated BNI, CGS-CIMB, Danareksa, Mandiri and Indo Premier as lead arrangers.

The books have opened and will close on April 15.

The notes are rated AA+ by Pefindo.In February, LPC reported that Semen

Indonesia had closed a US$1.037bn loan with eight lenders in syndication to fund the purchase of an 80.64% shareholding


COUNTRY REPORT JAPAN

that Lafarge Holcim owned in Holcim Indonesia and a mandatory tender offer for the remaining stake.

Semen Indonesia is yet to make an official announcement on the planned bond sale.

› EXIMBANK READIES MULTI-TRANCHE DEAL

INDONESIA EXIMBANK plans to raise Rp4.3trn from bonds and sukuk in various tranches, according to the offer document.

It is planning to raise Rp3.86trn from six-part bonds. It is eyeing Rp147bn, Rp935bn, Rp1.52trn, Rp278bn, Rp349bn, Rp625bn from one, three, five, seven, 10 and 15-year tranches at 7.35%, 8.4%, 8.9%, 9.25%, 9.5% and 9.8%.

The bank is also targeting Rp441bn from a sukuk portion at floating and variable rates. It plans to raise Rp230bn, Rp145bn and Rp66bn from one, three and five-year tranches.

Bahana, BCA, BNI, CGS-CIMB, Danareksa, DBS Vickers, Indo Premier, and Mandiri Sekuritas are the lead managers for the deal.

The rupiah notes are rated AAA by Pefindo.

The deal opens on April 15 and closes on April 16.

Recently, Indonesian Eximbank said it was planning to raise Rp32trn from bond sales in up to four stages, according to a Reuters report citing statements from the director.

› OTO MULTIARTHA SETS COUPONS

OTO MULTIARTHA has set the coupons for a triple-tranche bond offering to raise Rp1trn, according to a source close to the plans.

The car finance firm has fixed the coupons at 7.75% for one year, 8.75% for three years and 9.25% for five years.

It has appointed BCA Sekuritas, Mandiri Sekuritas, IndoPremier and Nikko Sekuritas Indonesia as lead arrangers.

Pefindo recently affirmed a AA+ rating on the bonds.

Oto Multiartha is yet to make an official announcement on the planned bond sale.

› WASKITA KARYA PLANS TWO-PART BONDS

WASKITA KARYA is marketing dual-tranche domestic bonds to raise Rp1.85trn.

The state-owned developer has announced indicative coupon ranges of 8.5%–9.5% for a three-year tranche and 9.00%–9.75% for a five-year piece, according to the offer document.

The books opened on April 9 and close on April 22.

Bahana, BNI, Danareksa, DBS, IndoPremier and Mandiri Sekuritas are the lead arrangers of the deal.

SYNDICATED LOANS

› PTPN POSTPONES MAIDEN LOAN

PERKEBUNAN NUSANTARA III (PTPN) has postponed the launch of a US$200m two-year debut offshore facility.

Bank presentations were postponed to the week of April 22. The roadshow was initially scheduled for Singapore on April 10, Hong Kong on April 11, Taipei on April 12 and Tokyo on April 15.

Deutsche Bank and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners of the deal, which is available in either euros or US dollars. The interest margin is 185bp over Euribor/Libor and the average life is 1.8 years. Funds are for working capital requirements of the borrower and its subsidiaries.

In March 2017, Perkebunan Nusantara V raised a Rp4.866trn (US$363m) 10-year loan. Bank Mandiri, Malayan Banking and Bank Central Asia were the MLABs on that deal, which offered an interest margin of 315bp over Jibor, according to LPC data.

State-owned PTPN, which regularly taps the Indonesian rupiah market, is a producer of palm, rubber, sugar and related commodities.

› PGN TO MANDATE BORROWING

PERUSAHAAN GAS NEGARA is tipped to mandate Bank Mandiri on a one-year new-money loan of about US$350m.

The borrower’s previous offshore loan was a US$650m five-year financing in August 2014. ANZ, Citigroup, HSBC, MUFG and Sumitomo Mitsui Banking Corp were the MLABs of the deal, which attracted three other lenders in general syndication.

is Indonesia’s largest natural gas transportation and distribution company.

› ADIRA CLOSES NEW-MONEY LOAN

ADIRA DINAMIKA MULTI FINANCE has closed a US$350m three-year amortising facility, increasing it from a targeted size of US$250m.

BNP Paribas, DBS Bank, Maybank, MUFG and United Overseas Bank were the mandated lead arrangers and bookrunners of the new-money deal, which attracted 20 lenders in general syndication. The signing was on April 5.

The borrowing paid a top-level all-in pricing of 106bp based on an interest margin of 90bp over Libor and an average life of 1.625 years. Funds are for general corporate purposes.

The borrower’s previous loan was an increased US$300m three-year financing last June. ANZ, BNP, Citigroup, DBS and MUFG were the MLABs of the loan, which

offered a top-level all-in pricing of 100bp based on a margin of 90bp over Libor and an average life of 1.625 years.

The Jakarta-based company, a unit of Bank Danamon Indonesia, provides consumer financing and finance leasing services for cars, motorcycles, durable goods and other products.


JAPAN


› SMBC AVIATION PRINTS FIVE-YEAR NOTE

SMBC AVIATION CAPITAL last Monday priced a US$500m five-year bond at 99.868 with a coupon of 3.55% to yield 3.579%.

This was equivalent to Treasuries plus 125bp, the tight end of guidance of Treasuries plus 130bp, plus or minus 5bp, and inside initial price thoughts of Treasuries plus 145bp area. The new issue concession was estimated at 3bp.

The deal size was capped at US$500m and orders were heard to reach US$2.3bn.

The 144A/Reg S bonds will be issued by SMBC Aviation Capital Finance, and guaranteed by the parent company. The notes have expected ratings of A– by both S&P and Fitch.

Citigroup, Credit Agricole, Goldman Sachs, JP Morgan, RBC and SMBC Nikko were bookrunners.

› TOYOTA MOTOR CREDIT PRINTS

TOYOTA MOTOR CREDIT CORP, rated Aa3/AA– (Moody’s/S&P), priced a US$2bn two-part senior offering last Tuesday.

A US$1.25bn 1.5-year floater priced at par with a coupon of three-month Libor plus 15bp, tightening from initial price thoughts of low 20s.

A US$750m three-year fixed-rate tranche priced at 99.937 with a coupon of 2.65% to yield 2.672%, equivalent to Treasuries plus 38bp. This was at the tight end of final guidance of Treasuries plus 40bp, plus or minus 2bp, and inside IPTs of low 50s.

Citigroup, RBC Capital Markets, Mizuho and MUFG were active bookrunners for the SEC-registered deal.

› AFLAC JAPAN PRIVATELY PLACES PERP

AFLAC LIFE INSURANCE JAPAN, rated AA by JCR, raised ¥30bn (US$268m) by selling a perpetual non-call five in a private placement.


The bonds were issued by Aflac Japan, not by Aflac Inc, which had issued Global yen bonds in 2017 and 2018. As the issuer converted from a branch of Aflac Inc into a legal subsidiary a year ago, the deal is classified as a domestic bond offering and does not have a guarantee from Aflac Inc.

The PerpNC5 carries a 0.963% coupon for the first five years, which is equivalent to 93bp over yen offer-side swaps. The coupon will change to a floater rate of six-month Libor plus 93bp if not called and will step up 100bp after 10 years.

Unlike the Global yen deal done by Aflac Inc, this deal was marketed in a typical Japanese way. The marketing period was seven trading days, a lot longer than the usual three or sometimes two days in international yen deals. The marketing method, however, was not the traditional retention system but the transparent Pot system.

The guidance range narrowed slowly over the course of marketing. It was at 90bp–100bp on April 3–4, then 90bp–98bp on April 5–8, 93bp–97bp last Tuesday, and 93bp–95bp on Wednesday before landing at the tightest end.

The books swelled to near ¥60bn, according a banker on the deal.

Mitsubishi UFJ Morgan Stanley, Mizuho and SMBC Nikko are the lead managers on the deal, rated A+ by JCR.

› SOFTBANK GROUP SETS RETAIL RECORD

SOFTBANK GROUP has raised ¥500bn from its biggest retail bond, once again turning to Japanese savers to lock in low-cost funding.

The six-year retail bonds, priced at par, carry a 1.64% coupon, just above the mid-point of the initial guidance range of 1.30%–1.90%.

The issue underlines the continued appeal of the SoftBank brand in Japan, where individual investors have bankrolled much of its expansion in recent years.

The mobile phone and technology investment giant raised ¥700bn from domestic retail bonds in 2013, ¥1.1trn in 2014, ¥920bn in 2015, ¥400bn in 2016, ¥400bn in 2017 and ¥410bn in 2018, according to DealWatch, IFR’s sister publication. Its retail offerings have included both senior debt and more risky 25-year non-call five-subordinated paper.

In addition to this, its mobile phone unit raised ¥2.6trn from last year’s IPO, sold mainly to Japanese retail buyers.

Of the proceeds of the new trade, ¥300bn will be allocated to refinance bonds maturing on May 30, and the rest will be used to refinance debt maturing in September.

Nomura underwrote 28.8% of the issue, Daiwa 18%, SMBC Nikko 16%, Mizuho and Mitsubishi UFJ Morgan Stanley 12% each, SBI Securities 8%, and the rest was taken by five other brokerages. Underwriting fees are a quite rich 125bp.

The bonds are rated A– by JCR.

SYNDICATED LOANS

› JBIC BACKS TORAY'S TENCATE ACQUISITION

Japan Bank for International Cooperation has signed a loan for TORAY INDUSTRIES to back its €930m (US$1.05bn) acquisition of Netherlands-based TenCate Advanced Composites Holding, JBIC said in a statement last Tuesday.

The size of the loan, which was co-financed with commercial banks, is undisclosed.

Last July, the world’s largest maker of carbon-fibre composite materials completed the acquisition of TenCate, which makes thermoplastic prepreg, a material that improves efficiency of moulding.

Toray last tapped the syndicated loan markets in March for a ¥39.8bn (then US$358m) loan with Sumitomo Mitsui Banking Corp as arranger.

› JOGMEC SIGNS ZERO-INTEREST LOAN

JAPAN OIL GAS & METALS NATIONAL signed a ¥544.65bn (US$4.95bn) one-year bullet term loan last Thursday following a heavy oversubscription, the state-backed company said in a statement.

The government-guaranteed loan was priced at a zero interest rate through conventional auctions that saw bids of up to ¥3.195trn.

Sumitomo Mitsui Banking Corp was the agent. Drawdown is slated for April 26, and proceeds will be for operating funds.

JOGMEC, which visits the loan market multiple times in a year, typically raises a large loan in April. The company completed a ¥393.536bn one-year term loan with a similar structure in April last year.

In February, it obtained a ¥35.989bn one-year term loan, which also priced at zero interest following strong demand from lenders such as regional banks.

MALAYSIA


› MAYBANK ISLAMIC SELLS T2

MAYBANK ISLAMIC has raised M$1bn (US$247.7m) from the sale of 10 non-call five Islamic bonds that will qualify as Tier 2 capital.

The notes, rated AA1 by RAM, will pay 4.5%.

Settlement was on April 5. Proceeds from the self-led issue were used to redeem a 4.75% Tier 2 bond that matured on the same day. The Islamic bank is a unit of Malayan Banking.

NEW ZEALAND


› ADB KAURI RAISES NZ$200M

ASIAN DEVELOPMENT BANK (Aaa/AAA/AAA) priced a NZ$200m (US$136m) seven-year Kauri bond on April 5 with joint lead managers ANZ and TD Securities.

The 2.375% April 16 2026s priced at 99.647922 for a yield of 2.43%, in line with mid-swaps plus 43bp guidance and 77.25bp wide of the April 2025 NZGB.

ADB previously accessed the Kauri market in October 2018 with a NZ$400m increase to its 2.875% April 28 2021 bond.

› HEARTLAND BANKS NZ$125M

HEARTLAND BANK (formerly Heartland Building Society), rated BBB (Fitch), has raised an upsized NZ$125m from a five-year note offer.

The 3.55% April 12 2024s priced at par on April 5, at the tight end of mid-swaps plus 175bp–190bp guidance.

BNZ was arranger and joint lead manager with CBA, Deutsche Craigs and Westpac.

Heartland Bank previously issued a NZ$150m 4.5% five-year retail note in September 2017.

www.ifrasia.com


COUNTRY REPORT PHILIPPINES

› TOYOTA NZ PARKS NZ$100M

TOYOTA FINANCE NEW ZEALAND, rated Aa3/AA– (Moody’s/S&P), priced a capped 2.71% NZ$100m five-year senior unsecured bond last Thursday at mid-swaps plus 88bp.

The margin was at the wide end of final 83bp–88bp guidance which had been revised from the initial 82bp–92bp range. ANZ was sole lead manager.

The issuer, which raised NZ$100m from a five-year bond sale last September, has NZ$75m of dual-tranche notes maturing on April 23.

SYNDICATED LOANS

› TRADE ME CUTS PRICING ON LOAN

New Zealand-based online classified operator TRADE ME last Thursday increased a proposed term loan to US$605m from US$575m term and cut the pricing on the deal.

The debt will be used to support the company’s buyout by private equity firm Apax Partners.

The upsized loan allowed the company to cut the size of a privately placed second-lien loan to NZ$276m (US$186m) from NZ$320m.

Guidance on the first-lien loan is now at 425bp over Libor with a 0% floor and discount of 99.5 after circulating in the 450bp-475bp over Libor range with a 0% floor and a discount of 99.

The seven-year loan will have six months of soft call protection at 101.

Credit Suisse leads alongside Nomura, UBS, Macquarie and Jefferies. Commitments were

due Thursday and have been extended to Friday.

The borrower is also raising NZ$88m through a revolving credit facility, pricing on which is expected to be the same as the first-lien term loan.

The acquisition was announced December 12 2018 and carried an equity value of NZ$2.56bn.

The issuer and the debt are rated B1/B.The borrower is TRADE ME GROUP (TITAN

ACQUISITIONCO NEW ZEALAND).

› SPARK EXTENDS 2017 REVOLVER

Telecommunications company SPARK NEW

ZEALAND has extended the maturity of a NZ$200m revolving credit facility it signed in April 2017 by one year, the company said in a stock exchange filing on April 4.

The new maturity of the undrawn revolver from domestic and international banks is April 30 2022. The original three-year loan was already extended once in April 2018 by a year.

Spark’s other loans include a NZ$100m three-year committed revolver from HSBC due on November 30 2021. The facility replaced NZ$100m of loans with Bank of New Zealand that matured in October last year.

Spark also has a NZ$200m committed revolver with Westpac that matures on November 30 2020, and a NZ$125m revolver with MUFG maturing on November 30 2022.

The facilities from BNZ and MUFG were fully drawn as of December 31 2018 and NZ$60m of the Westpac facility was drawn.

Spark Finance is the borrower of these facilities.

PHILIPPINES

SYNDICATED LOANS

› MONDE NISSIN UNIT WRAPS UP DEBUT

MARLOW FOODS, a unit of Philippine food company Monde Nissin, has closed a debut £123m (US$158m) five-year borrowing, with Asian banks largely supporting the deal.

Citigroup was originally mandated as sole bookrunner of the dual-tranche facility, before HSBC joined at the top as equal-status arranger.

Six other lenders joined the deal, which was syndicated on a best-efforts basis.

Marlow Foods is the borrower on the non-recourse financing, which carries a letter of comfort from parent Monde Nissin.

The deal comprises a £113m amortising term loan with an average life of four years and a £10m revolving credit facility. It offered a top-level all-in pricing of 220bp based on an interest margin of 195bp over sterling Libor.

Funds will be used for capital expenditure, refinancing of shareholder loans and general corporate purposes.

Marlow Foods owns vegetarian and vegan food manufacturer Cauldron Foods and meat substitute producer Quorn Foods, both of which are based in the United Kingdom.

Monde Nissin acquired Quorn Foods in October 2015 from Exponent Private Equity and Intermediate Capital Group

Aboitiz Power signs loan for thermal assets Loans Power group to increase stakes in Mariveles and Dinginin plants

ABOITIZ POWER CORP has signed an up to

US$300m five-year facility backing its

acquisition of a stake in AC Energy Holdings

Inc’s thermal platform in the Philippines.

DBS Bank, Mizuho Bank, MUFG and

Standard Chartered are the lenders of the

financing, which will be launched into

general syndication at a later date.

Funds will be used to partially finance

the acquisition of a 49% voting stake and

60% economic stake in AA Thermal, which

is owned by AC Energy – a wholly owned

subsidiary of Ayala Corp.

Arlington Mariveles Netherlands Holding,

an affiliate of AC Energy, is the seller of AC

Energy, which is valued at US$579.2m.

AA Thermal’s assets initially consist of

AC Energy’s limited partnership interests in

GNPower Mariveles Coal Plant, the owner

and operator of an operating 2x316 MW coal

plant in Mariveles, Bataan, and in GNPower

Dinginin, the developer and owner of a 2x668

MW supercritical coal plant project under

construction in Dinginin, Bataan.

The agreement will increase Aboitiz

Power’s beneficial ownership in the Mariveles

project to 78.325% and in the Dinginin

project to 70%. The former project has been

operating since 2013, while the first unit of

the latter project is scheduled to go online

this year.

Aboitiz Power last signed a US$650m two-

year bridge loan that backed its purchase of

an indirect partnership interest in GNPower

Mariveles Coal Plant and GNPower Dinginin

from Blackstone. DBS, HSBC, Maybank,

MUFG, Mizuho and StanChart were the

mandated lead arrangers, bookrunners and

underwriters of the financing, which attracted

11 lenders in general syndication. That loan

paid a top-level all-in pricing of 126.67bp

based on an interest margin of 110bp over

Libor and an average life of 1.8 years. Therma

Power Inc is the borrower of the financing,

which has a corporate guarantee from parent

Aboitiz Power.

Incorporated in 1998, Aboitiz Power is the

holding company for the Aboitiz Group’s

investments in power generation, distribution

and retail electricity services.

CHIEN MI WONG


for £550m. At the time, Banco de Oro Unibank, Bank of the Philippine Islands and Metropolitan Bank & Trust Co provided a US$650m seven-year loan to finance the acquisition.


SINGAPORE


› DBS GROUP DOES DOLLARS

DBS GROUP HOLDINGS last Tuesday priced a US$750m three-year senior unsecured bond offering at 99.946 with a coupon of 2.85% to yield 2.869%, equivalent to Treasuries plus 58bp.

This was at the tight end of guidance of Treasuries plus 60bp, plus or minus 2bp, and inside initial price thoughts of 75bp area.

The 144A/Reg S offering attracted over US$2.2bn of orders from 140 accounts, with North America taking 47%, Asia Pacific 39% and EMEA 14%.

By investor type, fund managers booked 50%, insurers and pension funds a combined 20%, banks 18%, official institutions 8% and private banks 4%.

The bonds will be issued off the Singaporean bank’s US$30bn Global MTN programme and are expected to be rated Aa2/AA– (Moody’s/Fitch).

Compatriot United Overseas Bank’s dollar bonds due April 2021, rated Aa1/AA–/AA–, were seen at Treasuries plus 55bp, while National Australia Bank had May 2022 bonds, rated Aa3/AA– (Moody’s/S&P), at Treasuries plus 65bp, indicating that DBS paid little or no new issue premium.

DBS was sole global coordinator. It was also joint bookrunner with Barclays, JP Morgan, RBC Capital Markets, Societe Generale and Wells Fargo Securities.

› UOB MAKES A SPLASH ON US T2 DEBUT

Singapore’s UNITED OVERSEAS BANK (Aa1/AA–/AA–) drew considerable demand across the Atlantic for its first US dollar-denominated capital deal sold via 144A/Reg S format.

UOB allocated 40% of the subordinated bonds to US investors, overshadowing the 35% distribution to Asia and the 25% lot given to Europe.

The US$600m Tier 2 10-year non-call five bond priced at Treasuries plus 150bp, or 25bp inside initial price guidance. Final pricing was seen as offering a minimal new issue concession despite issuing at the tightest spread for a Basel III-compliant US dollar-denominated Asian Tier 2, according to Refinitiv data.

This is the first Singapore bank Tier 2 since the city state revised its bail-in rules in 2018, which clarified when a bank becomes non-viable, at which point holders of the Tier 2 notes face a writedown in their principal bond amount. By reducing

Olam signs incentive loans for digital growth Loans Agribusiness company breaks new ground with D-loan

Singapore-headquartered agribusiness OLAM

INTERNATIONAL has obtained an innovative new

type of corporate loan that links pricing to

the borrower’s progress towards its digital

transformation.

The US$350m three-year revolving credit

facility is a digital loan (D-loan), a form of

positive incentive loan (PIL), which rewards

borrowers that achieve pre-arranged targets.

The rise in PILs over the past two years

has so far been dominated by credit facilities

linked to environmental, social and corporate

governance goals.

Increasing numbers of companies,

especially in Europe, are looking to achieve

improved terms on their corporate facilities

by linking pricing to pre-existing ESG

commitments.

“Positive incentive loans are really taking

off. Clients are busy looking at their options.

There has been a broadening away from

purely environmental and social elements

to more business related developments,” a

senior banker said.

“These types of loans help communicate

a message to the world, showing companies

moving in the right direction, while lenders

can demonstrate their support for a

particular strategy.”

Like ESG-linked RCFs, D-loans are for

general corporate purposes and are not

earmarked for a specific kind of investment.

The financing for Olam, which refinances

existing loans, is the first time that a credit

facility has been linked to the digital maturity

of a borrower.

Olam and its lenders agreed on digital

score targets to be reached during the life of

the financing. If Olam meets those targets, it

sees a reduction in loan pricing.

This is an important financial incentive to

borrowers to significantly improve their digital

maturity as fast as possible, said BBVA, digital

coordinator and facility agent on Olam’s deal.

Olam’s digital maturity score will be

determined using Boston Consulting Group’s

Digital Acceleration Index methodology,

assessing Olam across four digital criteria

comprising business strategy driven by

digital; digitising the core; new digital

growth; and enablers.

The financing is being provided on an equal

basis by mandated lead arrangers BBVA, DBS Bank, First Abu Dhabi Bank, JP Morgan, Mizuho Bank, Natixis and Standard Chartered.

“We believe that companies that

undertake a digital transformation will be

the winners in their sector in the long term,”

Ricardo Laiseca, BBVA’s head of global

finance, said.

“Digitisation translates into greater

competitiveness and profitability, which will

allow these companies to stay ahead of the

competition.”

Olam’s deal shows that the range of

targets around which PILs are structured is

expanding.

Already PILs have been tied to a wide

range of goals including carbon emissions,

fuel and water usage, employment,

renewable energy, access to affordable

energy, child labour, and the empowerment

of women.

In February, UK-based educational

technology group Pearson agreed a

US$1.19bn sustainability-linked loan

refinancing, the first syndicated loan globally

with targets linked to education.

The margin on the 5+1+1-year loan

is linked to Pearson’s commitment to

extend its vocational educational reach

internationally in support of the United

Nations’ sustainability goals, especially Goal

4 on education.

Bank of America Merrill Lynch and

Barclays coordinated the RCF as

bookrunning mandated lead arrangers. ANZ,

BNP Paribas, Citigroup, HSBC, JP Morgan,

MUFG and TD Bank were mandated lead

arrangers.

BNP advised on the sustainability element

of the loan, while Barclays is facility agent.

ALASDAIR REILLY


COUNTRY REPORT SINGAPORE

uncertainty, the subordinated notes carry lower credit risks.

The clarity prompted Moody’s to upgrade T2 subordinated bonds issued by Singaporean banks to A2 from A3 last December.

UOB’s notes, which are expected to be rated A2/BBB+/A+, drew over US$3bn in orders from 176 accounts.

By investor type, fund managers took 58%, insurers and pensions 27%, the public sector bought 8%, private banks and corporates 4% and banks 3%.

Citigroup, Credit Suisse, HSBC, Standard Chartered and UOB were joint bookrunners.

› FRASERS BUILDS PERPETUAL MOMENTUM

FRASERS PROPERTY priced a S$400m (US$295m) perpetual non-call five bond on April 4, Singapore’s largest corporate perp since 2017, on the back of an investor-friendly structure and heavy demand from private banks.

The bonds were priced at 4.98%, 27bp inside initial guidance of 5.25% area, after orders reached over S$900m.

The deal was the largest non-FIG perpetual since Mapletree Investments sold S$700m 3.95% perpetual non-call 5.5-year notes in May 2017.

Demand was driven by private banks, which took 90% of the bonds, leaving 10% to asset managers, banks and corporate investors. Singapore accounted for 94% of the allocations.

The property developer offered a call in year five, as well as a reset at the end of year five to the prevailing Singapore SOR rate plus the initial credit spread of 304bp, with a 100bp step-up at the year five as well.

This is a less aggressive structure than previous Singapore dollar perpetual non-call five bonds, which had resets and step-ups only in year 10. For example, ST Telemedia sold S$350m 5% perpetual notes in January this year with a call in year five but a reset and a step-up in year 10.

Fraser achieved a lower coupon and a larger size than STT’s deal. However it offered a good pick-up over the STT perpetuals, which were quoted at around 4%.

Fraser Property settled its unrated subordinated notes on April 11 off a S$5bn multi-currency debt issuance programme. Proceeds will be used for general corporate needs and for debt refinancing.

Frasers Property Treasury was the issuer of the notes, which are guaranteed by parent Frasers Property.

OCBC Bank was sole lead manager and bookrunner.

RESTRUCTURING

› E&Y WITHHOLDS PAC RADIANCE OPINION

The independent auditor of financially strapped PACIFIC RADIANCE has withheld its opinion on the company’s latest annual results because of the uncertainty surrounding its debt restructuring.

The Singaporean oil services company reported last Thursday that its current and total liabilities exceeded current and total assets by US$486.75m and US$158.48m, respectively, as at end-December 2018.

Auditor Ernst & Young said the information provided for its audit reflected Pacific Radiance’s assumption

that it was a going concern, but that there were “material uncertainties” about the appropriateness of that assumption.

The group’s assets, with a carrying value of US$300.3m, are secured against bank loans, on which certain covenants were breached in 2017. Banks agreed to temporarily suspend certain debt obligations while discussions are being held to restructure the loans.

In late August last year, holders of S$100m (US$73.2m) 4.3% bonds consented to a deferred cash payment and a debt-to-equity swap.

In December, the company signed a binding term-sheet with unidentified parties for an investment of assets in exchange of shares. The parties control vessel-owning and logistics services entities. This restructuring option is subject to various approvals, including from regulatory agencies and shareholders.

“These factors give rise to material uncertainties on the appropriateness of the use of the going concern assumption in the preparation of the accompanying financial statements of the group and the company,” said Ernst & Young in a disclaimer to the annual report.

As a result, it was not able to obtain enough evidence to provide a basis for an opinion on the results.

For the 2018 financial year, Pacific Radiance reported a net loss of US$101.2m (including impairment charges of US$53.6m).

Meanwhile, a Singapore High Court moratorium on legal proceedings against Pacific Radiance and subsidiaries Pacific Crest and CSI Offshore is due to end on April 18. The companies are expected to apply to the court for further extensions.

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SOUTH KOREA


› KORES GOES OFFSHORE

KOREA RESOURCES CORP last Wednesday priced US$400m five-year senior unsecured bonds at Treasuries plus 102.5bp, drawing orders of over US$2.85bn from more than 145 accounts.

Initial guidance was Treasuries plus 130bp area, before tightening to 105bp area, plus or minus 2.5bp.

Asia took 88% of the Reg S notes and EMEA 12%. Fund managers booked 63%, central banks and banks took a combined 21%, insurers 10%, and private banks and others a combined 6%.

Majority-owned Mexican subsidiary MINERA Y METALURGICA DEL BOLEO will issue the notes, which have expected ratings on par with guarantor Korea Resources at A1/A (Moody’s/S&P).

The senior unsecured notes have a change of control put at par if the Korean government ceases to own and control at least 51% of the company.

Kores is a mineral resources developer with a national policy role to secure resources for Korean industries.

Citigroup, Credit Agricole, HSBC and JP Morgan were joint bookrunners.

TAIWAN

SYNDICATED LOANS

› GRAND RIVER LAUNCHES MEZZANINE LOAN

GRAND RIVER DEVELOPMENT has launched a US$100m three-year mezzanine to part-finance the construction of Taipei Sky Tower in Taipei’s Xinyi district.

Sole mandated lead arranger and bookrunner Huatai Securities pre-funded the deal in early March and is expected to close syndication in late May or early June.

The project will cost about US$1bn to develop and is expected to be completed in 2020.

The tower will house the Park Hyatt Taipei and Andaz Taipei hotels, as well as retail stores.

The project site was formerly that of

CTBC Bank’s headquarters. Taiwan-listed CTBC Financial Holding sold 95% of the site and building to Grand River in October 2015 and the tower was demolished in 2016.

In February 2016, Grand River raised a NT$10.11bn (then US$304m) seven-year loan to build Taipei Sky Tower. MLAB CTBC Bank brought in nine lenders. The interest margin was 210bp over Taibor and the top-level upfront fee was 25bp. Green Heaven Investments is the guarantor.

The latest mezzanine financing will provide additional capital for building the tower.

Project manager Riant Capital is a real estate fund with more than US$1.5bn of assets under management in North Asia.

› MULTIBANK INVITES ASIAN BANKS

Panama’s MULTIBANK has launched a US$100m three-year bullet term loan, tapping Asian loan market liquidity.

Standard Chartered and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners of the financing, which pays an interest margin of 170bp over Libor.

Banks have been invited to join as MLAs with commitments of US$25m or more for

LG Chem adds to green credentials Bonds Korean petrochemical company funds Green business ventures

LG CHEM has burnished its environmentally

friendly credentials with a US$1.56bn-

equivalent 144A/Reg S Green bond offering

in two currencies.

The Korean petrochemical producer last

Monday priced a US$500m 3.25% 5.5-year

note at 99.855 to yield 3.279%, equivalent

to Treasuries plus 95bp. Initial guidance was

125bp area.

A US$500m 3.625% 10-year tranche

priced at 99.419 to yield 3.695%, equivalent

to Treasuries plus 117.5bp, inside initial

guidance of 145bp area.

LG Chem also sold €500m (US$563m)

0.5% four-year Green bonds at 99.61 to yield

0.599%. This was equivalent to mid-swaps

plus 65bp, inside initial price thoughts of

mid-swaps plus 90bp–95bp.

Orders were over US$2.2bn from 159

accounts for the 5.5-year dollar tranche.

Asia took 63% of the bonds, US accounts

20% and Europe 17%. By investor type, asset

managers and insurers booked a combined

67%, banks 26%, central banks 5% and

private banks 2%.

The 10-year drew orders of over US$2.6bn

from 182 accounts, with Asia taking 63%,

Europe 22% and the US 15%. By investor

type, asset managers and insurers took 75%,

banks 18%, central banks 4% and private

banks 3%.

The bonds have expected ratings of A3/A–

(Moody’s/S&P), in line with the issuer, which

is a subsidiary of Korean chaebol LG Group.

Price references came from like-rated KT

Corp, which had August 2022 and July 2026

dollar bonds quoted at Treasuries plus 80bp

and 101bp, respectively, and SK Telecom,

which had April 2023 and July 2027 dollar

bonds seen at Treasuries plus 87bp and

103bp.

Pricing was in line with those companies,

although the 10-year arguably came inside

fair value, which was seen in the context of

100bp–120bp. The issuer benefited from

rarity value, as well as the relative scarcity

of Asian investment-grade issues this year,

helping it stand out in a crowded field of

over US$7bn in Asian emerging market bond

offerings on Monday. The green angle gave

it an extra appeal, especially for European

investors, some of whom bought both the

euro and dollar tranches for their green

portfolios.

LG Chem is a petrochemical producer,

but it has diversified into manufacturing

rechargeable batteries, which includes

batteries for electric vehicles.

“It’s one of those issuers that is not

traditionally green, but is trying to green up

its operations with the bond proceeds,” said a

source close to the deal.

LG Chem has been investing heavily in

its battery business, and Moody’s wrote that

revenue from that division is expected to more

than double by 2020 from W6.5trn (US$5.7bn)

in 2018. This month, it set up a joint venture

with VinFast Trading and Production, a

subsidiary of Vingroup, to produce lithium ion

battery packs for the Vietnamese carmaker’s

electric scooters and cars.

Bank of America Merrill Lynch, BNP Paribas, Citigroup, HSBC, Morgan Stanley

and Standard Chartered Bank were joint

bookrunners for both tranches.

The bonds were seen 5bp–8bp tighter in

secondary trading on Tuesday.

DANIEL STANTON


COUNTRY REPORT THAILAND

a top-level all-in pricing of 190bp through an upfront fee of 60bp, lead managers with US$15m–$24m for an all-in of 186.7bp based on a fee of 50bp and participants with US$10m–$14m for an all-in of 183.3bp through a 40bp fee.

A bank presentation was held last week in Taipei. Commitments are due by May 17.

There is a US$100m greenshoe option.According to LPC data, Commerzbank

and StanChart provided a US$50m two-year term loan for Multibank in October 2015.

› CHAILEASE HOLDING BACK FOR REVOLVER

CHAILEASE HOLDING is back for a US$150m three-year revolving credit, less than a month after one of its units raised a smaller facility.

Mega International Commercial Bank and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners of the new loan, which has a US$100m tranche A led by Mega and a US$50m tranche B led by SMBC.

Tranches A and B offer interest margins of 126bp and 130bp over Libor, respectively. For tranche A, the borrower will pay any excess interest rate beyond a 35bp difference between TAIFX and Libor.

Banks are being invited to join as co-arrangers with commitments of US$25m or more for an upfront fee of 18bp, as managers with US$18m–$24m tickets for a 12bp fee, or as participants with US$12m–$17m for a 7bp fee. The deadline for commitments is April 19.

Funds are to refinance a US$100m three-year loan the borrower raised in April 2016 and for working capital purposes. Mega was the MLAB on that deal, which offered a margin of 134bp over Libor, according to LPC data.

At the end of March, US-based Grand Pacific Finance, a unit of Chailease Holding, raised a US$100m three-year financing. Bank of Taiwan was the MLAB of that deal, which offered margins ranging from 150bp to 250bp over Libor.

› CIP SEEKS PROPOSALS FOR WIND FARM PF

Danish infrastructure fund management company COPENHAGEN INFRASTRUCTURE PARTNERS has sent out a request for proposals for a loan of up to NT$69.8bn (US$2.3bn) to back offshore wind projects in Taiwan.

CTBC Bank and MUFG are the financial advisers on the loan, which has an 18-year tenor.

Potential lenders are being asked to submit indicative pricing, commitment levels and other details by the April 26 response deadline.

The total cost of the projects in Taiwan’s Changhua county is around NT$93bn.

Last April, Taiwan’s Ministry of Economic Affairs awarded CIP a contract for projects with a combined capacity of 900MW, including 600MW for projects in Changfang and Xidao, located off the coast of Changhua county, and 300MW for Site 29, which CIP will develop with partners China Steel and Diamond Generating Asia.

The same month, Danish wind energy developer Orsted A/S won a contract to install 900MW of offshore wind capacity at its Changhua 1 and 2a projects with completion slated for 2021. Orsted is expected to launch a NT$25bn five-year wind farm loan into general syndication soon. Bank of Taiwan, BNP Paribas and Cathay United Bank are the mandated lead arrangers and bookrunners. A Taiwan-based unit of Orsted is the borrower on the NT$25bn loan, while the parent company is the guarantor.

Separately, German developer Wpd and Taiwan’s Formosa II OWF are also in the market for multi-billion US dollar project financings for offshore wind farms, which are also part of Taiwan’s target to install 5.5GW of offshore wind power capacity by 2025.

THAILAND


› GHB PLANS CHUNKY BOND

Thailand’s GOVERNMENT HOUSING BANK is planning to market bonds in tenors of three to 15 years to raise up to Bt20bn (US$630m).

The state-owned financial institution, locally rated AAA by Fitch, will offer three, five, 10 and 15 years. Institutional investors will be invited to subscribe to the notes from April 24-26.

CIMB Thailand is sole lead manager for the deal.

› TPI POLENE PLANS RETURN

TPI POLENE plans to return to the bond market to raise up to Bt5bn three months after it sold Bt3.5bn three-year bonds in January.

CIMB Thai will reprise its role as sole lead manager for the latest offering of bonds, rated BBB+ by Tris.

The deal comes at an opportune time. Last Wednesday, Tris upgraded its outlook

on the issuer’s rating to positive from stable to reflect a potential improvement in its financial profile when its power plants are all at full operation.

The company is Thailand’s third largest cement manufacturer and also has interests in power generation. Its power plants sell their entire electricity output to state-owned Electricity Generating Authority of Thailand.

TPI Polene plans to privately place the notes to a small group of investors. Proceeds will be used to refinance Bt4.75bn of bonds that will mature this year.

› BEM ROLLS OUT BOND PLANS

BANGKOK EXPRESSWAY AND METRO is planning to sell up to Bt5bn of bonds in tenors of three to 10 years over the next few weeks.

Bank of Ayudhya and Government Savings Bank are joint lead managers for the deal. Preliminary pricing indications are at spreads of 80bp–90bp for the three-year tranche, 105bp–115bp for the five-year tranche, 125bp–135bp for the seven-year tranche and 127bp–137bp for the 10-year tranche.

The pre-marketing ranges offered by the Thai mass rapid transit company are tighter than those offered by THAI AIRWAYS, although both issuers are rated the same by Tris, at A with a stable outlook.

Thai Airways, which is due to hold bookbuilding for a Bt10bn deal on April 23, is indicating 40bp–50bp more than BEM for the same tenors, mainly because of the national air carrier’s higher leverage. Bangkok Bank, Kasikornbank and Krungthai Bank are joint lead managers for Thai Airways’ deal.

BEM plans to open bookbuilding for institutional and high-net-worth investors in late April or early May.

› PERFECT PROPERTY BONDS

PROPERTY PERFECT, rated BB+ by Tris, will invite institutional and high-net-worth investors to subscribe next month to four-year bonds to raise up to Bt2.5bn (US78.8m).

The unrated bonds will pay 6.25% for the first two years and 7.00% for the last two years.

Subscription will be on May 7-9.Globlex Securities, KT Zimco Securities, Capital

Nomura Securities, KGI Securities Thailand and Yuanta Securities Thailand are joint lead managers.

The Thai property developer will use the proceeds to repay debt as well as fund business expansion and working capital needs.


ASIA DATA

LAST WEEK’S ECM DEALS

Stock Country Date Amount Price Deal type Bookrunner(s)

Huya China 10/04/19 US$442m US$24 Follow-on (primary/ secondary) Citigroup, Credit Suisse, Goldman Sachs, Jefferies

Guotai Junan Securities China 10/04/19 HK$3.17bn HK$16.34 Follow-on (primary) Guotai Junan International, UBS

Zengame Technology China 10/04/19 HK$221m HK$1.23 IPO (primary) Guotai Junan International

China New Higher Education Group China 10/04/19 HK$393m HK$3.57 Follow-on (primary) CLSA

ReadyTech Australia 09/04/19 A$50m A$1.51 IPO (primary) Macquarie Capital, Wilsons Corporate Finance

Source: IFR Asia

LAST WEEK’S EQUITY-LINKED ISSUANCE

Issuer Country Date Amount Greenshoe Maturity Coupon (%) Premium (%) Bookrunner

Yuexiu Real Estate Investment Trust China 09/04/2019 HK$1.1bn 363 days 1.875% 2.5% DBS, HSBC, Nomura

Baozun China 08/04/19 US$275m 5 years 1.625% 30% Credit Suisse, Deutsche Bank

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 407.629 0.142 1.520 3.748 135

ADHY Asian-dollar high-yield index 644.372 0.046 2.097 7.344 500

AGIG Asian-dollar government high-grade index 379.921 0.213 1.857 3.690 115

AGHY Asian-dollar government high-yield index 768.292 0.243 2.853 7.087 371

ACIG Asian-dollar corporate high-grade index 434.126 0.117 1.408 3.788 144

ACHY Asian-dollar corporate high-yield index 528.373 0.008 1.954 7.373 525

Source: Merrill Lynch

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