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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

MAY 2 2020 ISSUE 1136 www.ifre.com

NAB stands out from Australia’s big fourwith first equity deal since virus outbreak

Philippines presents ‘diamond’ offeringwith sovereign’s largest offshore bond

Australian companies scurry for financingas risk aversion drives up cost of loans

BONDS/LOANSIndonesia’s PLN rejects talk of deferring debt repayments07

LOANS

Techcombank bags largest debut loan for Vietnamese bank borrower08

EQUITIES

Nasdaq-listed JD.com files for secondary listing in Hong Kong09

PEOPLE & MARKETS

HSBC’s new strategy already in peril as bad loan provisions hit quarterly profit 12

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International Financing Review Asia May 2 2020 1

Upfront OPINION INTERNATIONAL FINANCING REVIEW ASIA

Covid capital

How much bank capital is really enough? A deadly virus may not have been what regulators had in mind when they toughened up on capital requirements,

but it is sure to test whether the rules really work.

response to the coronavirus fallout. The A$3.5bn (US$2.3bn) equity raising is a precautionary buffer against a surge in bad debts, but it is not the result of regulatory pressure – a change from recent Aussie cash calls in the sector.

capital rules to allow banks to respond to the crisis, with the goal of avoiding a credit squeeze at a time when the real economy is reeling.

NAB still has plenty of room within those capital buffers, so the recap can be seen as a warning of potential credit

be forced to follow its lead, given the competitive pressure among the quartet. Westpac, which reports interim results

event, then other banks should be too.HSBC last week increased credit provisions to US$3.0bn

but warned that a worst-case scenario could raise bad debts this year to US$11bn. Standard Chartered struck a far more

Hin Leong Trading in Singapore).Both have already been effectively forced to raise capital,

In contrast, US banks remain free to pay dividends despite a huge spike in unemployment and lower CET1 ratios. Massive support from the Federal Reserve and government stimulus packages have dampened fears of credit losses, at least for the time being.

The simple truth is that the damage from the Covid-19 pandemic remains impossible to predict. If the world fails to bring the virus under control, banks will need to hang on to as much capital as they can – no matter what the rules dictate.

Launch in lockdown

With its capital city still under a strict lockdown,

The Philippines priced its biggest US dollar bond on Monday, raising US$2.35bn across tranches of 10 and 25 years at record-low coupons. Not so long ago, that would have been preceded by a round of pitches from eager

priced within a single day.Regular issuers like the Philippines have streamlined the

longer need special approval from parliament or corporate boards, and lavish roadshows have long since disappeared. The Covid-19 pandemic may have killed off the beauty parade, too.

That would be no bad thing. Flying managing directors

sustainability and reduce carbon emissions across the banking sector.

Well-known, well-banked issuers – both in the public and private sector – have little trouble engaging with underwriters and investors in a virtual setting. Bond roadshow presentations have been posted online for years, and investors have quickly become comfortable with placing orders from home.

Lockdowns and remote working will not last forever. After the restrictions are lifted, however, issuers and their bankers would do well to avoid slipping back into bad habits.

for a catastrophic credit event, then other banks should be too.

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INTERNATIONAL FINANCING REVIEW ASIA CONTACTS

2 International Financing Review Asia May 2 2020

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Minato-ku, Tokyo,

SINGAPORE

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EDITOR

Steve Garton

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HEAD OF ASIAN CREDIT

ASIA EQUITIES EDITOR

Fiona Lau

DEPUTY EQUITIES EDITOR, ASIA

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SENIOR CREDIT CORRESPONDENT, ASIA

ASIA PACIFIC BUREAU CHIEF, LOANS

SENIOR REPORTERS: HONG KONG

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Takahiro Okamoto

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EMAIL ADDRESSES

Adani Electricity Mumbai 29

Adaro Energy 7

Advanced Personnel Management

International 18

AirTrunk 6

AK Medical 25

Amret 21

AMTD Group 28

Asian Pay Television Trust 32

Australia and New Zealand

Banking Group 5

Bangchak 11, 34

Bank of Baroda 29

Bank of China 23

Beijing Enterprises Clean Energy

Group 23

Berli Jucker 11

Bozhon Precision Industry

Technology 25

Canadian Imperial Bank of

Commerce 18

CAR Inc 22

Central China New Life 26

Charoen Pokphand Foods 11

Charter Hall Retail REIT 21

Chenya Energy 33

China Airlines 33

Chongqing Changan Automobile 25

Country Garden Services 26

Credit Corp 21

Daiichikosho 30

Daqin Railway 26

Downer EDI 19

Dr Peng Telecom & Media Group 8

Eagle Hospitality Real Estate

Investment Trust 30

Eastroc Beverage Group 25

Ebang International 26

Eisa Holding 25

Emerald Resources NL 21

EMR Capital 7

Erdenes Tavan Tolgoi 28

EVA Airways 33

Falcon Energy Group 31

Founder Securities 22

Gemdale 23

Geo Energy Resources 29

Gluon Xima International 25

Greenland Hong Kong Holdings 24

Guangzhou Baiyun International

Airport 25

Guosen Securities 26

Hannstar Board Corp 33

Honghe Development Group 22

Hongwell Group 34

Huawei Technologies 23

Huazhu Group 24

Hutama Karya 29

Inpex 7

JD Taurus Development (HK) 23

JD.com 9, 23

Jinke Property Group 26

JK Lakshmi Cement 29

KfW 18

Kintor Pharmaceutical 26

Korea East-West Power 32

La Trobe Financial 11, 18

Land and Houses 11

Lendlease Group 19

LIC Housing Finance 29

Macquarie Group 6

Madison Dearborn Capital Partners 18

Mandarin Airlines 33

Monash IVF Group 21

Nam Cheong 31

Nan Hai Corp 22

National Australia Bank 5

New South Wales Treasury Corp 18

Noble Development 11

Northern Star Resources 20

Olam International 30

Olam Treasury 30

One Rail Australia 20

Optus Finance 20

Pacific Radiance 31

Peijia Medical 26

Perusahaan Listrik Negara 7, 30

Qantas Airways 6, 19

Reliance Industries 10

Republic of the Philippines 4

Shanghai Hongwell Real Estate 25

Shuifa Group 22

Singapore Airlines 31

SingTel Group Treasury 20

Sri Lanka 32

Starlux Airlines 33

State of Israel 5, 33

Ta Ya Electric Wire & Cable 34

Tata Capital Financial Services 29

Tata Motors 29

Tata Power 29

Techcombank 8

Tigerair Taiwan 33

Times China Holdings 23

Total 7

TPG Telecom 6

True Move H Universal Communication 11

Uni Airways 33

Union Life Insurance 23

Unitech Printed Circuit Board 34

Vicinity Centres 7

Viva Energy REIT 21

Vocus Group 6

Vodafone Hutchison Australia 6

Wesfarmers 18

Westpac Banking Corp 5

Wharf Real Estate Investment

Company 28

Worley 20

Xiaomi Best Time International 24

Yageo 33

Yieh United Steel 33

Zhejiang Huace Film and TV 26

COMPANY INDEX


ContentsINTERNATIONAL FINANCING REVIEW ASIA

MAY 2 2020 ISSUE 1136

COVER STORIES

BONDS

04 Philippines cuts ‘diamond’ dealThe Philippines printed its largest-ever offshore commercial bond, a US$2.35bn global bond offering that drew a combined order book of over US$9bn.

EQUITIES

05 NAB moves first with cash callNAB became the first of Australia’s big four to raise equity since Covid-19 began with a A$3.5bn fundraising that could encourage its peers to follow suit.

LOANS

06 Aussie loan costs push higherAustralian companies are paying more for syndicated loans as banks face pressure on their own cost of funding, a reversal of the previous downward trend.

NEWS

07 PLN says the lights are still onPerusahaan Listrik Negara last week dismissed local media reports that it was considering a deferral of debt repayments.

08 Techcombank makes stellar debut Techcombank impressed with its

debut in the offshore loan market.

08 Subsea cable delays hit bonds Dr Peng Telecom has proposed a

restructuring of its offshore bonds after delays on an undersea cable venture.

09 JD.com looks beyond hostile US Nasdaq-listed JD.com has filed

confidentially for a secondary listing in Hong Kong.

PEOPLE & MARKETS

12 Loan losses threaten HSBC strategyHSBC warned its two-month-old strategic plan was already in jeopardy after a surge in provisions for bad loans dragged Q1 profit down by almost 50%.

13 StanChart fixes focus on costs Standard Chartered floated more cost-

cutting as the economic crisis thwarted its medium-term income targets.

14 China kicks off ChiNext reforms China plans to launch a registration-

based system for IPOs on the Shenzhen ChiNext board soon.

12 Who’s moving where NAB’s Asia general manager Neil Parekh is leaving

to join Tikehau Capital, the French alternative investment manager.

16 In brief Oil trader Hin Leong Trading is under the management of a court-

appointed supervisor as it seeks to restructure billions of dollars of debt.

ASIA DATA

36 This week’s figures

18 AUSTRALIA

New South Wales Treasury

Corp became the latest state

government to tap the 20-year

segment with a A$450m sale of

2.25% May 7 2041 bonds.

21 CAMBODIA

Emerald Resources NL has

closed on US$60m of debt

and completed a A$75m share

placement for its Okvau gold

project in Cambodia.

22 CHINA

Founder Securities has

launched a tender offer for up

to US$70m of its US$200m

6.9% guaranteed bonds due

November 2020.

28 HONG KONG

Hong Kong-based AMTD Group

has announced minimum

yields of 7.25% and 4.5% for

new senior perps in US and/or

Singapore dollars, respectively.

29 INDIA

Electric utility company Tata

Power last Tuesday sold Rs10bn

three-year bonds at 7.6% to a

single investor. The bonds are

rated AA by India Ratings.

29 INDONESIA

Geo Energy Resources has

bought back US$34.122m in

principal amount of its 8%

senior bonds due 2022 at a

steep discount.

30 JAPAN

Daiichikosho is seeking a ¥30bn

loan to ensure it has liquidity

on hand amid the coronavirus

outbreak, the Tokyo-listed

karaoke parlour chain said.

30 PHILIPPINES

The Asian Development Bank

will lend US$1.5bn each to the

governments of India, Indonesia

and the Philippines as part of a

US$20bn coronavirus package.

30 SINGAPORE

Wells Fargo has issued a notice

of default and demand for

payment for a US$35m loan to

a subsidiary of Eagle Hospitality

Real Estate Investment Trust.

32 SOUTH KOREA

Korea East-West Power printed

a US$500m five-year bond

without paying any new issue

concession, and still saw it

tighten in the secondary market.

32 SRI LANKA

Fitch cut Sri Lanka’s long-term

foreign and local-currency issuer

default ratings to B– from B,

with a negative outlook, citing

mounting financing stress.

33 TAIWAN

The State of Israel priced a

US$5bn 40-year Formosa

bond offering at par to yield

3.8%, inside initial guidance of

3.8%–3.9%.

34 THAILAND

Bangchak found good demand

to meet its targeted maximum

issue size of Bt8bn after pricing

three bond tranches at the wide

ends of guidance.

COUNTRY REPORT

16

News

Philippines cuts ‘diamond’ dealBonds Sovereign prints largest bond offering as wider spreads entice new investors

BY DANIEL STANTON

The REPUBLIC OF THE PHILIPPINES printed its largest-ever offshore commercial bond on Monday, with a US$2.35bn global bond offering that drew a combined order book of over US$9bn.

The country’s National Treasurer, Rosalia de Leon, waxed lyrical about the outcome. “The transaction was able to achieve the Republic’s lowest-ever coupon for a 10 and 25-year benchmark issuance amidst no less than an environment gripped with pandemic fear,” she said in a statement.

“This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space for we were able to convert immense pressure into an opportunity to dazzle in brilliant shine.”

A US$1bn 10-year tranche priced at par to yield 2.457%, equivalent to Treasuries plus 180bp, while a US$1.35bn 25-

year tranche priced at par to yield 2.95%, equivalent to 30-year Treasuries plus 169.1bp.

Respective initial guidance was 220bp area and 3.375% area.

Leads saw fair value for the Baa2/BBB+/BBB rated benchmark at Treasuries plus 170bp for both tranches, putting the new issue concessions at 10bp for the 10-year and 1bp for the 25-year.

Pricing appealed to some investors who had previously found the Philippines’ usual spreads, which have often been

in double digits, too tight. “There were some guys we

haven’t seen for a very long time,” said a banker at one of the leads. “There were some super-chunky sizes, especially at the long end.”

Although the Treasury spread was wider than on the sovereign’s last dollar issue, the plunge in US rates since then gave the Philippines a 130bp saving in yield terms on the

10-year tranche. It sold a 2029 benchmark in January 2019 at plus 110bp for a yield of 3.782%.

The longer tranche was marketed in yield terms, so a rise in the 30-year Treasury yield during bookbuilding meant that the sovereign ended up inverting its curve.

RECOVERY STORY

Philippine sovereign five-year CDS blew out to 168bp in late March, but was seen this week at 89bp mid, back to where it was trading before the government imposed a lockdown on Metro Manila and the rest of Luzon island to curb the spread of coronavirus.

Another source said that the deal had been prompted by significant reverse enquiries, following a wave of sovereign issues from Asia, Latin America and the Middle East in recent

Aussie loan margins 06 Subsea cable drags bonds under water 08 JD.com in HK 09


“There were some guys we haven’t seen for a very long time. There were some super-chunky sizes, especially at the long end.”

Ambani’s surprise 10 BoJ buys corporate bonds 10 Bangchak fills up 11

weeks.A US$5bn 40-year Formosa

trade from the STATE OF ISRAEL was in the market the same day, but did not detract much from demand. Even though Israel is rated higher, at A1/AA–/A+, and offered a far juicier 3.8% yield in a deal tailored for Taiwanese life insurers, the Philippines still managed to draw attention.

“Some lifers came in, even though it’s fairly expensive for them,” said the lead manager.

Thirty, 40 and even 50-year tenors have been in vogue from high-grade Asian issuers in recent weeks, but laws and regulations in the Philippines do not permit the sovereign to issue beyond 25 years. The unusual US$2.35bn total size was also the maximum allowed under the 2020 budget, following a €1.2bn (US$1.3bn) dual-tranche euro issue in January, and the easy-to-digest size helped both tranches tighten 5bp–6bp in secondary trading on Tuesday. This was the sovereign’s first dual-tranche dollar deal since 2006.

Final books were over US$4.5bn for each tranche, with 187 and 164 accounts coming in for the 10-year and 25-year pieces, respectively. US investors received the biggest allocation in both tranches.

US accounts took 45% of the 2030s, Asia 28% and EMEA 27%. Asset managers and fund managers booked 80%, banks 10%, insurers, pension funds and public institutions 9%, and private banks and others 1%.

The US took 53% of the 2045s, Asia 27%, and EMEA 20%. Asset managers and fund managers booked 66%, banks 6%, insurers, pension funds and public institutions 27%, and private banks and others 1%.

The SEC-registered bonds have expected ratings of Baa2/BBB+/BBB.

Citigroup, Credit Suisse, Goldman Sachs, Morgan Stanley, Standard Chartered and UBS were joint bookrunners.

NAB moves first with cash callEquities Aussie banks make virus-related provisions

BY CANDY CHAN

NATIONAL AUSTRALIA BANK last Monday became the first of Australia’s big four banks to raise equity since the Covid-19 outbreak began with a A$3.5bn (US$2.2bn) fundraising that could encourage some of its peers to follow suit.

The country’s third-largest lender announced the cash call alongside a 51% drop in cash profit for the six months to March 31 and a 64% dividend cut.

The share sale, comprising a A$3bn placement and a A$500m share purchase plan, is the biggest equity issuance so far this year in Australia. It will buttress NAB’s capital ahead of an expected spike in bad loans due to the pandemic’s impact.

The placement of 212m new shares, or 7.1% of outstanding, was priced at A$14.15 apiece, a 10.2% discount to the pre-deal close of A$15.76 on April 24.

NAB’s move has revived the debate over the right level of capital for Australia’s major banks.

Nathan Zaia, an analyst at Morningstar, said AUSTRALIA AND

NEW ZEALAND BANKING GROUP and WESTPAC BANKING CORP will also need additional capital and are likely to opt for the same combination of a placement and

share purchase plan.“Given NAB’s raise, ANZ and

WBC will probably want the same flexibility to be able to meet capital requirements and keep lending,” Zaia told IFR Asia.

The share offering is expected to increase NAB’s common equity Tier 1 capital ratio from 10.39% to 11.20%.

By comparison, Westpac expects its CET 1 capital ratio to be 10.8% at March 31, while ANZ’s ratio was 10.9% at December 31.

Westpac has said it will take a pre-tax impairment charge of A$2.2bn in its first half due to potential credit losses, but it is unlikely to sell equity in the immediate future.

“Having materially strengthened capital over the last decade, building significant buffers, we are well positioned to absorb this increase and respond to future developments,” Westpac’s CEO Peter King said in a statement last Tuesday.

The statement suggests that Westpac is unlikely to announce a capital raising exercise when it releases interim results on May 4, but analysts at Jefferies reckon a future A$3bn to A$4bn CET 1 capital raising cannot be ruled out given rising credit risk.

STRONG RESPONSE

NAB’s placement was well received by existing domestic and international shareholders, with a 36% decline in the share price so far this year helping to drive interest.

“With economic uncertainty and unprecedented events to unfold, those risks are in the price and bank shares are cheap,” said Zaia.

The stock fell 2.8% to close at A$15.32 last Tuesday, well above the placement price.

However, analysts have questioned whether NAB has made sufficient provisions as loan losses may not hit until after government relief measures have been wound down later in the year.

NAB’s overall charge for impairments rose from A$470m last September to A$1.16bn, with a further A$807m set aside in provisions related to the coronavirus.

“For these sorts of recapitalisations, we just hope to see that the companies have injected sufficient capital as the economic outcome of the coronavirus can barely be predicted,” an investor said.

NAB is cutting its interim dividend to A$0.30 per share from A$0.83 previously, equivalent to A$1.6bn or 37bp of CET1.

“It was a balancing act,” CEO Ross McEwan told analysts on a call. “I think 48% of our shareholding is retail, we don’t want them running out the door at the same time we are doing a capital raise.”

This comes after the Australian Prudential Regulation Authority said that banks would need to carry out stress tests and that any dividends paid out before these should be at a “materially reduced level”.

Goldman Sachs and Macquarie were the underwriters on the placement.


For daily news stories visit www.ifre.com

UNDER PRESSURE

AUSSIE BANKS LAGGED INDEX BEFORE COVID-19

Source: Refinitiv. Rebased to 100 at Jan 1 2019

NAB All ordinaries

50

70

90

110

130

150

Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20

Aussie loan costs push higherLoans Margins widen, deals stall as risk aversion hits

BY MARIKO ISHIKAWA

Australian companies are paying more for syndicated loans as banks face pressure on their own cost of funding, reversing a downward trend that had pushed pricing to a five-year low in 2019.

Many borrowers have moved quickly to shore up their balance sheets with short-term credit lines, refinancings and maturity extensions through bilateral and club deals. Those that have braved volatile market conditions with syndicated deals have encountered higher funding costs. This effect has been more pronounced for riskier credits as lenders preserve capital for top-tier borrowers.

“We can expect to see a flight to quality, where lenders focus their balance sheet on core relationship clients,” said Andrew Ashman, head of loan syndicate for Asia Pacific at Barclays in Singapore. “Many corporates are drawing down their standby revolving facilities to boost their liquidity position. This could impact liquidity available in the loan market and may lead to price inflation.”

Australian companies that are now offering higher interest margins on new financings include QANTAS AIRWAYS, MACQUARIE

GROUP, VODAFONE HUTCHISON

AUSTRALIA, TPG TELECOM, VOCUS

GROUP and AIRTRUNK.Qantas is syndicating a 10-

year secured loan of at least A$300m (US$194m) with an interest margin of 225bp over the bank bill swap bid rate (BBSY). The deal follows a A$1.05bn loan of up to 10 years closed in March, which pays an interest rate of 2.75%. Qantas’s previous asset-backed loan was in October 2018, when it raised A$450m through a 10-year financing with margins of 145bp–175bp over BBSY.

Meanwhile, pricing for a

A$5.25bn loan to finance the merger of Vodafone Hutchison Australia and TPG Telecom was sweetened by 65bp for each of the three tranches just days before a mid-April deadline for commitments. The A$15bn merger was first announced in August 2018 but blocked in May 2019 by the Australian Competition and Consumer Commission and later revived.

The borrowers revised interest margins on the three and five-year tranches to 190bp

and 210bp over BBSY based on a net debt-to-Ebitda ratio of 2.5x–3.0x. Launched in mid-March, the loan originally offered margins of 125bp and 145bp over BBSY, which was already richer than than the 110bp and 130bp initial margins the two companies had offered for the same three and five-year tenors on a A$4.75bn financing that closed last January.

Vocus’s cost of borrowing has also risen as it returns to

the market after two years. Vodafone’s smaller rival is offering initial margins of 290bp, 310bp and 330bp on its latest A$1.4bn-equivalent loan with 2.25, 3.25 and 4.25-year tenors, based on net leverage of 2.75x–3.0x. That compares with initial margins of 200bp, 215bp and 230bp for the same tenors with a A$1.42bn-equivalent loan that was completed in July 2018 and tied to leverage of 2.5x–3.0x at the time.

Data centre operator AirTrunk has also increased the pricing on a multi-currency five-year term loan B of around A$1.6bn, raising the margin by 75bp to 450bp. Meanwhile, Macquarie closed a debut five-year Ninja loan in April at a reduced size of US$300m and with increased pricing of 120bp over Libor. When the deal was launched in early March, the original size was US$400m with pricing of 100bp over Libor.

The recent trend for pricier loans stands in stark contrast with 2019, when interest margins on five-year syndicated

News


RISK REPRICING

AUSSIE IG LOAN MARGINS REVERSE TIGHTENING TREND (AVG, BP)

Source: Refinitiv LPC

3 years 5 years

70

90

110

130

150

170

190

2014 2015 2016 2017 2018 2019

loans for investment-grade credits in Australia averaged 117.50bp, the lowest since 2014, according to Refinitiv LPC data. The average for three-year syndicated loans also dropped to the lowest in five years in 2019. (See Chart.)

STALLED DEALS

With market conditions showing few signs of a swift recovery, some borrowers have postponed their fundraisings.

“What tends to happen in Australia during times of

crisis is the primary pipeline grinds to a halt and syndication that had been in the pipeline almost becomes stale and hard to move. That’s what we’re finding now.” said Bob Sahota, managing director and chief investment officer at Revolution Asset Management, which invests in leveraged loans in Australia and New Zealand.

France’s TOTAL and Japan’s INPEX have put on hold a proposed refinancing and repricing of loans for the

Ichthys Liquefied Natural Gas project in Western Australia. Some lenders found the price talk of 140bp over Libor for the 8.5-year commercial tranche loan too tight under current market conditions.

Indonesia’s ADARO ENERGY and Australian private equity firm EMR CAPITAL are also putting on hold a refinancing effort for US$1.69bn of acquisition loans for the Kestrel coal mine in central Queensland, which would have included bonds and loans.

Retail property group VICINITY

CENTRES and the Australian unit of Spanish conglomerate Acciona have also suspended syndication of their loans.

Not all companies have time on their side, though. According to Refinitiv LPC data, Australian companies have US$59.6bn of loans maturing this year. At the same time, banks face a US$600bn increase in Asia Pacific non-performing loans in 2020, according to a S&P report published on April 6.

PLN says the lights are still onBonds/Loans Indonesian state-owned utility rushes to reassure creditors

BY KIT YIN BOEY

PERUSAHAAN LISTRIK NEGARA last week dismissed local media reports that it was considering a deferral of debt repayments, seeking to reassure creditors and investors of its financial health as Covid-19 impacts the Indonesian economy.

Indonesia rolled out electricity subsidies in April, squeezing PLN’s revenues and putting the utility under scrutiny from lawmakers. Local media reported that its chief executive Zulkifli Zaini had told the House of Representatives on April 22 that it was asking banks whether debt payments due this year could be delayed until next year.

“The media report was picked up by the international press, and that magnified the impact of the alleged claim. Foreign banks were pretty alarmed since any deferment of debt payments has the potential to trigger cross-defaults on PLN’s massive debt,” said one foreign banker.

State-owned PLN moved quickly on April 23 to assuage concerns over its ability to service and repay its debts. Chief financial officer Sinthya Roesly said in a statement that the company’s financial conditions were well maintained and that it “has no

plans nor is under negotiation to delay its performance obligations or re-profile its commercial loans”.

She stressed that PLN had adequate liquidity and standby loan facilities that could be

used at any time to fulfill its obligations.

PLN is putting together a syndicate of global banks for a US$1bn loan and has just priced a Rp1.737trn (US$112m) four-tranche domestic bond. A foreign loans banker said overseas banks had received the press release as well as a separate email from the company to reiterate the strength of its financial standing.

“PLN’s message was simple: it is BAU – business as usual,” said the banker.

A similar message was also conveyed to investors who had put in orders for the four-tranche bond, which is due to settle on May 5.

“We had just allocated orders to the investors, and not everyone came back with confirmations after the initial report of a possible deferment. But the pull-out from those who did withdraw was very

little,” said a banker on the deal.

“We hosted a conference call with PLN, who clarified that it had gone through various scenarios during the presentation to Parliament of how the company will be impacted by the current market conditions. And one of the worst scenarios presented was the potential deferment.”

As Covid-19 slows economic growth, PLN expects its revenue to fall to Rp257trn in calendar 2020, 14.6% lower than an earlier forecast of Rp301trn. The utility’s coffers are also affected by the provision of free or discounted electricity to 31 million households between April and June, part of the

government’s programme to help lower-income families cope with the impact of the pandemic.

Analysts expect PLN to come under more pressure because of payments to independent power producers as more plants come online. The Institute for Energy Economics and Financial Analysis estimates that these payments could amount to nearly Rp120trn this year, up from an estimated Rp91.45trn in 2019.

CreditSights analysts Rohan Kapur and Lakshmanan R said the company was burdened by its role to provide electricity to the entire country, which leads to large capital expenditure requirements and, in turn, greater leverage.

“Despite PLN’s poor standalone credit profile, the GoI’s unequivocal support provides a cushion to fall back on for the company,” said the analysts in a report on April 21.

Bankers also expect this solid government backing to be matched by strong support from state-owned banks.

“On top of this, Indonesia can count on foreign donors, especially on a government-to-government basis, with Japan a reliable partner to count on,” said a foreign banker.

Buoyed by such expectations, the loans banker said most of the banks that had submitted bids are still in the race to be mandated for the US$1bn loan. No underwriters have been officially mandated yet.



“We hosted a conference call with PLN, who clarified that it had gone through various scenarios during the presentation to Parliament of how the company will be impacted by the current market conditions. And one of the worst scenarios presented was the potential deferment.”

Subsea cable delays hit bondsRestructuring Dr Peng Telecom proposes maturity extension for dollar bonds

BY DANIEL STANTON

A Chinese company that teamed up with Google and Facebook on an undersea cable venture connecting the US and Asia has proposed a restructuring of its offshore bonds, after delays in construction and political objections weighed on the project.

DR PENG TELECOM & MEDIA

GROUP has made a proposal to restructure its US$423.35m 5.05% bonds due June 1, which involves an extension of the maturity date but no haircut on the principal.

The Shanghai-listed telecommunications operator has proposed increasing the coupon to 7.55% and extending

the maturity date by 18 months to December 1 2021, with two partial principal redemptions before that date.

Dr Peng provides broadband and cloud computing services in China and North America, and has invested in the Pacific Light Cable Network, an undersea fibre optic cable project that will be the first to connect Hong Kong and Los Angeles. It blamed complications including typhoons, the presence of “fish aggregating devices”, and the coronavirus pandemic for delays to the cable construction schedule, but US authorities have also played a part.

Dr Peng’s subsidiary, Pacific Light Data Communications, teamed up with US tech giants

Google and Facebook to build the undersea cable. PLDC owns four of the six pairs of ultra high-capacity optical fibres, while Google and Facebook each own one pair.

On April 8, the US Department of Justice ruled that Google should be allowed to use the link to connect between Los Angeles and Taiwan, but not Hong Kong. The DoJ said that a direct cable link between the US and Hong Kong, which is part of China, posed an “unacceptable risk” to national security, in a statement on behalf of itself and the departments of Homeland Security and Defense.

Facebook has applied for permission to operate the

link between the US and the Philippines, but not to connect to Hong Kong.

The DoJ in its ruling referred to a 2019 decision to turn down China Mobile’s application to provide telecom services between the US and overseas countries. Back then, the Federal Communications Commission said that the Chinese government’s ownership and control of China Mobile raised concerns.

While Dr Peng is not state-owned, the implication is that the US is concerned about China’s increasing influence on the special administrative region of Hong Kong.

RAISING CASH

Dr Peng said that extending the maturity of its offshore bonds by 18 months would give it time to complete the construction of the undersea network, obtain all necessary

Techcombank makes stellar debutLoans Vietnamese lender scores in syndication with largest first-time bank borrowing

BY MIRZAAN JAMWAL

Vietnam’s TECHCOMBANK impressed with its debut in the offshore loan market, raising US$500m from two dozen lenders and demonstrating the strength of demand for some new credits as loose monetary policy fuels liquidity in the banking market.

The three-year loan, which is the largest for a first-time Vietnamese bank borrower, received a blowout response with 19 banks joining the five mandated lead arrangers, underwriters and bookrunners in general syndication.

Lenders were attracted to its rarity value and pricing, despite the risk-off environment caused by the coronavirus pandemic.

When Techcombank’s loan launched in mid-February, there was little of interest in the market.

“There was limited deal flow caused by the pandemic

and (lenders had) excessive liquidity,” said a Taiwan-based loan banker.

The outcome is all the more remarkable given how other financial institutions have struggled to raise loans because

of the Covid-19 fallout.In early April, Macquarie

Group closed a debut five-year Ninja loan at a reduced size of US$300m and sweetened pricing of 120bp over Libor, having originally targeted US$400m at a 100bp margin. (See News.)

State-owned Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) closed a

US$120m one-year refinancing in mid-January with just two banks joining in limited syndication. The lacklustre response came even before market conditions took a turn for the worse as the pandemic

started to spread across Asia.As a debut borrower

Techcombank, formally known as Vietnam Technological and Commercial Joint Stock Bank, offered a pricing premium compared to its peers. In contrast, spreads have tightened for repeat bank borrowers from Vietnam as lenders have grown more familiar with these credits.

“Most of the (bank

borrowers) are priced at the low hundreds, which might be a bit too low for some of the retail banks, whereas Techcombank would still be above lenders’ cost of funds at the time they committed,” said a Singapore-based syndications banker.

Techcombank’s loan offered top-level all-in pricing of 163bp based on an interest margin of 150bp over Libor.

That pricing was attractive when it launched, but in today’s market it would likely be higher, as lenders are facing higher funding costs due to increased market volatility, the Singapore-based banker said.

In comparison, BIDV, a well-established borrower, completed its one-year loan in January at a margin of 75bp over Libor.

In November 2018, BIDV closed a US$300m dual-tranche loan that paid an all-in of 130bp based on a 110bp margin for the three-year portion. In

News


“Most of the (bank borrowers) are priced at the low hundreds, which might be a bit too low for some of the retail banks, whereas Techcombank would still be above lenders’ cost of funds at the time they committed.”

August of the same year, it wrapped up a US$150m three-year bullet loan that paid a top-level all-in of 137bp based on a margin of 117bp over Libor.

SAFER BET

Lenders were keen to support Techcombank, which is one of Vietnam’s biggest privately

(Moody’s/S&P). Its total assets increased 19.5% to D383.7trn (US$16.3bn) in 2019.

Vietnam’s syndicated loan market was one of only a few to achieve meaningful growth in 2019, as lenders sought diversification away from the larger Indian and Indonesian markets. Syndicated loans for Vietnamese borrowers doubled from 2018 to US$7.71bn, according to Refinitiv LPC data.

“Borrowings from Vietnam carry much higher pricing than similarly rated Indian or Indonesian credits,” another Taiwan-based loan banker said.

“Usually, banks are under more strict supervision than non-banking financial companies, and they are much

safer as we are turning towards a more conservative strategy.”

The bank’s shareholders include private equity firm Warburg Pincus and Vietnamese conglomerate Masan Group, which added to the deal’s appeal.

Vietnam is also one of the countries least affected by the coronavirus outbreaks in Asia, with only 270 confirmed cases and no death as of the middle of last week.

While several banks and non-bank lenders from Asia have tapped the loan markets this year, only Bank Negara Indonesia has achieved a similar outcome to Techcombank. The Indonesian state-owned bank wrapped up a US$970m dual-tranche loan in early February with 28 banks, 23 of which joined in general syndication.

The deal was launched in mid-November as a US$750m dual-tranche loan offering top-level all-in pricing of 93bp and 106.6bp based on margins of 75bp and 90bp over Libor for the 3.5 and five-year tranches, respectively.

JD.com looks beyond hostile US

Equities E-commerce giant makes confidential filing for

Hong Kong listing

BY FIONA LAU

Nasdaq-listed JD.COM has filed confidentially for a secondary listing in Hong Kong, pressing ahead with a deal at a time when US regulators have turned increasingly hostile towards Chinese firms.

The Chinese e-commerce company is likely to sell a stake of up to around 5% in the Hong Kong listing, which is expected to come as early as June, according to people familiar with the situation.

Based on JD.com’s market capitalisation of US$64bn at Tuesday’s close, the Hong Kong float could raise about US$3.2bn.

JD.com shares fell 4.4% last Tuesday after IFR reported the confidential filing, compared to a 1.4% drop in the Nasdaq Composite Index.

JD.com is moving ahead despite the coronavirus outbreak as its business model has proven resilient during the pandemic and the US market environment has turned increasingly hostile towards Chinese issuers, according to the people.

“The US-China relationship has already been tense since the trade war. Now with this argument over the virus origination and the Luckin scandal, it’s going to be even more difficult,” said one of the people. “It’s natural for JD.com to look at another listing platform.”

JD.com did not respond to emails seeking comment.

Luckin Coffee said in early April that employees fabricated sales worth hundreds of millions of dollars in the final nine months of 2019, sending its shares plunging.

The accounting scandal has added to long-standing complaints from US regulators and investors over the corporate governance of US-listed Chinese companies.

On April 21, the head of the US securities watchdog specifically warned investors of the risks of investing in Chinese companies.

“In many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to US domestic companies,” said Jay Clayton, chairman of the Securities and Exchange Commission.

Growing regulatory and political pressure has prompted a number of US-listed Chinese companies to consider Hong Kong as an alternative fundraising venue since JD.com’s bigger rival Alibaba Group raised HK$101bn (US$13bn) from a Hong Kong listing in November. CICC last month estimated that 19 US-listed Chinese companies could list in Hong Kong to raise a combined US$34bn.

As of last Tuesday, shares of JD.com were up 24% this year compared to a 4% drop in the Nasdaq Composite Index over the same period.

Despite the virus outbreak, GF Securities estimates JD.com’s revenue grew 13% year on year in the first quarter as data from China’s National Bureau of Statistics show that online sales of physical goods increased by 5.9% year on year in the first quarter and JD.com’s self-operated logistics business has remained stronger than its peers during the pandemic. Demand for fast-moving consumer goods on its own platform also surged while demand for electronics and small home appliances remained stable.

JD.com is due to release its first-quarter results on May 8.

Bank of America, CLSA and UBS are leading JD.com’s Hong Kong share sale.



approvals to begin operation, and potentially to sell it.

It proposes to redeem US$50.682m, or 12%, of the principal at face value in cash on the original maturity date, and a further US$65.352m, or 15%, of the principal at par on October 1 2020.

Dr Peng will also attach additional security to the bonds, in the form of first ranking security over a Cayman Islands-based limited partnership that will monetise some of its investments and a Hong Kong bank account that will receive the proceeds of the asset sales.

In March, Dr Peng announced a plan to sell up to 429.718m new shares to Shenzhen Xinpengyun Technology and other investors, though the exact terms and timing have yet to be decided.

If the share sale and/or one or more asset sales go ahead

and raise net proceeds of at least US$105m, Dr Peng will use 20% of the proceeds to redeem more bonds, up to a maximum of US$63.3525m in principal amount.

Dr Peng plans to seek bondholder consent for the measures in late May, and will pay the cash equivalent to 1% of face value to bondholders who consent to the changes.

The company said the proposed restructuring would alleviate liquidity pressures and allow it to maximise the value of its assets.

Latham & Watkins is legal adviser to the company and Alvarez & Marsal is financial adviser.

The bonds, issued through Dr Peng Holding Hongkong, were downgraded to Caa1 by Moody’s in May 2019. They were last quoted at a cash price of 50, according to Refinitiv data.

Japan steps up bond stimulusBonds Central bank surprise sends prices higher across the board

BY TAKAHIRO OKAMOTO

The Bank of Japan decided by a unanimous vote to increase its corporate debt purchases last Monday, in its latest move to mitigate the impact of the coronavirus pandemic on the Japanese market.

At the policy meeting, shortened to one day from the originally planned two days across April 27 and 28, the central bank decided to buy more commercial paper and corporate bonds, raising its cap to a combined ¥20trn (US$186bn) from ¥7trn previously. The BoJ had already decided to increase its purchases of CP and corporate bonds by ¥1trn each in March, expanding the original ¥5trn programme.

A ¥100bn single-issuer limit will be eased, allowing the BoJ to buy up to ¥500bn of CP and

¥300bn of corporate bonds from a single issuer, subject to a cap at 50% and 30% of an issuer’s CP and bonds outstanding, up from 25% previously. The maturity limit for corporate bonds will also be extended from three to five years.

In response to the move, offers in the secondary market completely disappeared as sellers held out for higher prices.

“The decision was much more than expected,” said a fund manager at a Japanese asset management company who was especially impressed by the easing of the single-issuer limit.

The domestic yen market had been hit by big swings in rates and spreads in overseas markets in March, but the fund manager said the BoJ decision is sure to improve market conditions.

“It will not only encourage

companies to sell five-year bonds but also save some dealers and pension funds who were badly wounded.”

The BoJ’s decision to buy more corporate bonds is expected to support the cross-border yen market as well.

“The BoJ’s corporate bond purchases will press down domestic bond yields up to the five-year sector, so Samurai bonds will become more attractive,” said a Japanese syndicate banker.

He said he had been worried that investors might choose to buy domestic bonds because the domestic deals priced in April came out about 10bp–20bp wider than in December, closer to cross-border yen bonds. “The BoJ’s move would help especially foreign banks issue five-year bail-in-able bonds in yen,” he added.

At the policy meeting, the BoJ also decided to buy JGBs more aggressively and make the lending scheme it adopted in March even more user-friendly.

On JGB purchases, it scrapped the pledge to increase its JGB holdings by ¥80trn a year and promised to buy an unlimited amount, though that has not impressed the market. When it made its regular JGB purchasing operation on Tuesday, it increased the amount by only ¥60bn from the previous one. The BoJ also did not come close to its previous ¥80trn pledge, with its JGB holdings increasing by a more modest ¥14trn during the 12 months to April 20.

On the lending scheme, it will accept more collateral, invite more participants such as specialised banks and award 0.1% of interest if a bank utilises the scheme.

The central bank also kept its short-term policy rate at –0.10% and long-term policy rate of around zero unchanged.

Reliance springs rights surpriseEquities Conglomerate intent on cutting debt even as planned disposals stall

BY ANURADHA SUBRAMANYAN

RELIANCE INDUSTRIES is considering its first rights issue in more than 30 years as it seeks to reduce its huge debts at a time when difficult market conditions have put some of its planned asset sale plans in doubt.

The move took investors by surprise, coming just days after Facebook agreed to buy a 9.8% stake in the Indian conglomerate’s broadband subsidiary for US$5.7bn and as capital expenditure slows amid the Covid-19 pandemic.

Reliance, however, needs money to cut its net debt of Rs1.53trn (US$20.22bn). A plan to sell a 20% stake in the company’s petrochemicals division to Saudi Aramco may be on hold because of the slump in oil prices. Meanwhile, the expected listings of wireless broadband services provider

Reliance Jio Infocomm and retail arm Reliance Retail are also unlikely while stock markets remain weak.

Reliance’s board was due to consider the rights issue proposal at a board meeting on April 30, after IFR Asia went to press. No other details were available.

In a research report, Morgan Stanley said a dilution of between 2% and 12% was likely.

Bankers said the rights offer should raise at least US$5bn in order to meaningfully reduce debt and improve cashflow. This would represent a dilution of almost 5% at current prices.

Although its broadband business is doing well, the closure of factories and the collapse of oil prices are expected to hit Reliance’s oil and petrochemicals businesses hard.

“This is definitely not an opportunistic transaction. For

all you know the company is raising money to overcome the severe pain that will be caused by the Covid-19 pandemic,” an ECM banker said.

The group has accumulated more debt after investing heavily in its retail and telecom businesses, where profits are now growing fast. Chairman and managing director Mukesh Ambani told shareholders last year that Reliance would cut net debt to zero by March 2021.

Gross debt stood at Rs3.07trn as of December 31, up from Rs2.88trn in March 2019. Net debt in December was Rs1.53trn.

“Many investors are put off by the rights issue announcement because in India no one has made money on a rights offer. The fear is that promoters will take a big discount and leave other investors in the lurch,” a Mumbai-based broker said.

Ambani and his family own nearly 50% of the company and will have to underwrite the offer, as is usually the case in India.

However, others think that a qualified institutional placement would have diluted existing investors even more as the company would have been obliged to find many new investors for such a large deal.

“Through the rights issue, the cash-rich promoters are telling the market that they are there to support the company during such tough times,” another ECM banker said.

A rights issue could have positive consequences, according to analysts. Morgan Stanley said a rights issue of 2%–12% of equity priced at a 5%–20% discount would be earnings-accretive by 0.1%–2.6% immediately after the capital-raising.

Reliance has outperformed the market with its shares down 5.7% this year, compared with a 22% fall in the benchmark S&P BSE Sensex.

News


Bangchak lubricates Thai marketBonds Three-tranche Bt8bn bond restores confidence after Noble flop

BY KIT YIN BOEY

An encouraging response to BANGCHAK’s triple-tranche bond offering on Tuesday has unfrozen the baht bond market, raising hopes that Thai corporate issuers will raise more than Bt67bn (US$2.1bn) over the next few weeks.

“The deal has jumped over the hurdle in the market with investors willing to accept the pricing and the credit,” said a banker on the deal. “Bangchak will now serve as a benchmark for issuers that will come in its wake.”

The Thai oil refiner and fuel retailer is expected to reach its maximum target issue size of Bt8bn, thanks to demand from insurance companies and cooperatives with a smattering of orders from mutual funds for the short-dated tranche.

The offering comprises a two-year tranche yielding 2.6%, a seven-year tranche at 3.0% and a 10-year tranche at 3.4%.

The domestic bond market was rattled last week when property developer NOBLE

DEVELOPMENT was only able to raise Bt582m – a third of its targeted issue size of Bt1.5bn – of three-year bonds priced at par to yield 4.5%.

Noble’s deal, via lead manager and underwriter CIMB Thai, was the first public issue after liquidity dried up as asset managers and mutual funds retreated from the markets at the end of March to preserve cash amid the Covid-19 pandemic.

To open up the market, the Thai government introduced a Bt400bn bond stabilisation fund in early April. The fund provides bridge financing by purchasing

bonds issued by high-grade companies and has helped to restore some confidence among the investor community.

“If the measure can boost investor confidence, those (maturing) bonds can be rolled over and will not have to utilise BSF fund,” said Ariya Tiranaprakij, executive vice president of the Thai Bond Market Association. “The key is to stabilise the market sentiment in the time of volatility.”

Bankers are keen to revive the market to accommodate the refinancing of Bt460bn of bonds maturing over the next eight months, the bulk of which are investment-grade notes.

The pipeline includes a B2bn deal for LAND AND HOUSES which is scheduled to launch imminently via Kasikornbank and UOB Thailand, a Bt9bn sale by TRUE

MOVE H UNIVERSAL COMMUNICATION in early May, a jumbo Bt25bn offering from CHAROEN POKPHAND

FOODS in mid-May and a Bt18bn issuance by BERLI JUCKER at some point in May.

Bankers said Noble was not the ideal credit to test the waters under these market conditions. Rated BBB with a negative outlook by Tris, the issuer could only target high-net-worth investors at a time when institutions are prioritising higher-quality issuers and cash preservation.

Bangchak has a stronger credit profile with an A rating from Tris and is partly owned by the state through the Social Security Office and the Ministry of Finance. The issuer also tweaked its strategy by including the seven-year and 10-year tranches to attract insurance companies and cooperatives.

Bangkok Bank, Kasikornbank, Krungthai Bank and Phatra Securities are joint lead managers for the Bangchak offering.

La Trobe awakens Aussie RMBSStructured Finance Non-bank returns as major lenders focus on cheaper funding options

BY JOHN WEAVERS

The staggered reopening of Australia’s debt markets is about to gather pace with support from the government’s “Team Australia” coronavirus response, with at least one non-bank mortgage lender preparing to establish securitisation pricing points.

LA TROBE FINANCIAL signalled its imminent return to the RMBS market by mandating lead managers for investor meetings on April 30 and May 1 ahead of a potential deal, eight months after its last and ninth non-conforming sale.

The local market has recently focused on more defensive covered, government and SSA Kangaroo bonds and it would be unusual to see RMBS reappear before senior financial bonds, which have been absent since January 13.

Authorised deposit-taking institutions (ADIs), mostly banks, are in no rush to return to RMBS with so much cheap funding available. This includes surging deposits and access to the Reserve Bank of Australia’s A$90bn (US$59bn) Term Funding Facility, where they can borrow at 0.25% for three years.

Non-bank lenders are far more dependent on securitisations, however, because they lack retail deposits, access to the TFF and, in most cases, the bond market.

This RMBS reliance creates obvious problems for non-banks, especially when mortgage arrears and delinquencies are rising as unemployment soars.

La Trobe appears willing to accept the spreads available for new RMBS, which have narrowed from their March peaks but remain elevated.

Syndication desks said they would expect major bank senior

RMBS notes to price around 130bp–140bp over one-month BBSW, far wider than the 95bp margin Westpac paid on January 24. Non-banks are seen in the 150s and regional banks somewhere in between the two.

Potential clearing rates for mezzanine tranches are more difficult to assess with mortgage arrears mounting and the prospect of targeted support from the Australian Office of Financial Management.

The AOFM set up a A$15bn Structured Finance Support Fund to purchase RMBS and other ABS originated by smaller lenders in the primary market, and first used it on March 27 to buy A$189.14m across six tranches of Firstmac’s A$1bn prime RMBS, Firstmac Series 1-2020.

Additional AOFM support could be in the pipeline as it holds talks with the Australian Securitisation Forum on easing

liquidity problems via the establishment of a forbearance special purpose vehicle.

This would allow the SFSF to invest in RMBS and ABS in the secondary market as well as warehouse facilities sponsored by non-ADIs to compensate for cashflows deferred by repayment holidays due to the coronavirus.

When RMBS issuance resumes, deal sizes will likely be tempered by a smaller, more risk-averse investor base.

Many large-ticket purchasers have had to meet heightened redemption demands from their own investors, reducing the funds available for new issues – although this has not prevented some from picking up cheap RMBS paper in the secondary market.

La Trobe may struggle to match October’s record-breaking A$1.25bn RMBS print, which attracted 15 domestic and seven international investors.

Investors then were likely comforted by Blackstone’s purchase of an 80% stake in the company in late 2017.



People&Markets

Loan losses threaten HSBC strategyAnglo-Asian lender sounds warning after credit provisions surgeHSBC warned its two-month-old strategic plan was already in jeopardy after a surge in

The Anglo-Asian lender increased its expected credit impairment charges by a

HSBC warned that a severe economic impact from the pandemic could raise credit losses to US$7bn–$11bn this year and would affect its ability to meet the targets set out

“We’re comfortable that we’re being

uncertainty about the path and economic impact of Covid-19 on the global economy

Its latest warning comes only two months after CEO Noel Quinn outlined his ambitious

Quinn said job cuts had been put on hold as they were not appropriate in the current

including reducing risk-weighted assets in

“We will press ahead with our transformation thoughtfully and

“We believe that even with the coronavirus situation we can still implement a substantial proportion of the RWA rundown plans in

HSBC’s warning over its dividend policy will be disconcerting for HSBC’s Hong

The decision was made at the insistence of the Bank of England’s Prudential Regulation

HSBC has apologised for the outcome

SOFTER REVENUES

adjusted revenues in global banking and

to losses in the principal investment unit

was the bright spot for HSBC as the trading

heightened volatility that has convulsed

performer for HSBC as revenues jumped

which was recently placed under judicial

Revenues from retail banking and wealth

to lower interest rates and a weakening in

THOMAS BLOTT, STEVE SLATER


TOP STORY RESULTS

Who’s moving where...

NATIONAL AUSTRALIA

BANK’s Asia general

manager Neil Parekh

is leaving to join

TIKEHAU CAPITAL, the

French alternative

investment manager.

Parekh is due to join

towards the end of

the second quarter

as partner and in

the newly created

role of head of Asia,

Australia and New

Zealand. He will be

based in Singapore.

NAB has appointed

Cassandra Lister as

interim Asia general

manager until a

permanent successor

is named. Lister, who

only joined NAB three

months ago, will

remain head of the

Hong Kong branch.

UBS has expanded

its Japan structured

products and

solutions team with

two new hires.

Motoki Narazaki joined on Monday

from Nomura Asset

Management,

where he worked

in the multi-asset

investment division.

He will cover a range

of underlying assets

at UBS.

Ryota Kotani also

joined recently from

Citigroup to focus

on fixed income

underlying product

sales.

Both Kotani and

Narazaki report to

Takayuki Suzuki,

head of structured

flow distribution in

the Japan global

markets team.



StanChart fixes focus on costsSTANDARD CHARTERED

more cost-cutting measures this year as it repeated warnings that lower interest rates and the economic impact of the coronavirus would make it tough to hit its medium-term

The increased focus on costs comes as

primarily due to the economic fallout caused

The emerging markets lender said it was aiming to keep operating expenses excluding

by reducing compensation and investment

more slowly due to exogenous factors then so

“If we are wrong about the pace of recovery and the global economy gets back on its feet rapidly – and we are seeing encouraging early signs of that happening in China – then the actions we are taking

advantage of the opportunities that will

second major turnaround plan since he took

smaller businesses and restructure operations

StanChart had already conceded in

to headwinds from low interest rates and the

It provided further clarity on that on Wednesday as it said that rate cuts by the

globally would likely reduce group income by

The bank conceded that the coronavirus

into the next six to nine months with good

STRONG START

although the situation reversed dramatically

measure that allows a bank to record a gain on its derivatives contracts when its own

was primarily due to an increase in credit

information on counterparties during the call with reporters but said roughly two-thirds were corporate exposures and

ASEAN accounted for more than other

Corporate and institutional banking accounted for more than half of group pre-

impairments offsetting the DVA gains and a

decrease in revenues from its capital

which comprises the bank’s private-side

the completion of prior year pipeline activity and increased balances from drawdowns

cash management and trade performing

This was still close to the mid-point of its

said it expects this to increase by a further

in Indonesia’s Bank Permata in the second

THOMAS BLOTT

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

Kenneth Lam has

joined HANG SENG BANK

as senior vice president

for syndicated

finance and corporate

advisory.

Based in Hong

Kong, Lam will

mainly handle loans

distribution for the

bank.

He reports to

Jenny Hui, head of

syndicated finance and

corporate advisory.

Before joining Hang

Seng Bank, Lam

worked for a year at

Nanyang Commercial

Bank.

He had previously

worked at Credit

Agricole for over

10 years, with his

last position being

a director for loan

syndication.

HONG KONG

EXCHANGES AND

CLEARING has named

Stephanie Lau as co-

head of IPO vetting.

Lau, until recently

senior vice president

for listed issuer

regulation, will have

oversight of all issuer

listing applications

alongside Lin Shi, who has served as

sole head for the past

year.

In addition, Katherine Ng, managing

director in the listing

division, has been

appointed divisional

chief operating

officer. Current

divisional COO Grace Hui is taking on a new

role as head of green

and sustainable

finance in HKEx’s

markets division.


People&Markets

NAB’s first-half cash profit halvesNATIONAL AUSTRALIA BANK

more than halved after its earnings took a hit due to the coronavirus and other one-off

the preferred measure among Australia’s banks because it strips out one-off items such as asset sales – for the six months to

while a change in software capitalisation policy also lowered earnings after tax by

the bank’s biggest earnings driver during

Corporate and institutional banking cash

this was partially offset by higher lending volumes and lower credit impairment

impairment charges fell with property

WESTPAC BANKING CORP said on

pre-tax impairment charges when it reports

certain other individual provisions and net

Westpac said that the impairment

expects to report a core capital ratio of

The increase in provisions is in addition

THOMAS BLOTT

China kicks off ChiNext reformsChina plans to launch a registration-based system for IPOs on the Shenzhen Stock

a template set in the Shanghai Star market and expanding the country’s capital

The pilot US-style registration system and other plans for the ChiNext board were cleared last Monday at a central government meeting chaired by Chinese

Regulatory Commission and the Shenzhen

the Star market’s other rules on secondary

and companies with weighted voting rights

The reformed ChiNext only has three

value of Rmb1bn should have revenue of at

considered once the reforms have been in

COMPETITIVE RULES

The CSRC said the Star board is mainly for high-tech enterprises that serve national

“There will be some kind of competitive relationship between Star and ChiNext for a

between the two boards emerge in one or

The banker also estimated that the reformed ChiNext framework will be up and

The rules for sponsor investments will

aiming for a less strict framework than in

Sponsors of Star market IPOs must

ChiNext will apply this rule to four kinds of

issue price is set higher than the outcome of investor pricing consultations and deals

“We could say that the new ChiNext

sponsors more inclined to suggest that

TAKING OVERThe CSRC stopped accepting ChiNext IPO applications last Monday as the SZSE will take over responsibility for these once

for secondary share offerings as well as

The bourse will start taking new

will deal with applications transferred from

Chinese regulators also plan to raise the threshold for retail participation in the reformed ChiNext by introducing a rule that individual applicants must have an average

Companies that have a market value

The bourse and the securities regulator began canvassing opinions on the proposed

KAREN TIAN, FIONA LAU


Clifford Capital launches AIIB joint ventureSingapore-based CLIFFORD CAPITAL has set up a holding company structure after formally launching a new venture with the ASIAN INFRASTRUCTURE INVESTMENT BANK to help address the region’s infrastructure funding

Clifford Capital Holdings will be the holdco for wholly owned subsidiary Clifford

formed BAYFRONT INFRASTRUCTURE MANAGEMENT

issuing structured notes in the public

It has signed memoranda of

The MoUs set out the principles and criteria for transferring infrastructure

banks and planned to increase its network

“Close collaboration and dialogue with these banks to ensure a steady pipeline

achieving our objective of crowding in non-bank institutional capital to address the

collateralised loan obligation backed by

government will guarantee Bayfront’s debt

providing some extra capital to fund

CCH will also expand into providing

through Keppel-Pierpoint Private Credit

Clive Kerner

Audra LowDANIEL STANTON


China curbs WMPs after oil routChinese regulators have asked commercial banks to halt new sales of a wide range of wealth management products that might

The verbal instructions from the China Banking and Insurance Regulatory

according to two direct sources who are

The CBIRC’s move came days after heavy losses were recorded in a crude oil futures trading product sold by BANK OF CHINA

The CBIRC did not immediately respond

its crude oil futures trading product at an

crying foul as they said the bank should

Some banks including BOC have been asked to conduct their own investigations

into possible loopholes in their risk

Retail investors may have lost more

INDUSTRIAL AND COMMERCIAL BANK OF CHINA on Tuesday suspended all open positions for retail investor products linked to

warned investors of a possible loss of all investments or cash deposits in these products due to commodities market

SHANGHAI PUDONG DEVELOPMENT BANK also said in a notice on Monday that it would suspend open positions for its copper and soybean trading products from the morning

to process negative prices and told clearing

“if major energy prices continue to fall

oil futures fell between or below a certain

Oil prices have plunged this year due to the spreading economic impact of

triggered by major producers Saudi Arabia

CHENG LENG, EMILY CHOW

“Close collaboration and dialogue with these banks to ensure a steady pipeline of loan acquisitions is a key pillar in achieving our objective of crowding in non-bank institutional capital to address the large infrastructure financing gap in Asia Pacific.”

BOC said it had settled trades for its crude oil futures trading product at an historic negative value of minus US$37.63 per barrel, leaving mainly retail investors crying foul as they said the bank should have done more to protect their interests.

IN BRIEFHin Leong Trading

Court appoints judicial managers

Singapore’s HIN LEONG TRADING, one of Asia’s

top oil traders, has been placed under the

management of a court-appointed supervisor as

it seeks to restructure billions of dollars of debt,

three sources with knowledge of the matter said

on Monday.

Hin Leong had applied earlier to be placed

under interim judicial management and

withdrawn an application to the Singapore High

Court for six months of legal protection from

creditors, two other sources said.

Hin Leong did not immediately respond to a

Reuters request for comment.

Under so-called judicial management, a court

appoints an independent manager to run the

affairs of a financially distressed company in the

place of existing management.

Executives from accounting firm PwC have been

appointed as interim judicial managers of Hin

Leong, the three sources said on Monday. They

have up to eight weeks to file a preliminary

report, two of the sources said.

PwC did not immediately respond to a request

for comment.

Hin Leong owes US$3.8bn to 23 banks,

according to a company presentation to lenders

on April 14 contained in an affidavit in court

filings. The affidavit was reviewed by Reuters

but has not been made public.

In the affidavit, Hin Leong’s founder Lim Oon

Kuin said he had directed the firm not to

disclose US$800m in losses over several years.

The financial difficulties have come to light

following the collapse in oil prices and slump in

demand as the coronavirus pandemic shut down

economic activity.

Hin Leong had appointed PwC and law firm

Rajah & Tann as advisers for negotiations with

lenders to obtain short-term credit, but talks fell

through, sources had said previously.

Singapore police said earlier they had launched

an investigation following news of Hin Leong’s

losses.

Falcon Private Bank

Swiss banking licence at risk

FALCON PRIVATE BANK, a wealth manager that was

at the centre of Malaysia’s 1MDB scandal, could

lose its Swiss banking licence very shortly, two

sources close to the situation told Reuters.

Swiss financial markets watchdog FINMA

could withdraw the licence for the private bank

owned by Abu Dhabi state fund Mubadala

Investment Company on the grounds that it

has continuously failed to meet regulatory

requirements, the sources said.

“Falcon employees are preparing to wind down

the institute,” one of the people said. A social


People&Markets

Market regulator raids Luckin CoffeeChina’s top market regulator has launched an inspection into LUCKIN COFFEE

country’s securities watchdog in doing so as the coffee chain comes under scrutiny for

Administration for Market Regulation

being inspected by the SAMR in a post

understand the company’s operating

The China Securities Regulatory Commission announced earlier in April that it would investigate claims of fraud at Luckin after it announced an internal investigation had shown its chief operating

Securities and Exchange Commission to

The sources declined to be named

Chinese state news agency Xinhua reported late on Monday that the CSRC had

pitched itself as a challenger to Starbucks

Bankers and investors have warned that Luckin’s issues were likely to weigh on other Chinese companies considering a US IPO – a group already affected by the trade

ZHANG YAN, JULIE ZHU


plan for employees losing their jobs was also in

the works.

Falcon, FINMA and Mubadala all declined to

comment.

Falcon gained global notoriety in 2015 after it

was reported that investigators found nearly

US$700m had been transferred from an account

at the bank’s Singapore outpost to accounts in

Malaysia linke-d to then Prime Minister Najib

Razak.

FINMA found in 2016 that Falcon had violated

anti-money laundering regulations by failing

to carry out adequate background checks

into transactions and business relationships

associated with state fund 1MDB, which were

booked in Switzerland, Singapore and Hong

Kong.

The watchdog told Falcon it would lose its

licence if there was any repetition of the offence.

Swiss federal prosecutors also opened a

criminal investigation, which is ongoing.

A separate probe by Singapore authorities

over Falcon’s involvement in the 1MDB scandal

resulted in the wealth manager being stripped

of its local banking licence.

Reserve Bank of IndiaLiquidity facility for mutual funds

The Reserve Bank of India has announced a

Rs500bn (US$6.6bn) special liquidity facility for

mutual funds (SLF-MF), following the decision

by FRANKLIN TEMPLETON to wind up six Indian debt

funds.

Under the SLF-MF, the central bank will conduct

repo operations with a 90-day tenor at the fixed

repo rate. Funds will be lent to banks to meet

the liquidity requirements of mutual funds by

extending loans, or purchasing or conducting

repos against bonds and commercial paper held

by mutual funds.

The scheme is available to access from 9am to

midday local time every working day from April

27 until May 11, or until the facility is exhausted.

The RBI will review the amount and timeline,

depending on market conditions.

On April 23, Franklin Templeton said it would

wind up six Indian debt funds, because of a

drop in bond market liquidity and a sharp rise in

investor redemptions.

Investors in the mutual fund schemes – its low-

duration fund, ultra-short bond fund, short-term

income plan, credit risk fund, dynamic accrual

fund, and income opportunities fund – will not

be able to redeem their units. The assets of the

funds will be sold and the proceeds returned to

investors.

The RBI said that the closure of some debt

mutual funds had increased liquidity strains

on some other funds and created “potential

contagious effects”. It said that the effects so far

have been confined to high-risk debt funds, but

the larger industry remains liquid.

People’s Bank of ChinaCut to TMLF

China’s central bank cut the interest rate on its

targeted medium-term lending facility on April

24 following similar reductions to borrowing

costs on other liquidity tools in the past few

weeks to support the economy.

The People’s Bank of China said it lowered the

one-year interest rate on the TMLF by 20bp to

2.95% from 3.15% in the previous operation.

In the same statement, the central bank

said it injected Rmb56.1bn (US$7.93bn) into

the economy on April 24 when a batch of

Rmb267.4bn of TMLF loans was due to expire.

TMLF loans are aimed at struggling areas of the

economy. The gap between the one-year MLF

and TMLF was wiped out following the PBoC’s

move. The gap was kept at 10bp in the previous

operation in January.

“The role of TMLF as a low-cost alternative

to MLF is diminishing, as there are various

measures providing cheaper funding already,”

said Frances Cheung, head of Asia macro

strategy at Westpac in Singapore.

“While the rates are the same, the recipients can

be different, hence these are still two facilities,”

she said.

China has greatly stepped up easing efforts

since the outbreak of the new coronavirus,

which has caused massive business disruption

and led to the world’s second-largest

economy posting its first quarterly contraction

on record.

Though analysts expect a stimulus package

carrying more proactive monetary and fiscal

measures soon to cushion the economic

slowdown, many believe the authorities would

prefer targeted moves for the time being and

refrain from building up debt, a lesson from the

previous round of easing in 2015.


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COUNTRY REPORT Australia 18 Cambodia 21 China 22 Hong Kong 28 India 29 Indonesia 29 Japan 30

Philippines 30 Singapore 30 South Korea 32 Sri Lanka 32 Taiwan 33 Thailand 34

AUSTRALIA

DEBT CAPITAL MARKETS

› TCORP TAPS LONG-DATED DEMAND

NEW SOUTH WALES TREASURY CORP, rated Aaa/AAA (Moody’s/S&P), became the latest state government to tap the 20-year segment with last Tuesday’s A$450m (US$290m) sale of 2.25% May 7 2041 bonds via sole lead manager Citigroup.

The new 21-year note priced at 98.350 for a yield of 2.35%, equivalent to the May 2041 ACGB plus 73.75bp and 143bp over EFP (10-year futures).

This is the latest in a run of Citigroup-led semi government trades in the 20-year area. Syndication managers away from these deals speculate they are targetting an individual offshore, probably Japanese, investor.

Citigroup recently arranged A$300m and A$500m sales of new 2.25% April 16 2040 and 2.25% November 20 2041 bonds for Queensland Treasury Corp.

It was also sole lead for a A$500m issue of 2.25% November 20 2040s for Treasury Corp of Victoria on April 9 as well as several under-the-radar, long-dated state bond deals.

› CIBC TAKES ADDITIONAL COVER

CANADIAN IMPERIAL BANK OF COMMERCE, Sydney branch tapped its April 14 2023 covered floating-rate note for A$200m last Monday, to increase the size of the note to A$800m.

The reopening, via joint lead managers ANZ and CBA, priced at 100.883, equivalent to three-month BBSW plus 95bp – well inside the 125bp margin CIBC Sydney paid for the initial A$600m three-year sale on April 2.

Toronto-Dominion Bank also paid 125bp for its A$1.25bn three-year covered Kangaroo FRN issued on April 1 before Bank of Montreal sold A$2bn of three-year Kangaroo FRNs at three-month BBSW plus 120bp on April 8.

Royal Bank of Canada, Sydney branch, followed on April 15 with a A$2.25bn three-year FRN at a margin of 100bp, having taken advantage of a strong rally in global credit, underpinned by the extension of the Fed’s Secondary Market Corporate Credit Facility announced on April 9.

Major Canadian banks are the most active offshore participants in the Australian covered bond market. Besides them only Swedish mortgage lender Stadshypotek, Bank of New Zealand, Norway’s DNB Boligkreditt and Singapore’s DBS Bank have sold covered Kangaroos since the financial crisis.

› KFW STAYS SHORT FOR A$200M

Triple A rated German government-guaranteed agency KFW continued its recent run of two and three-year Kangaroo taps with last Wednesday’s capped A$200m increase to its 2.9% June 6 2022 bond.

Unusually for SSA Kangaroo additions, sole lead manager RBC Capital Markets was able to print 2bp inside guidance at asset swaps plus 39bp.

The reopening, which raised the outstanding size of the line to A$1.5bn, priced at 104.677 for a yield of 0.635%, equivalent to 40.5bp over the July 2022 ACGB.

STRUCTURED FINANCE

› LA TROBE MARKETS RMBS RETURN

Non-bank mortgage lender LA TROBE FINANCIAL has mandated Macquarie to arrange a potential Australian dollar RMBS issue alongside Citigroup, CBA, HSBC, NAB, Natixis and Wells Fargo. Investor meetings are scheduled for April 30 and May 1.

The transaction is likely to be supported by the Australian Office of Financial Management’s A$15bn (US$9.8bn) Structured Finance Support Fund (SFSF) scheme to purchase targeted RMBS and other ABS originated by smaller lenders in the primary market.

Non-bank lender Firstmac took advantage of the scheme when the AOFM bought A$189.14m across six tranches of its A$1bn prime RMBS, Firstmac Series 1-2020 on March 27, including all A$70m of the Class A-2 notes to push pricing down to 75bp versus guidance in the 225bp area.

La Trobe last tapped the RMBS market in October with its ninth and largest non-conforming RMBS issue, the upsized A$1.25bn La Trobe Financial Capital Markets Trust 2019-2.

International asset manager Blackstone bought an 80% stake in La Trobe Financial in late 2017.

SYNDICATED LOANS

› WESFARMERS SHOPS FOR A$2BN LOANS

Australian retail-to-chemicals conglomerate WESFARMERS has increased its available committed debt facilities to about A$5.3bn (US$3.41bn) to strengthen its balance sheet to deal with the impact of the coronavirus pandemic.

The company put in place an approximately A$2bn debt facility at acceptable terms, with pricing well below its current overall cost of debt, Wesfarmers said in a filing to the Australian Securities Exchange last Tuesday.

It has also taken other steps in recent weeks, including a stake sale of 10.1% combined in supermarket operator Coles in February and March to raise around A$2.11bn in pre-tax proceeds.

“Covid-19 has had a profound impact on our way of life and business operations and the actions we are taking with our balance sheet and in our businesses are focused on sustaining performance in an uncertain future,” said Wesfarmers managing director Rob Scott.

The company has accelerated its plans to improve the unsatisfactory financial performance of Australian department store chain Target following a deterioration in trading conditions. This includes a review of a range of actions to improve shareholder returns and an assessment of strategic options for a commercially viable Target, the filing said.

In March, Wesfarmers signed a A$400m sustainability-linked financing with Commonwealth Bank of Australia, the largest such bilateral loan Down Under.

The three-year loan, marking a debut SLL for Wesfarmers, pays an interest margin tied to the company’s performance in meeting ambitious targets linked to indigenous employment and a reduction in carbon emissions intensity. The ASX-listed company would have to pay a higher pricing if it does not meet those targets.

The loan agreement converts an existing borrowing into the new SLL.

› MADISON TAPS TLB FOR APM GROUP BUY

Chicago-based private equity firm MADISON

DEARBORN CAPITAL PARTNERS is raising a term loan B of around A$600m–$700m to back its proposed acquisition of a majority stake in disability employment services provider ADVANCED PERSONNEL MANAGEMENT INTERNATIONAL.


COUNTRY REPORT AUSTRALIA

Bank of America has won the mandate to underwrite the financing.

Madison Dearborn is acquiring the stake in APM from Australia’s Quadrant Private Equity and APM management, according to a March 12 press release from law firm Gilbert + Tobin, which is advising the sellers.

The acquisition price is around A$1bn and the deal is expected to be completed before the end of June, according to Australian media reports.

Last December, APM acquired Konekt, one of the largest integrated employment placements, workplace injury management and workplace health solutions providers in Australia, according to the latter’s announcement that month.

In July 2017, Quadrant funded its buyout of APM via a A$165m five year loan, according to Refinitiv LPC data. The borrowing consists of term loan tranches of A$54m, A$81m and A$20m, and a A$10m revolving credit facility. ANZ, Commonwealth Bank of Australia, Investec, Macquarie Bank and Metrics Credit Partners were the lenders.

› PRICING FOR QANTAS LOAN EMERGES

QANTAS AIRWAYS is offering an interest margin of 225bp over BBSY and an upfront fee of 100bp for a 10-year amortising loan of at least A$300m.

Two Boeing 787-9 planes form the security for the latest borrowing, which has an average life of five years.

Another plane will be pledged as security and the loan will be increased if there is oversubscription. Commitments are due by mid-May.

ANZ, BNP Paribas, MUFG and Sumitomo Mitsui Banking Corp are the mandated lead arrangers and bookrunners.

The latest deal is the company’s second long-tenor financing within a month.

In March Qantas closed a A$1.05bn loan of up to 10 years to manage the impact of the coronavirus outbreak on its business.

That loan pays an interest rate of 2.75% and carries no financial covenants. Qantas has pledged seven out of 11 Boeing 787-0 aircraft as security for the loan. It had purchased these planes with cash in recent years.

The loan completed in March was not syndicated and was closed soon after Moody’s placed the airline’s Baa2 credit rating under review for a possible downgrade due to the unprecedented disruption in the aviation industry.

A previous secured syndicated financing for Qantas was a A$450m 10-year asset-backed loan in October 2018.

BNP, National Australia Bank and Standard Chartered were the MLABs of the financing, which attracted a dozen lenders in general syndication and was increased from a A$300m initial target.

That loan – secured over a pool of fixed assets, including aircraft engines – pays margins tied to the loan-to-value ratios. It gives the borrower more flexibility whenever collateral is added or removed leading to pricing and/or collateral adjustments.

The interest margins are 175bp, 160bp and 145bp over BBSY for LTV ratios of 75%–80%, 65%–75% and less than 65%, respectively.

› DOWNER EDI SIGNS A$500M REVOLVER

DOWNER EDI has signed a new A$500m syndicated loan with relationship banks and extended maturities of bilateral loans, according to a filing to the Australian Securities Exchange the week before last.

The new revolving credit facility matures in July 2022 and will refinance Downer’s A$200m loan due in April 2021 along with providing the company with additional liquidity.

The company also agreed to extend A$130m of bilateral facilities maturing in the next 12 months to the financial years ending 2022 and 2023.

As a result, Downer will only have less than A$200m of debt, 6% of its total, maturing in the second half of the 2021 financial year.

As of December 31, Downer had A$515m cash and A$1.14bn committed undrawn facilities.

Lendlease taps A$2.05bn in equity, loans Equity/Loans Infrastructure group shores up balance sheet

Australian property and infrastructure

company LENDLEASE GROUP is raising A$2.05bn

(US$1.32bn) of debt and equity to strengthen

its balance sheet and take advantage

of investment opportunities as markets

stabilise.

The company completed a A$950m

equity placement last week that drew

strong support from existing and new

shareholders.

Lendlease sold 96.9m shares, or 17.2%

of outstanding, at A$9.80 each, or an 8.2%

discount to the pre-deal close of A$10.68.

Existing shareholders were allocated in full

up to their pro rata allocation. Goldman Sachs, Morgan Stanley and UBS were the

joint lead managers and underwriters.

The group is also raising up to A$200m

through a share purchase plan for eligible

shareholders to subscribe new shares from

May 5 to May 21.

Lendlease also said it had agreed about

A$900m of additional debt facilities with

tenors ranging from 12 to 24 months, subject

to final documentation. Together with the

equity placement, that leaves the company

with an expected gearing ratio of 10%–15%

at June 30.

Lendlease said it would use existing

cash and debt facilities to repay A$225m

of medium-term notes maturing in May

2020. There are no other major maturities

until FY2022. It had A$3.95bn of cash and

committed undrawn bank facilities as at

April 24.

Lendlease currently has adequate

headroom on its various covenants in relation

to its debt facilities, including interest cover,

gearing and negative pledge.

However, factors such as falls in asset

values and the inability to achieve timely

asset sales could lead to a breach of such

covenants, which could result in lenders

requiring immediate repayment, according to

a filing last Tuesday.

The company has rolled out other

measures in response to market uncertainties

stemming from the pandemic, including

deferral or reduction of non-essential capital

and project expenditure.

Lendlease continues to maintain

its estimates for its exit from non-core

businesses in the range of A$450m–$550m

(pre-tax).

In January, Lendlease raised a A$990m

self-arranged five-year club loan from 10

banks backing the development of the

53-storey Circular Quay Tower in Sydney.

Bank of China, Commonwealth Bank of

Australia, DBS Bank, HSBC, ICBC, MUFG

Bank, Mizuho Bank, OCBC Bank, Sumitomo

Mitsui Banking Corp and United Overseas

Bank provided the loan.

Lendlease Group currently has 21 major

urbanisation projects in nine cities worldwide.

CANDY CHAN, MARIKO ISHIKAWA


In December, Spotless Group, in which Downer holds a majority stake, completed an amendment and extension of its dual-currency loan from 2018 with 14 existing lenders. The deal, in Australian and New Zealand dollars, extended maturities of the 2018 loan by one year to 2022 and 2023, while slashing interest margins by 10bp to 130bp and 145bp over the base rates.

Downer’s previous loan market visit was in May 2018 for a A$400m revolving credit evenly split into four and five-year tranches with opening interest margins of 125bp over BBSY and 140bp over BBSY, respectively, based on the company’s BBB (Fitch) rating.

The rating agency still rates Downer at BBB.

› OPTUS DIALS UP A$800M 364-DAY LOANS

OPTUS FINANCE, a subsidiary of Singtel Optus, has signed 364-day committed loans totalling A$800m, marking its return to the loan market after six months.

The facilities, signed with a group of banks, carry guarantees from Optus and certain of its subsidiaries, parent Singapore Telecommunications said in an exchange filing last Friday.

The latest borrowing follows a A$1bn revolving credit facility Optus signed in October 2019 with 14 banks. That loan matures on May 31 2022.

ANZ, Bank of America, Bank of China Sydney branch, BNP Paribas, Citibank, Commonwealth Bank of Australia, DBS Bank, HSBC, Mizuho Bank, OCBC, Standard Chartered Bank, Sumitomo Mitsui Banking Corp, Societe Generale and Westpac Banking Corp were the lenders on that facility.

The latest filing from SingTel said that another of its subsidiaries, SINGTEL GROUP

TREASURY, signed one-year committed facilities totalling S$950m (US$668m) with a group of banks.

In April, SingTel Group Treasury also closed a S$2.5bn three-year revolver as a club.

ANZ, Bank of America, BOC Singapore branch, Citigroup, DBS, HSBC, Mizuho, MUFG, OCBC, Societe Generale, StanChart, SMBC and United Overseas Bank equally committed to the transaction.

On March 5, S&P cut the ratings of Optus

respectively, mirroring downgrades for the two companies from Fitch in February.

› ONE RAIL AUSTRALIA CLOSES CLUB

Australian rail freight operator ONE RAIL

AUSTRALIA has closed an A$825m senior loan with 10 banks on a club basis.

The facility comprises a A$500m five-year term loan, a A$170m seven-year term loan, a A$135m five-year piece for capital expenditure and a A$20m working capital facility.

ANZ, Bank of China, Bank of Communications, BNP Paribas, Commonwealth Bank of Australia, Industrial and Commercial Bank of China, Mizuho Bank, National Australia Bank, OCBC and Sumitomo Mitsui Banking Corp are the lenders.

Macquarie was adviser to the refinancing.

The interest margins for the five and seven-year tranches are 285bp and 305bp over BBSY for the first three years, respectively, and step up to 310bp and 330bp in the fourth year and to 330bp and 350bp in the fifth year.

One Rail Australia, formerly known as Genesee & Wyoming Australia, was renamed this February after Macquarie Infrastructure and Real Assets and Dutch pension fund PGGM acquired the remaining 51.1% stake in the Australian unit of Genesee & Wyoming.

Last August, MIRA and PGGM agreed to assume full ownership of GWA, concurrent with the acquisition of G&W by Brookfield Infrastructure Partners and Singapore’s GIC.

A US$2.55bn seven-year term loan B funded G&W’s acquisition, which was completed in December. The TLB priced in November at 200bp over Libor with a 0% floor, 99.5 original issue discount and 101 soft call protection for six months. G&W also raised a US$600m revolving credit facility.

GWA’s previous loan was in December 2016 when it raised a five-year senior secured financing to partially fund its A$1.14bn acquisition of Glencore’s Australian coal haulage business GRail. The loan’s opening margin was 290bp over BBSY. The all-in interest cost is about 5% per year.

The financing is split into term loans of A$560m and A$30m, and a A$50m revolver, all maturing in December 2021, according to Refinitiv LPC data.

The lenders were ANZ, Bank of America, BNP, CBA, Citigroup, JP Morgan, Mizuho, MUFG, NAB and SMBC.

› WORLEY RETURNS TO TAP NEW LOANS

WORLEY has obtained A$465m in 12-month facilities from banks, within a month of completing extensions on its existing loans.

These new facilities have been established on similar terms to existing facilities, according to a filing to the Australian Securities Exchange last Tuesday.

The latest move will further strengthen Worley’s liquidity position as it copes with the fallout from the coronavirus pandemic.

In March, Worley said it had extended the maturity of approximately A$480m in working capital loans for 12 months.

It said at the time it expected the remaining A$100m from working capital facilities of about A$580m maturing in FY2020 to be renewed in June 2020.

Formerly known as WorleyParsons, the company is a provider of project and asset services in the energy, chemical and resources sectors.

› NORTHERN STAR DRAWS DOWN A$200M

Australian gold miner NORTHERN STAR

RESOURCES has drawn down A$200m to boost liquidity during the current period of uncertainty arising from the coronavirus pandemic.

As a result, Northern Star’s drawdowns on its corporate debt facilities totalled A$700m as at March 31, the company said in a filing to the Australian Securities Exchange last Tuesday.

The only scheduled debt repayment in the next 12 months is A$25m on December 31.

On March 26, Northern Star deferred payment of its interim dividend to October 27, and withdrew its production and cost guidance for FY20 to ensure the company is in the strongest possible financial position to respond to Covid-19 and the subsequent global financial impact.

On January 3, the company completed the acquisition of Newmont Gold’s 50% stake in a gold mine in Western Australia.

Northern Star entered into an agreement with Newmont Gold’s Australian subsidiary to acquire all the shares in Kalgoorlie Lake View for US$775m and associated assets for US$25m.

The purchase was funded via A$425m of secured debt, a A$765m share placement and cash.

In December, Northern Star signed A$775m of loans consisting of a A$300m three-year revolver, a A$400m four-year loan, a A$72m term loan due June 12 and a A$3m portion due March 2021, according to Refinitiv LPC data. ANZ, Commonwealth Bank of Australia and HSBC were the lenders.

KLV holds a 50% interest in Kalgoorlie Consolidated Gold Mines and in the operations and assets managed by KCGM.

KCGM is a 50:50 joint venture between Newmont and Saracen Mineral Holdings and includes the Super Pit gold mine in Kalgoorlie, Western Australia, among other deposits.


COUNTRY REPORT CAMBODIA

› MONASH IVF GETS COVENANT WAIVER

Reproductive and fertility services provider MONASH IVF GROUP is seeking an equity raising of around A$80m after having obtained covenant amendments and temporary waivers on its syndicated loan maturing in January 2022.

The equity raising is for reducing debt thus enhancing Monash IVF’s balance sheet flexibility to navigate the coronavirus pandemic, and for pursuing identified growth opportunities in Australia and South-East Asia.

Following the equity raising and repayment of around A$77m debt, Monash IVF will have total liquidity of cash and undrawn facilities of around A$97m, according to a filing to the Australian Securities Exchange last Monday.

Lenders to Monash IVF have agreed to suspend covenant testing on its syndicated loan until June 30 2021.

As at April 24, Monash IVF had a net debt position of around A$94m, including access to approximately A$20m of cash after fully drawing down on its A$115m syndicated debt facility.

Pro forma net leverage ratio (net debt/Ebitda) as at December 31 2019, based on last 12-month Ebitda calculated in accordance with the syndicated debt facility agreement was at 2.6x.

Monash IVF will target gearing of less than 2.0x Ebitda in the medium term.

› VIVA ENERGY REIT CONCLUDES REVIEW

VIVA ENERGY REIT is looking to repay one of its lenders and has agreed to revise a loan with another one as part of a debt review event it concluded following the exit of its controlling shareholder.

Viva Energy REIT has been in discussion with the two lenders for A$120m in debt facilities after other lenders on loans of A$976.7m provided waivers to the review event, according to a filing to the Australian Securities Exchange last Tuesday.

The borrower intends to tap other available debt within 30 days to repay a A$20m term loan to the first lender, who has requested repayment. The loan has an original maturity of September 2028.

The agreement with the second lender relates to a revision of the facility limit to A$50m from A$100m previously, and a change in the maturity date to April 2021 from June 2022. This facility is currently undrawn.

Following these moves, Viva Energy REIT’s pro forma liquidity position (unrestricted cash and undrawn debt facilities) is A$104.3m, with a weighted

average debt maturity of 3.2 years as of March 31.

The facilities carried provisions for a review event if Viva Energy Group’s shareholding in Viva Energy REIT fell below 20%.

In February, Viva Energy Australia, which is part of Viva Energy Group, agreed to sell its 35.5% stake in Viva Energy REIT.

In early April, Viva Energy REIT closed a A$275m four-year revolving credit facility as a four-bank club.

Viva Energy REIT is Australia’s largest listed real estate investment trust owning solely service station and convenience retail properties.

EQUITY CAPITAL MARKETS

› CHARTER HALL RETAIL RAISES EQUITY

CHARTER HALL RETAIL REIT has completed a A$275m (US$176m) share placement to strengthen its balance sheet and increase financial flexibility.

It offered 94.8m units, equal to 20% of the outstanding, at A$2.90 each, representing a 7.9% discount to the last close of A$3.15 on April 24.

Eligible unitholders were allocated in full up to their pro rata share of new units. The REIT is also inviting shareholders to subscribe for an additional A$25m of new units from May 5 to May 21.

Following the placement, gearing is forecast to shrink to 22.6% and cash and undrawn debt facilities to increase to A$407m.

The REIT’s anchor tenants, which are mainly convenience retail stores, have all remained open during the Covid-19 pandemic. Supermarket sales spiked during March as shoppers stocked up on essential items.

Major tenants like Woolworths, Coles, BP Wesfarmers and Aldi represent in excess of 51% of rental income, and 60% of supermarkets are currently paying turnover rent, Charter Hall said.

JP Morgan and UBS are the joint lead managers and underwriters to the placement.

› CREDIT CORP BOOSTS BALANCE SHEET

Australian debt buyer CREDIT CORP is in the market raising A$120m from a placement to enhance balance sheet flexibility.

It is issuing 9.6m shares at A$12.50 apiece, or a 11.6% discount to the pre-deal closing price of A$14.14 on April 28.

The company is also raising A$30m from a share purchase plan for eligible

shareholders to subscribe to new shares from May 8 to June 2.

Credit Corp intends to reduce debt to 10% gearing, below its target range of 25% to 30%, to provide increased funding capability and headroom for committed undrawn debt facilities so as to withstand the economic impact of the Covid-19 pandemic.

It said it aims to maintain its capacity for debt ledger purchasing and investments in opportunities that arise.

JP Morgan is underwriting the placement.

CAMBODIA

SYNDICATED LOANS

› EMERALD RESOURCES DIGS FOR PF

EMERALD RESOURCES NL has reached financial close on US$60m of debt and completed a A$75m (US$47m) share placement for its Okvau gold project in Cambodia.

The company signed the credit agreement with Sprott Private Resource Lending II (Collector), according to a filing to the Australian Securities Exchange last Tuesday.

Sprott is also offering access to a US$100m acquisition and development financing to fund future development and acquisition opportunities.

Sprott has also subscribed to US$3.5m of Emerald shares at the same issue price as the placement (on a post-consolidation basis) as a contingency to protect against any adverse currency movements in relation to the minimum equity requirement under its proposed facility.

Emerald Resources has maintained its Q2 2021 guidance for plant commissioning and first gold production from the project, which is located 275 kilometres north-east of Phnom Penh.

› AMRET SIGNS MAIDEN LOAN

Cambodian microfinance company AMRET has signed a US$50m three-year debut loan after six lenders joined in general syndication.

Cathay United Bank was the sole mandated lead arranger of the amortising facility, which carries a two-year extension option.

The deal paid a top-level all-in pricing of 411bp based on an interest margin of 395bp over Libor and an average life of 2.45 years.

A wholly owned subsidiary of the French microfinance group Advans, Amret is a leading deposit-taking company in


Cambodia with around 300,000 mainly rural borrowers and 3,000 staff.

For full allocations, see www.ifre.com.

CHINA


› FOUNDER SEC MAKES TENDER OFFER

FOUNDER SECURITIES has launched a tender offer for up to US$70m of its US$200m 6.9% guaranteed bonds due November 2020.

The offer price is US$900 per US$1,000 in principal amount plus accrued interest, according to a filing.

The offer is being made to improve and extend the company’s debt maturity profile as part of its liability management programme, the filing said.

The deadline is May 5 for settlement on or around May 11.

Founder Securities (Hong Kong) is sole dealer manager and DF King is information and tender agent.

The bonds were issued by First FZ Bond in 2018 and guaranteed by Founder Securities (Hong Kong) Financial Holdings. Shanghai-listed parent Founder Securities is the keepwell deed provider.

› HONGHE DEVELOPMENT PRINTS

Local government financing vehicle HONGHE

DEVELOPMENT GROUP has priced US$108m three-year Reg S unrated senior unsecured bonds at par to yield 7%, flat to price guidance.

Proceeds will be used for project construction and business development, including repaying interest-bearing debts in the PRC and replenishing working capital.

Guosen Securities (HK), CEB International and Central Wealth Securities Investment were joint global coordinators as well as joint bookrunners and joint lead managers with Goldbridge Securities and Zhongtai International.

The issuer is the primary entity that undertakes infrastructure development and poverty alleviation project construction work in Honghe Hani and Yi Autonomous Prefecture in the southern part of Yunnan province.

› NAN HAI MARKETS SBLC-BACKED BOND

Chinese film distribution and property development company NAN HAI CORP was marketing two-year non-call one US dollar credit enhanced senior unsecured notes on

April 29 at initial price guidance of 4.00% area.

The proposed bonds will be issued by the Hong Kong-listed company’s wholly owned subsidiary, Amber Treasure Ventures, and have the benefit of an irrevocable standby letter of credit denominated in US dollars issued by China Citic Bank Shenzhen branch (Baa2/BBB+/BBB).

The bonds have an expected issue rating of BBB+ by S&P.

The benchmark Reg S issue has received strong anchors and indications of interest.

Proceeds will be used for the repayment of mid to long-term offshore debt due within one year.

China Citic Bank International is the sole global coordinator, sole bookrunner and sole lead manager.

The deal was not yet priced at the time of writing.

› SHUIFA GROUP COMES BACK

SHUIFA GROUP, rated Baa3 (stable) by Moody’s, on April 29 was marketing a three-year US dollar benchmark-sized Reg S bond offering at initial price guidance of 4.60% area.

The deal was not yet priced at the time of writing.

The group announced the mandate and completed an investor conference call earlier this year but the launch was delayed by the Covid-19 pandemic. The deal structure has also changed. In late February the group indicated it aimed to print a five-year bond.

The proposed bonds will be issued by wholly owned subsidiary Shuifa International Holdings (BVI) and guaranteed by Shuifa Group. The senior unsecured bonds have an expected Baa3 rating by Moody’s, on par with the guarantor.

Proceeds will be used for project construction and refinancing debt in the PRC.

Guotai Junan International, China International Capital Corp, Zhongtai International, Bank of China and Standard Chartered Bank are joint global coordinators as well as joint lead managers and joint bookrunners with ICBC International, SPDB International, China Securities International, ABC International, China Everbright Bank Hong Kong branch and China Minsheng Banking Corp Hong Kong branch.

Shuifa Group is ultimately 100%-owned by the Shandong provincial government, through a 70% stake held by the Shandong State-owned Assets Supervision and Advisory Commission, a 20% interest owned by Shandong Guohui Investment, and a 10% stake held by Shandong Social Security

Fund, according to Moody’s.The group is the sole financing and

operating entity in Shandong province for water utilities and water-related construction. It also has businesses in environmental services, clean energy and agriculture.

On September 10 last year, it priced a US$400m debut bond issue to fund project construction and refinance onshore debt. The three-year senior unsecured Reg S bonds were priced at par to yield 4.15%, or 47.5bp tighter than initial 4.625% area guidance.

› S&P DOWNGRADES CAR INC TO CCC

S&P on April 27 downgraded CAR INC and its outstanding US dollar bonds CCC from B– with negative outlook, citing heightening liquidity pressure and challenges as banks monitor the company’s shareholding structure and operating performance.

The rating agency said that the Chinese car rental company’s remaining liquidity sources may not be sufficient to cover its maturities over the next 12 months, including US$300m 6% bonds due in February 2021.

The action is S&P’s second downgrade in less than a month after an accounting scandal at Luckin Coffee affected CAR’s access to capital markets and operations. S&P on April 7 lowered CAR and its US dollar bonds to B– from B+ and placed the ratings on negative watch.

S&P said that CAR’s plan to sell 30,000–35,000 used vehicles in 2020 could provide some liquidity, in addition to its operating cashflow, however, there are still uncertainties about the plan, including the pricing and the ability to offload the cars.

S&P said whether CAR’s access to capital markets and bank funding will improve after a proposed shareholding change remains key.

CAR on April 16 said its largest shareholder UCAR has agreed to sell a stake of up to 17.11% in two tranches to Amber Gem Holdings, which is controlled by private equity fund Warburg Pincus. Prior to that UCAR held 25.92% and Amber Gem 10.11%.

S&P said the proposed transaction increases the risk of triggering the change-of-control clause on CAR’s dollar notes, potentially leading to their immediate repayment. The combined holding of UCAR and Legend Holdings in CAR could drop to as low as 35.4% – near the 35% CoC threshold – after UCAR completes the second tranche of its deal with Warburg Pincus.


COUNTRY REPORT CHINA

› TIMES CHINA PRINTS 364-DAY NOTES

TIMES CHINA HOLDINGS, rated Ba3/BB–/BB–, has priced US$200m 364-day notes at par to yield 6% in a private deal.

Proceeds from the Reg S unrated senior unsecured bonds will be used for general corporate purposes.

Settlement will be on May 6.Barclays, Goldman Sachs, Guotai Junan

International and UBS were joint global coordinators as well as joint lead managers and joint bookrunners with China Industrial Securities International and CCB International.

› UNION LIFE UNVEILS TENDER RESULTS

UNION LIFE INSURANCE, rated Baa3 by Moody’s, said US$53.392m in aggregate principal amount of its outstanding US$470m 3% notes due September 2021 has been validly tendered.

The Chinese life insurer raised the acceptance amount from US$50m and will pay US$860 per US$1,000 in principal amount of the notes, plus accrued interest, according to a stock exchange filing on April 29.

The principal amount outstanding after the settlement of the offer is US$416.608m.

The settlement is expected on or about April 30.

The 2021s traded at a bid cash price of 80.75 on April 29, recovering the over 12-point losses posted in March, according to Refinitiv data.

HSBC is the dealer manager and Morrow Sodali is the information and tender agent.

› BECE PLANS PANDA GREEN BOND

BEIJING ENTERPRISES CLEAN ENERGY GROUP has announced a 5.5% coupon for an up to Rmb1bn (US$141m) three-year green Panda bonds offering on the Shenzhen Stock Exchange, near the top end of an indicative range of 4.9%–5.9%.

The Cayman Islands-incorporated, Hong Kong-listed company plans to use proceeds for acquisitions and to inject capital into a subsidiary.

The issuer and the bonds are rated AA+ by China Lianhe.

Huatai United Securities is lead underwriter and bookrunner on the offering.

› BOC PRINTS RMB40BN ONSHORE AT1

BANK OF CHINA has printed Rmb40bn Additional Tier 1 capital bonds in China’s interbank market at 3.4%, in the upper half of the 2.8%–3.8% indicative price range.

Both the issuer and the bonds are rated AAA by China Chengxin International and Golden Credit Rating International.

BOC International (China) was the lead

underwriter and bookrunner. China International Capital Corp, Guotai Junan Securities, Agricultural Bank of China, Bank of Communications, China Merchants Bank and Bank of Jiangsu were joint lead underwriters.

› GEMDALE BACKTRACKS

Chinese property developer GEMDALE has scrapped its decision to slash the coupon of one of its onshore bonds following objections from investors and an enquiry from regulators.

In an April 29 filing, the Shanghai-listed company said it would keep the coupon of its Rmb1bn three-year non-put two notes due May 2021 unchanged at 5.29%, reversing an earlier decision on April 21 to lower it to 1.50%.

Gemdale said the latest decision was made after “careful consideration” based on legal advice as the earlier move to lower the rate to 1.50% violated the terms and conditions in the bond prospectus. It also apologised for causing concern in the markets.

There are some recent precedents for cuts of onshore coupons, though not as steep as what Gemdale first intended.

The Shanghai Stock Exchange earlier wrote to Gemdale to ask for legal clarification on the issue.

The bonds resumed trading on April 29.Gemdale is an active issuer in China’s

exchange-traded and interbank bond markets. It also has outstanding US dollar bonds issued offshore through subsidiaries.

› HUAWEI COMPLETES THIRD ONSHORE

HUAWEI TECHNOLOGIES has priced Rmb2bn of five-year medium-term notes in China’s interbank bond market at 3.09%, within indicative price guidance of 2.8%–3.4%.

The issuance, its third onshore bond issue this year, drew a total Rmb4.16bn of subscriptions. The bonds will be issued under a Rmb20bn quota registered with Chinese financial regulators.

ICBC was the sole lead underwriter and sole bookrunner.

Lianhe Credit has assigned a AAA rating to both the issuer and the bonds.

The Chinese technology giant issued two onshore bonds in March – a Rmb2bn 3.24% five-year bond via ICBC and a Rmb2bn 3.38% via CCB.

SYNDICATED LOANS

› JD.COM SEEKS LOAN FOR LOGISTICS

Chinese e-commerce giant JD.COM is seeking an onshore/offshore five-year loan of

US$2.91bn-equivalent for development and refinancing of its logistics portfolio.

Standard Chartered Bank is the mandated lead arranger and bookrunner of the financing, which comprises a US$1.4bn-equivalent onshore renminbi portion, and an offshore portion split into US$1.36bn and US$150m tranches.

The onshore portion is secured over seven of JD.com’s logistics properties in China. The collateral will be shared with the offshore portion via an inter-creditor agreement.

Five onshore units of JD.com are the borrowers on the onshore portion.

JD TAURUS DEVELOPMENT (HK) is the borrower on the offshore portion, which offers an interest margin of 217bp over Libor.

Commitments are due by end-June.Nasdaq-listed JD.com has filed for a

secondary stock market listing in Hong Kong, IFR reported last Tuesday. (See News.)

The company’s previous visit to the loan markets was a debut US$1bn five-year loan, which was doubled following commitments from 19 banks in general syndication.

Bank of America Merrill Lynch, Bank of China, Deutsche Bank and Standard Chartered were the original mandated lead arrangers, bookrunners and underwriters of the bullet facility, which offered a top-level all-in pricing of 133.5bp based on an interest margin of 115bp over Libor.

JD.com was the largest retailer in China by revenues in 2019 and clocked net income of Rmb11.89bn (US$1.7bn), reversing a net loss of Rmb2.8bn in 2018.

As of December 31 2019, JD.com operated regional fulfillment centres in seven major cities, front distribution centres in 28 cities and other additional warehouses in 54 cities in China.

› XIAOMI SCORES WITH REFI

Chinese smartphone maker Xiaomi has provided a masterclass to Asian borrowers, increasing its five-year loan to US$1.2bn on the back of a successful US dollar bond debut the week before last.

Xiaomi scored on three fronts through the loan – slashing the pricing significantly, pushing its maturity and increasing the size – no mean feat considering the volatile market conditions due to the coronavirus pandemic.

Eighteen banks joined the deal, which had been launched at an original US$1bn target and an all-in pricing of 134bp in March.

The lenders are: Agricultural Bank of China, ANZ, Bank of China, Bank of Communications, BNP Paribas, China


Construction Bank, China Merchants Bank, China Minsheng Bank, Citigroup, DBS Bank, Hang Seng Bank, HSBC, Industrial and Commercial Bank of China, Industrial Bank, Mizuho Bank, Ping An Bank, Standard Chartered Bank and Wing Lung Bank.

Allocations are being finalised and signing is expected to take place this week.

Hong Kong-incorporated XIAOMI BEST TIME

INTERNATIONAL is the borrower, while Hong Kong-listed Xiaomi Corp is the guarantor.

Proceeds from the latest loan will refinance a US$1bn three-year loan Xiaomi obtained from 19 banks in July 2017.

The company repriced the loan in October 2018, cutting the interest margin by 60bp to 155bp over Libor. Four new lenders joined, while five other existing banks dropped out of the deal at the time.

On April 22, Xiaomi made a successful debut in the 144A/Reg S bond market. The Baa2/BBB–/BBB rated company priced a US$600m 10-year 3.375% senior unsecured bond at 98.745 to yield 3.525%, or Treasuries plus 290bp.

› HUAZHU GETS COVENANT WAIVERS

Nasdaq-listed Chinese hotel operator HUAZHU GROUP has obtained waivers for two upcoming covenant tests for a US$987m-

equivalent loan that backed its acquisition of German luxury hotel group Deutsche Hospitality.

The company informed its lenders the week before last that it has obtained consent from two-thirds (by value) of the banks to waive testing of the leverage covenant for the periods ending June 30 2020 and December 31 2020.

Huazhu sought the waiver as it expects a likely breach of the covenant on the three-year loan, amid a significant decline in hotel occupancy rates in the wake of the coronavirus pandemic.

The loan carries a “snooze you lose” clause, which disenfranchises a lender’s voting right in relation to a specific amendment or waiver request if that lender has not responded to the facility agent within a certain pre-defined period.

Thirteen lenders, including original mandated lead arrangers and bookrunners JP Morgan, Deutsche Bank and Morgan Stanley, participated in the loan, which was signed in January.

A Hong Kong-incorporated financing vehicle is the borrower, while its parent, Huazhu is the guarantor.

Huazhu expects its net revenues in the first quarter of 2020 to decline 15%–20% year on year, or 45%–50% if Deutsche

Hospitality is excluded, the company said in its 2019 earnings announcement on March 26.

Around half of Huazhu’s hotels in China were required to close temporarily and occupancy rates plummeted to about 10% during the Lunar New Year holiday in late January.

Since early March, however, operations have shown an initial recovery. As of March 26 2020, 93.5% of Huazhu’s hotels had resumed operations with the occupancy rates rising to 62%.

› GREENLAND UNITS LOOK TO REFINANCE

Hong Kong-listed GREENLAND HONG KONG

HOLDINGS is seeking a US$150m–$250m-equivalent dual-currency three-year loan for refinancing.

China Everbright Bank and HSBC are the mandated lead arrangers and bookrunners of the loan, which offers an interest margin of 300bp over Hibor or Libor.

Banks can commit in either US or Hong Kong dollars. Tickets of US$50m or more will earn the MLAB title and an upfront fee of 130bp for a top-level all-in of 343.33bp, while commitments of US$35m–$49m will receive the MLA title and a 108bp fee for an all-in of 336bp. Lead arrangers joining with US$20m–

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COUNTRY REPORT CHINA

$35m received an upfront fee of 81bp for an all-in of 327bp.

Commitments are due by May 22.Proceeds will be used to refinance a

US$250m three-year loan the borrower obtained in June 2017, which paid a top-level all-in pricing of 313bp based on an interest margin of 280bp over Libor or Hibor and an average life of 2.85 years.

Greenland Hong Kong Holdings is majority owned by Shanghai-based state-owned developer Greenland Holding Group.

For the year ended December 31 2019, the borrower recorded a 43% growth in its profit to Rmb2.47bn .

Separately, GLUON XIMA INTERNATIONAL, an indirect wholly owned subsidiary of Greenland Holding Group, is raising an approximately US$300m loan, also for refinancing purpose.

Credit Suisse is the MLAB of the transaction. Greenland Holding will provide a guarantee.

Gluon Xima too completed a US$315m three-year loan from nine lenders in August 2017. Credit Suisse led that loan, which offered a top-level all-in pricing of 258.33bp via a margin of 225bp over Libor.

› EISA CLOSES US$287M REFI

EISA HOLDING has closed a US$287m-equivalent five-year loan after attracting eight banks in general syndication.

First Commercial Bank was the mandated lead arranger and bookrunner on the deal, which comprises a US$240m tranche A for Eisa Holding and a Rmb330m term loan tranche B for its subsidiary SHANGHAI

HONGWELL REAL ESTATE.Tranche A is further split into a US$100m

term loan tranche A1 and a US$140m revolving credit tranche A2.

Tranche A offers an interest margin of 185bp over six-month Libor. The borrower will pay any excess interest rate beyond a 35bp difference between TAIFX and Libor.

Tranche B offers a margin of 20bp over the five-year loan prime rate, a benchmark interest rate unveiled in China in August 2019 that is currently at 4.8%.

For tranche A, lenders were offered a top-level upfront fee of 20bp. For tranche B, lenders were offered a top-level fee of 6bp fee.

Eisa’s chairman Hsu Kun-tai and parent Redwood International Group are the guarantors on both tranches.

Shares of Eisa, parent Redwood International and subsidiary Shanghai Hongwell Real Estate will form the security package for tranche A, while Hongwell International Plaza in Shanghai serves as security for tranche B.

The guarantees and security package are the same as those on a US$274m-equivalent five-year loan the borrowers raised in April 2016.

Proceeds from the latest loan will refinance the April 2016 borrowing and also fund working capital requirements.

First Commercial was also the MLAB on that deal, which comprised a US$190m tranche A for Eisa Holding and a Rmb550m tranche B for Shanghai Hongwell Real Estate.

That borrowing offers margins of 250bp over six-month Libor for tranche A and 107% of the PBoC rate for tranche B. The borrower will pay any excess interest rate beyond a 35bp difference between TAIFX and Libor.



› AK MEDICAL SHAREHOLDER TRIMS STAKE

Controlling shareholder Ximalaya has raised HK$631m (US$81m) from the sale of part of its stake in AK MEDICAL.

The deal, comprising 30m shares or 2.7% of total share capital, was priced at HK$21.04 per share, around the mid-point of the marketed range of HK$20.72–$21.38.

The price represents a discount of 7.5% to the pre-deal close of HK$22.75.

The vendor will be subject to a 90-day lock-up.

Ximalaya’s stake in AK Medical will drop to 45.7% from 48.4% after the placement.

Goldman Sachs was the bookrunner.

› BAIYUN NEEDS A LONGER RUNWAY

Shanghai-listed GUANGZHOU BAIYUN

INTERNATIONAL AIRPORT plans to make a Rmb3.2bn (US$452m) private placement to its biggest shareholder Guangdong Airport Authority to resist the impact from the coronavirus outbreak.

The company will sell up to 294m shares at Rmb10.90 each, representing 80% of the 20-day trading average. Its shares closed at Rmb14.05 on April 27, the pricing day.

Proceeds will be used to replenish working capital to mitigate the impact from the coronavirus outbreak and reduce the asset-liability ratio.

The company posted a net loss of Rmb63m in Q1 2019, while the net profit was Rmb243m a year earlier.

The airport said that the total number of flights at the airport had decreased by 38% year on year in Q1, and passenger throughput had decreased by approximately 54% year on year.

However, the airport, as the hub

of southern China, said it will strictly implement all the epidemic prevention measures required by the government before the epidemic is completely over.

The proposal still needs approval from shareholders and regulators.

› BOZHON PRECISION DROPS STAR PLAN

The China Securities Regulatory Commission said it has terminated the registration process for the proposed Rmb1.1bn Shanghai Star IPO of BOZHON

PRECISION INDUSTRY TECHNOLOGY after the company withdrew its application.

The manufacturer of high-precision measuring equipment, whose main clients include Apple, Nio and Foxconn, cleared an IPO hearing at the Shanghai Stock Exchange on October 30.

The proceeds of the IPO were to be used to expand the production of consumer electronics, fund a new energy vehicle project, upgrade an R&D centre, and replenish working capital.

The company posted a net profit of Rmb111m for Q1-Q3 2019, down 13.5%, on revenue of Rmb1.39bn.

Huatai United Securities was the sponsor.

› CHANGAN AUTOMOBILE FIRES UP ENGINE

Shenzhen-listed CHONGQING CHANGAN

AUTOMOBILE plans to raise Rmb6bn from a proposed private share placement.

The company will sell up to 1.44bn shares, or 30% of current shares, to up to 35 investors. China South Industries Group, China Changan Automobile Group, and China South Industries Assets Management have respectively committed to buy up to Rmb29.6m, Rmb1bn, and Rmb2bn of the offering. State-owned China South Industries Group is the largest shareholder with a combined 44.14% indirect stake in the company.

Proceeds will be used to upgrade and expand SUV production lines in Anhui and Chongqing provinces, fund an engine production line in Chongqing province, upgrade a collision testing lab, and replenish working capital.


› EASTROC BEVERAGE FILES FOR IPO

EASTROC BEVERAGE GROUP, a maker of energy drinks, has filed to the China Securities Regulatory Commission for a proposed Rmb1.49bn Shanghai IPO.

The company plans to offer 40m A-shares, or 10% of the enlarged capital.

Proceeds will be used to expand production, build an R&D centre and a new


headquarters building, upgrade IT services, and for marketing.

Huatai United Securities is the sponsor, and China Merchants Securities is the financial adviser.

› EBANG FILES FOR US IPO

EBANG INTERNATIONAL, a Chinese bitcoin-mining gear maker, has filed for a US IPO of US$100m after abandoning a Hong Kong listing plan last year.

Ebang and two other bitcoin-mining gear makers, Canaan and Bitmain Technologies, had applied to launch Hong Kong IPOs but let their applications lapse last year. People close to the deals said tight regulatory scrutiny in Hong Kong made it difficult for the floats to proceed there.

Canaan was the first to turn to the US and raised US$90m from a Nasdaq IPO last November. The stock closed at US$4.23 last Friday, around half of its IPO price of US$9 a share.

BitMain also filed confidentially for a US IPO which could raise about US$400m, IFR reported last November.

Ebang’s public filing means its IPO is expected to come earlier than that of BitMain. Ebang is planning to pre-market the deal as early as this week, according to people close to the transaction.

In 2019, Ebang’s revenue dropped 66% to US$109m and its net loss widened to US$41m, from US$11.8m in 2018.

AMTD and Loop Capital Markets are the bookrunners.

› GUOSEN SEC’S PLACEMENT CLEARED

Shenzhen-listed GUOSEN SECURITIES has won final approval from the China Securities Regulatory Commission for a Rmb15bn private placement.

It will sell 1.64bn shares to up to 10 investors. Shenzhen Investment Holdings, Yunnan Hehe (Group) and China Resources SZITIC Trust have committed to buy 33.5%, 16.8% and 1% of the placement, respectively. The three investors will face a lock-up of 36-60 months, and any remaining potential investors will have a lock-up of up to six months.

The floor price will be 80% of the 20-day average before pricing day.

Proceeds will be used to replenish capital and working capital and repay debt.

China Galaxy Securities is the sponsor and joint bookrunner with GF Securities and Hongta Securities.

› JINKE TO SPIN OFF UNIT IN HONG KONG

Shenzhen-listed JINKE PROPERTY GROUP plans to spin off its property management unit on the Stock Exchange of Hong Kong.

The deal will comprise H-shares equivalent to 25% of the enlarged capital, with a 15% greenshoe.

Proceeds will be used to expand the size of the business, acquire other property management companies, replenish working capital and spend on IT services.

The unit posted a net profit of Rmb406m in 2019 on revenue of Rmb2.75bn.

Jinke Property Group holds a 75% stake in the unit, and the remaining shares belong to a private equity firm which plans to sell part of its holding.

The proposal still needs approval from the securities regulators in Hong Kong and mainland China.

Jinke Property Group has a market value of Rmb42bn.

› THREE PRE-MARKET HK IPOS

Three companies started pre-marketing Hong Kong IPOs last Monday to raise combined proceeds of up to US$900m.

Chinese property management service provider CENTRAL CHINA NEW LIFE plans to raise up to US$300m. Books are tentatively scheduled to open on May 4 and pricing is on May 8.

BNP Paribas is the sole sponsor.Central China New Life posted net profit

of Rmb99m for the first six months of 2019, compared with a Rmb1.8m profit over the same period in 2018.

Central China New Life is controlled by Henan-based Central China Group, which also owns Hong Kong-listed developer Central China Real Estate.

PEIJIA MEDICAL also intends to raise about US$300m. Huatai International and Morgan Stanley are the sponsors of the medical devices maker’s float.

Peijia posted a loss of Rmb242m for the nine months ended September 30 2019, compared with a loss of Rmb51m over the same period in 2018.

KINTOR PHARMACEUTICAL plans to raise US$200m–$300m, with pre-marketing to end on May 8. The Chinese clinical-stage drug developer has a pipeline of five candidates for treating cancers and other diseases.

Co-founders Tong Youzhi and Guo Chuangxing own a combined 36.8% stake. Legend Holdings holds a 10.1% stake.

Huatai International is the sponsor. UBS is the joint global coordinator.

› ZHFAT PLANS RMB2.2BN PLACEMENT

ChiNext-listed ZHEJIANG HUACE FILM AND

TV has released a proposed Rmb2.2bn private share placement plan for film and television production.

The company will sell up to 527m

shares, or 30% of current shares, to up to 35 investors.

Proceeds will also be used to purchase ultra-high-definition equipment and virtual studio application software and replenish working capital.

The company cancelled a Rmb1.8bn convertible bond plan on the same day.


› CG SERVICES SELLS CB

COUNTRY GARDEN SERVICES has raised HK$3.875bn from a 363-day convertible bond, the first CB from a Hong Kong-listed property management company.

The zero-coupon, zero-yield CB was marketed at a conversion premium of 11%–15% and priced at the bottom of the range.

The book was multiple times oversubscribed with a good mix of outright and hedge fund investors. The top 10 investors took about two-thirds of the deal.

The deal came less than a week after Chinese software company Kingsoft raised HK$3.1bn from a CB on April 23, the first international equity-linked deal in Asia Pacific ex-Japan since the coronavirus outbreak.

However, bankers reckon the equity-linked market is not open to all issuers yet.

“Similar to straight equities, investors are interested in deals from certain sectors such as healthcare, the internet and property management,” said an equity-linked banker. “There is more resistance for other sectors as many CBs that were sold a few months back are still trading below water.”

The credit spread for the Country Garden Services CB was assumed at 450bp, implied volatility at 26.1%, stock slippage at 5% and the bond floor at 94.6.

The company plans to use the proceeds for potential mergers and acquisitions, strategic investments, working capital and general corporate purposes.

UBS was the bookrunner.The CB traded around 100.50 in the

secondary market.

› DAQIN RAILWAY ON TRACK FOR CB

Shanghai-listed DAQIN RAILWAY plans to raise Rmb32bn from a proposed six-year convertible bond offering to fund the acquisition of assets from China Railway Taiyuan Group.

Proceeds will be used to buy a land operating lease and a 51% stake in a subsidiary of China Railway Taiyuan Group.

Daqin Railway posted a 2019 net profit of Rmb15.2bn on revenue of Rmb79.9bn.


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HONG KONG


› AMTD SETS MINIMUM YIELDS

Hong Kong-based AMTD GROUP has announced minimum yields of 7.25% and 4.5% for new senior perpetual securities denominated in US and/or Singapore dollars, respectively.

The new notes are part of an exchange offer launched by the investment bank on April 23. Holders of its outstanding US$123m 7.625% perpetual bonds callable in June have the option to swap into the US dollar and/or Singapore dollar notes.

AMTD plans to release the final yields, issue price and coupons around the time the results of the exchange offer are announced

on May 7, one day after the offer ends.Its existing perpetual bonds are callable on

June 15 and the coupon will reset to 616.1bp over three-year Treasuries plus a 500bp step-up if not called – equal to around 11.45%. The original issue size was US$200m but the company repurchased US$77m in December.

AMTD International will be the issuer of the new notes.

AMTD Global Markets and Bank of East Asia are joint dealer managers while DF King is information and exchange agent.


› MONGOLIAN MINE IPO OFF FOR NOW

The Hong Kong IPO of Mongolian coal miner ERDENES TAVAN TOLGOI is off for now after the country scrapped an executive order calling for the giant project to be

funded through an international listing. Mongolian’s cabinet said last Monday it

has annulled a 2019 resolution to proceed with an international IPO to help fund the Tavan Tolgoi coal project and related railway links near the southern border with China, Reuters reported.

It cited “political distortions” as the reason behind the annulment, with worker unions opposed to the way the project plans to meet its obligations to distribute dividends to the public.

ETT planned to raise up to US$1bn from a Hong Kong IPO this year, IFR reported last September. Bank of America and Credit Suisse are the sponsors. The duo are also joint global coordinators with BOC International and Nomura.

People close to the transaction said the proposed float is off for now but could come back in another form later.

The company planned to use the IPO

Wharf reopens market for Hong Kong Bonds Generous price guidance and extra premium ensure a successful outcome

WHARF REAL ESTATE INVESTMENT COMPANY (Wharf

REIC), rated A2 (stable) by Moody’s, received

strong demand for a US$750m dual-tranche

Reg S bond offering with final books of over

US$7.6bn, leading the charge in the reopening

of the bond market for Hong Kong issuers.

A US$450m 2.375% five-year tranche

priced at 99.677 to yield 2.444%, or

Treasuries plus 205bp, and a US$300m

2.875% 10-year tranche at 98.893 to yield

3.004%, or Treasuries plus 235bp. Both

tranches were well inside initial guidance of

250bp area and 280bp area, respectively.

The deal, priced on April 28, was the first

from a Hong Kong company since the Asian

bond market largely shut down because

of the Covid-19 pandemic. The previous

transaction was Hysan Development’s

US$850m perpetual on February 25.

Like others in the past few weeks, Wharf

REIC gave generous initial price guidance

to attract investors and succeeded in

drawing orders of US$7.9bn by the time final

guidance was released.

“There was not much attrition even though

final price guidance tightened by 45bp for

both tranches,” said a banker on the deal. He

conceded that Wharf REIC had offered a new

issue premium of about 10bp for both tranches,

but said the heavy oversubscription had allowed

a slight upsize to US$750m from US$700m.

Final pricing was more generous than

Nomura’s trading desk’s fair value estimates

of 210bp and 238bp, which referenced the

company’s existing curve and added a new

issue premium of about 10bp for a Hong

Kong retail and luxury sector landlord given

current market volatility.

However, Nomura said it still saw decent

carry on Wharf REIC bonds, currently trading

about 30bp–40bp outside peers like Link

REIT and Swire Properties, which it deems

sufficient to compensate for the company’s

higher exposure to Hong Kong’s deteriorating

retail sales.

Although the impact of the coronavirus

outbreak on Wharf REIC’s business is a

major concern, many investors welcomed the

opportunity to put money to work as primary

bond supply remains relatively low, the

banker said.

STRONG BOOKS

The five-year tranche drew final orders of

US$3.9bn from 212 accounts, including

US$275m from the leads. Asia took 90% of

the bonds and EMEA 10%. Fund managers

received 60%, banks 28%, insurers 6%,

private banks 4%, and corporates 2%.

Final orders for the 10-year notes were

over US$3.7bn from 170 accounts, including

US$135m from the leads. Asia was allocated

90% of the bonds and EMEA 10%. Fund

managers took 79%, banks 11%, insurance

and public sector investors 5%, and private

banks 5%.

The newly priced notes traded as much

as 8bp–15bp tighter in the aftermarket but

pared some of their gains on profit-taking.

The five-year was quoted at 195bp/193bp

and the 10-year at 231bp/229bp by late

Wednesday morning, according to a trader.

The notes will be issued by Wharf REIC

Finance (BVI) and guaranteed by the Hong

Kong-listed parent company under an MTN

programme. The senior unsecured notes

have an expected A2 rating by Moody’s, on

par with the guarantor.

Proceeds will be used for general

corporate purposes.

In a profit warning on April 24, Wharf REIC

said it may report a first half loss mainly

because of a likely unrealised revaluation deficit

on its investment properties and hotels because

of the extreme adverse market conditions

caused by the coronavirus outbreak.

Moody’s said that while this development is

credit negative it will have no material impact

on the company’s overall credit quality.

Moody’s forecasts that adjusted net debt/

Ebitda will weaken to 3.8–4.6 times in the

next 12-18 months from 3.4 times in 2019.

Likewise, Ebitda/interest coverage will

decline to 7.3–8.6 times from 13.3 times

over the same period. Still, these ratios are

consistent with the A2 rating.

HSBC, Bank of China, DBS Bank, Mizuho Securities and SMBC Nikko were joint global

coordinators as well as joint bookrunners and

joint lead managers with Standard Chartered Bank on the transaction.

Wharf REIC last tapped the market with

a US$300m 2.5% five-year bond priced at

Treasuries plus 120bp last September.

CAROL CHAN


COUNTRY REPORT INDONESIA

proceeds to finance a coal-fired power plant and a railway to the Chinese border.

In 2012, ETT intended to raise about US$3bn from a three-way IPO in Hong Kong, London and Mongolia but dropped the deal because of market conditions.

INDIA


› TATA COMPANIES PRINT

Electric utility company TATA POWER last Tuesday sold Rs10bn (US$132m) three-year bonds at 7.6% to a single investor.

The bonds are rated AA by India Ratings.The same day, TATA CAPITAL FINANCIAL SERVICES

sold rupee bonds in two tranches.A Rs750m three-year offering priced at

7.50% and a Rs400m five-year at 7.65%.The three-year tranche is rated AAA by

both Icra and Crisil, while the five-year tranche is rated AAA by Icra.

Each tranche was allocated to two investors, according to NSE data.

Carmaker TATA MOTORS has also announced plans to sell up to Rs10bn of bonds in three tranches.

SYNDICATED LOANS

› ADANI ELECTRICITY CLUBS DEBUT LOAN

ADANI ELECTRICITY MUMBAI has closed a debut US$400m five-year offshore loan without launching a planned limited syndication.

The Adani Transmission subsidiary had mandated eight banks on the financing in February.

The loan pays an interest margin of 230bp over Libor and is split into five tranches, each with average lives of three years.

It follows a US$1bn 10-year senior secured bond AEML completed in early February. The bond priced at par to yield 3.949%, equivalent to Treasuries plus 230bp.

The same month ATL announced that the Qatar Investment Authority had acquired a 25.1% stake in AEML for approximately Rs32.20bn (US$452m), including Rs12.10bn of equity and US$282m of shareholder subordinated debt.

Part of the Adani Group, AEML is an integrated business of power generation, transmission and retail electricity distribution. It serves over three million consumers in Mumbai and its suburbs, meeting close to 2,000MW of power demand.


› LIC HOUSING CLOSES US$200M LOAN

LIC HOUSING FINANCE has closed syndication of a US$200m three-year loan with two banks joining in the senior phase.

Indian Bank and UCO Bank have joined to take US$80m combined.

General syndication will not be launched.Senior syndication was launched in

January offering an all-in pricing of 125.1bp over Libor based on an interest margin of 100bp and a remaining tenor of 2.75 years.

DBS Bank, MUFG, Standard Chartered Bank, and Sumitomo Mitsui Banking Corp were the mandated lead arrangers and bookrunners.

The borrowing marked the Indian non-bank financial company’s return to the offshore loan market after 16 years, having last raised a US$50m five-year borrowing in June 2003.

ABN AMRO Bank, DBS and State Bank of India were the arrangers on the transaction that paid a top-level all-in of 107bp based on a margin of 95bp over six-month Libor.


› JK LAKSHMI CEMENT RAISES US$25M LOAN

JK LAKSHMI CEMENT has borrowed US$25m from State Bank for India for capital expenditure.

The 8.68-year bilateral loan has an average life of six years.

The listed cement-maker’s board approved an offshore borrowing of up to US$25m on January 28, according to a stock exchange filing.

JK Lakshmi Cement is a part of conglomerate JK Organisation which has businesses in tyres, cement, paper, power transmission, dairy products and textiles.


› BANK OF BARODA TO RAISE CAPITAL

The board of state-owned BANK OF BARODA has approved a plan to raise Rs135bn (US$1.8bn) of capital in stages, comprising Rs90bn of primary equity issuance and Rs45bn of debt.

Further details were not given. BoB planned a Rs30bn–Rs50bn share sale

in early 2018 but put it on hold after the government announced a three-way merger with Vijaya Bank and Dena Bank.

Axis, BoB Capital Markets, Citigroup, Credit Suisse, JM Financial and Kotak were hired to manage the share sale.

BoB shares were down 54% year to date as of last Tuesday.

INDONESIA


› GEO ENERGY REPURCHASES MORE

GEO ENERGY RESOURCES has bought back US$34.122m in principal amount of its 8% senior bonds due 2022 at a steep discount.

The Indonesian coal miner paid US$14.974m to repurchase the bonds.

There are now US$154.017m of the bonds outstanding, from an original issue size of US$300m, and the company said it had US$108.2m of cash as of April 26.

In March, Moody’s and S&P both judged that Geo Energy’s repeated repurchases of bonds – then totalling US$111m – far below the face value constituted a distressed exchange.

On March 19, S&P cut the ratings of the issuer and its bonds to SD, for selective default. The previous ratings were both B–.

The following day, Moody’s lowered the ratings of Geo Energy and its bonds to Caa3 from Caa1.

On March 25, Fitch cut Geo Energy’s ratings to CC from B–, saying that it viewed the bond repurchases as opportunistic, but expected a default in the next 12 months.

The company may need to redeem its bonds early, after the proposed acquisition of two mines from Titan Global Energy was put on hold. Under the terms of the bonds, if it does not increase its coal reserves substantially by April 2021, a target it would achieve with the proposed acquisition, Geo Energy would be required to redeem the bonds early.

› INDONESIA GIVES GUARANTEE

Indonesia’s HUTAMA KARYA has hired banks for a proposed debut offering of US dollar-denominated 144A/Reg S notes with an unprecedented government guarantee.

Citigroup, Deutsche Bank, HSBC, Mandiri Securities and MUFG are joint lead managers and joint bookrunners, and held fixed income investor calls across Asia, Europe and the US last Tuesday and Wednesday.

The issuer is considering a tenor of between 10 and 20 years, according to a note sent to investors.

The proposed notes will be issued under the state-owned construction company’s newly established global MTN programme, and will be guaranteed by the Ministry of Finance on behalf of the Republic of Indonesia.


This is the first time that the Indonesian government has explicitly guaranteed US dollar bonds from a corporate issuer.

Hutama Karya is the only construction company in Indonesia that is wholly owned by the government, and is currently building the 2,765km Trans-Sumatra toll road.

The road will become the main highway on Sumatra, the resource-rich island that is the second-largest in the Indonesian archipelago, and will connect Banda Aceh in the north with Bandar Lampung in the south. The toll road will open in segments, and 367km is already operational.

The issuer is rated Baa3 (stable) by Moody’s and BBB– (stable) by Fitch and the notes have expected ratings of Baa2 by Moody’s and BBB by Fitch.

› PLN SHORT-CIRCUITS MARKET CHATTER

PERUSAHAAN LISTRIK NEGARA has priced a four-tranche bond to raise Rp1.737trn (US$112.14m) that saw minimal investor pullout after PLN dismissed market talk that it was considering a deferment of debt repayments.

A Rp316bn three-year tranche was fixed at par to yield 7.92%, a Rp99.155bn five-year tranche was set at 8.25%, a Rp312.18bn seven-year piece was set at 8.55% while a Rp1.009trn 10-year tranche was set at 9.1%.

Books opened in early April and closed around mid-April with the price guidance for the respective tranches at 7.2%–8.4%, 7.6%–8.8%, 8.3%–9.6% and 8.4%–9.9%. The issue size was just below the maximum amount of Rp1.82trn targeted by the Indonesian state-owned utility.

The bond, rated AAA by Pefindo, is tentatively scheduled for settlement on May 5. BCA Sekuritas, BNI Sekuritas, Danareksa Sekuritas, Indo Premier Sekuritas, Mandiri Sekuritas and Trimegah Sekuritas were joint lead managers for the deal.

PLN has about Rp161trn of short-term liabilities as at end-June 2019, including short-term bank loans. Refinitiv data shows the company has an outstanding Rp303bn of bonds due in July.

JAPAN

SYNDICATED LOANS

› DAIICHIKOSHO TUNES IN FOR ¥30BN LOAN

DAIICHIKOSHO is seeking a ¥30bn (US$280m) loan to ensure it has liquidity on hand amid

the coronavirus outbreak, the Tokyo-listed karaoke parlour chain said in a statement last Monday.

Eight existing lenders are expected to provide the unsecured fixed-rate loan, which has tenors of three to five years.

Funding is slated for after May 20.The borrower last tapped the syndicated

loan market in May 2011 when it raised a ¥10bn 364-day facility, according to Refinitiv LPC data. MUFG was the mandated lead arranger of the loan.

PHILIPPINES

SYNDICATED LOANS

› ADB LENDS US$4.5BN TO TACKLE COVID-19

The Asian Development Bank will lend US$1.5bn each to the governments of India, Indonesia and the Philippines as part of a US$20bn package to tackle the coronavirus pandemic.

The loans will help fund spending to prevent and contain Covid-19 as well as social protection for the poor and economically vulnerable sections of society, according to press releases from the ADB.

The US$20bn package was expanded from an initial US$6.5bn announced on March 18.

Up to US$13bn from the package will go towards helping governments of developing member countries to implement expenditure programmes that mitigate the impact of the pandemic.

Around US$2bn will be made available for the private sector in the form of loans and guarantees to financial institutions, small and medium-sized enterprises, and direct financing of companies impacted by Covid-19.

The loans fall under the ADB’s Covid-19 Active Response and Expenditure Support (CARES) programme, which is funded through the Covid-19 pandemic response option, or CPRO.

In April, the Manila-headquartered Triple A supranational raised a jumbo US$4.5bn 0.625% five-year bond priced at 99.82 to yield 34.35bp over the five-year US Treasuries.

It followed a two-year bond of the same size the ADB priced at the end of March with the same 0.625% coupon at 99.91 to yield 45.3bp over Treasuries.

Both bonds were to respond to Asia’s development needs during and beyond the coronavirus crisis.

SINGAPORE

SYNDICATED LOANS

› WELLS FARGO DEALS BLOW TO EH-REIT

Wells Fargo has issued a notice of default and demand for payment for a US$35m loan to a subsidiary of EAGLE HOSPITALITY REAL ESTATE

INVESTMENT TRUST, EH-REIT said in a filing to the Singapore Exchange on April 24.

The US lender cited multiple events of default on the mortgage for the Delta Woodbridge Hotel in New Jersey signed on May 21 2019, including non-payment of monthly interest and the respective principal amount of the loan due April 1.

Wells Fargo has exercised its right to cause the loan to bear interest at the default rate calculated from April 1 2020 and demanded payment in full of all amounts currently due and payable under the loan.

In March Singapore-listed EH-REIT defaulted on a US$341m loan signed in May last year due to the non-payment of rent in respect of certain properties in the portfolio.

EH-REIT and Eagle Hospitality Business Trust make up the stapled group Eagle Hospitality Trust, while Eagle Hospitality REIT Management Pte Ltd and Eagle Hospitality Business Trust Management Pte Ltd are the respective managers.

The managers have appointed FTI Consulting to assist in the restructuring process of EHT, according to last Friday’s filing.

The REIT has a portfolio of 18 primarily freehold hotels in 11 major metropolitan areas in the United States. The properties include Queen Mary Long Beach, Holiday Inn Resort Orlando Suites and Holiday Inn Hotel and Suites, Anaheim.

› OLAM BORROWS FROM IFC AND JICA

OLAM INTERNATIONAL has raised US$176m in term loans from the International Finance Corporation and Japan International Cooperation Agency, the Singapore-headquartered food and agri-business said in a press release last Wednesday.

Olam and its wholly owned subsidiary, OLAM TREASURY, are the borrowers of the multi-tranche financing, which comprises a US$120m five-year loan and a US$56m seven-year borrowing.

The IFC approved the US$120m unsecured corporate loan to Olam in March, according to an investment disclosure from the multilateral agency.


COUNTRY REPORT SINGAPORE

Proceeds of the financing will be used for the procurement of specific agri-commodities from smallholder farmers in Vietnam, Indonesia, Timor-Leste, Papua New Guinea and Uganda, as well as the expansion of Olam’s cocoa processing facility in Indonesia, the company said.

“Olam has been actively working to build a global, sustainable agri-business, and in Indonesia considerable efforts have been made to tackle environmental and social issues,” said Junichi Yamada, senior vice president of JICA, said in the press release. “We expect sustainable cacao business in Indonesia will be expanded through this loan facility, which we believe will provide stability to smallholder farmers.”

The borrowers previously raised a US$1.525bn multi-tranche revolving credit facility last October from 19 lenders, including four senior mandated lead arrangers – ABN AMRO Bank, HSBC, National Australia Bank and Sumitomo Mitsui Banking Corp.

RESTRUCTURING

› FALCON GETS EXTENSIONS

The Singapore High Court has granted more time to FALCON ENERGY GROUP to file

restructuring documents under a scheme of arrangement.

The cash-strapped Singaporean oil-and-gas services company said it needed more time to revise the documents following a recent collapse in crude oil prices and Singapore’s extension of its partial lockdown to June 2.

The court will allow Falcon to file the materials on June 5, instead of April 5, with a hearing on applications to convene scheme meetings to be held on June 11 via online video conferencing platform Zoom.

Falcon also obtained an extension on a moratorium to stay legal proceedings to June 18 from May 20.

› WEAK OIL PRICES HAMMER ISSUERS

Two struggling companies in Singapore’s oil sector have flagged further trouble ahead following a record plunge in crude oil prices on April 20.

NAM CHEONG and PACIFIC RADIANCE each warned they will need more time to negotiate with creditors as the latest collapse in oil prices compounded the impact of movement restrictions to contain the coronavirus outbreak in Malaysia and Singapore.

Malaysian-based Nam Cheong said

it was looking to appoint advisers to study an extension of debt maturities or restructuring of existing loans. It has started discussions with principal lenders.

This will be the Singapore-listed company’s second restructuring exercise. In 2018, most investors holding S$343m (US$241m) of bonds converted the debt into term loans.

Nam Cheong said it was also reviewing its cashflow projections in the face of business uncertainties, operational disruptions and cost containment measures.

Beleaguered Pacific Radiance, which failed to redeem S$100m of 4.3% bonds that matured on March 31, has appealed for more time to reach an agreement with major creditors, including bank lenders.

The offshore vessel owner said no major contracts had been cancelled to date but noted that if oil prices remained low or negative, cancellations could be expected.

US crude oil futures crashed below zero for the first time in history on April 20 to minus US$37.63 a barrel while Brent oil prices, the international benchmark, have fallen 70% this year to US$21.14.

Oil prices are expected to remain depressed on a combination of oversupply, rising inventories and weak demand.

SIA makes its case for jumbo rights Equities Airline says raising debt in the current climate was not possible

SINGAPORE AIRLINES decided to raise S$15bn

(US$10.6bn) via a rights offer of shares

and convertible bonds because the tough

environment for the aviation sector amid the

Covid-19 pandemic has made it very difficult for

airlines to take on more debt, the company said

in response to an investor group.

SIA gave the explanation ahead of a

shareholder meeting to approve the rights

issue last Thursday.

The Securities Investors Association

(Singapore) has asked why the airline chose

to raise so much equity, exposing existing

shareholders to dilution and penalising retail

shareholders who may lack funds now to

subscribe to the rights.

SIA earlier announced that up to 1.78bn

rights shares will be sold in a 3-for-2 ratio at

S$3 each to raise S$5.3bn. The issue price is at

a 54% discount to the pre-deal close of S$6.50.

SIA also plans to raise up to S$9.7bn from

an issue of mandatory convertible bonds.

Around 295 zero coupon 10-year mandatory

convertible bonds will be issued per 100 shares.

If not redeemed before the maturity date in

10 years, the MCBs will be converted into new

shares at a conversion price of S$4.84.

The offer is the largest rights issue in the

island state, beating the previous record of

DBS Bank’s S$2.7bn issue in 2007.

SIA said it is difficult to raise funds through

the traditional routes. “Secured financing and

sale-and-leaseback transactions would also

create more cash outflow obligations,” it said

in a stock exchange disclosure.

On the other hand, raising capital through

shares and convertible bonds, “allows

SIA to treat the capital raised as equity,

strengthening its balance sheet.”

The Covid-19 pandemic has forced SIA to

cut 96% of its scheduled capacity.

SIA said of the S$8.8bn to be raised as

rights shares and CBs in the first tranche,

S$3.7bn will be for operating cashflow,

S$3.3bn for capital expenditure such as

aircraft purchases and aircraft-related

payments, and S$1.8bn for debt servicing.

The investor group queried why the

company needs so much money for capital

expenditure given the subdued demand for

passenger traffic, but SIA said the capex

relates to past orders.

Up to S$6.2bn in additional MCBs may

be issued within 15 months of shareholder

approval. “This will provide extra liquidity if

the Covid-19 crisis is prolonged, and provides

resources to prepare for recovery,” SIA said.

SIA said the right issue share price was in

line with market precedents.

“The key consideration was to provide an

opportunity and invitation to shareholders

to join this rights share issuance at an

appropriate discount, so that you may

all participate in the future growth of the

company as we emerge from this downturn

in at least the proportion you held in the

company prior to it,” SIA said.

SIA shares were down 34% year to date as

of Tuesday.

DBS Bank is the sole adviser and manager

of the rights issue.

ANURADHA SUBRAMANYAN



› ASIAN PAY TV PROGRAMS S$46M RIGHTS

Singapore Exchange-listed ASIAN PAY TELEVISION

TRUST is planning a S$46m (US$32m) 1-for-4 rights issue at S$0.128 apiece, a 3.8% discount to the pre-deal close of S$0.133.

APPT will issue around 361.3m shares and the proceeds will be used to repay debt and for working capital, the company said in a filing.

APPT shares are down 24% year to date as of last Tuesday.

APPT Management, APPT’s trustee-manager, in a personal capacity, and three other unitholders have each given an irrevocable undertaking to subscribe for their entitlements and to apply for any excess rights units. Their commitments are equivalent to the total number of rights shares on offer. The three unitholders are Araedis Investment, Hsiao Han Shen and Lu Fang Ming. Temasek owns 7.9% of APPT.

Bank of America is the lead manager of the rights issue.

The Taiwan-based pay television trust raised S$914m through an IPO priced at S$0.97 in 2013.

SRI LANKA


› FITCH DOWNGRADES SRI LANKA TO B–

Fitch has cut SRI LANKA’s long-term foreign and local-currency issuer default ratings to B– from B, with a negative outlook, citing mounting financing stress exacerbated by the coronavirus pandemic.

The rating agency also expects the sovereign will not have access to international bond markets this year.

Sri Lanka faces external debt payments of US$3.2bn from May to December this year, while its reserves are about US$7.2bn, according to Fitch. The obligations include a US$1bn

international sovereign bond payment due in October.

The 2020s were bid at a cash price of 87.95 on April 27, recovering some losses posted in March, according to Refinitiv data. The bonds dropped over 32 points in March to bid cash price of 68.

Fitch estimates Sri Lanka’s external liquidity ratio at about 64%, among the weakest in the Single B rating category.

Despite the authorities’ efforts to meet external funding needs through support from regional central banks and the IMF, securing the funds could be challenging as the pandemic tightens global liquidity and financing conditions, said Fitch.

The agency expects the budget deficit to widen to 9.3% of GDP in 2020, from an estimated 6.8% last year, due to significantly lower revenues and the spillover of tax cuts announced in late 2019, while government spending is likely to increase for virus-relief purposes.

Sri Lanka’s GDP is forecast to contract by 1% this year from 2.3% growth in 2019, according to Fitch.

Korea East-West Power prices flat to curve Bonds Latest Korean benchmark needs no premium to attract investors

KOREA EAST-WEST POWER last Monday printed a

US$500m five-year bond without paying any

new issue concession, and still saw it tighten

in the secondary market.

The 1.75% senior unsecured notes priced

at 99.269 to yield 1.904% or Treasuries plus

150bp, the tight end of final guidance of plus

150bp–155bp and inside initial guidance of

plus 190bp area.

The Korean power generator’s 2023s were

trading at Treasuries plus 149.5bp on the day

of pricing and same-rated peer Korea South-

East Power’s 2025s were at plus 154.6bp,

according to Refinitiv data.

“There were good data points from recent

Korean investment-grade issuers like Kexim

and Kookmin Bank that helped us through,

so there were no new issue concessions with

the deal pricing flat to or slightly inside the

curve,” said a banker on the deal.

The 144A/Reg S bonds received final

orders of over US$3.85bn from 209 accounts

and were said to be trading 3bp–5bp tighter

in the secondary market.

“It’s a good market sign that investors are

willing to buy at zero or low concessions,”

said another banker on the deal.

Nomura saw fair value at around

Treasuries plus 157bp by referencing peer

generation companies in Korea, plus a new

issue premium of around 5bp.

Korea East-West Power’s new issue has

expected ratings of Aa2/AA (Moody’s/S&P),

in line with the issuer.

The proceeds will be used for refinancing

US$500m 2.5% bonds due in June.

The bonds were very much carried by Asia

with investors from the region buying 67%,

followed by decent demand from the US at

22%. EMEA took the remaining 11%.

Asset managers and fund managers took

63%, banks 14%, official institutions and

central banks 12%, insurers and pension

funds 9% and private banks and others 2%.

BNP Paribas, Bank of America, Citigroup

(B&D), Credit Agricole CIB and HSBC were

joint bookrunners.

Korea Electric Power, which is 51%-owned

by the Korean government, owns Korea East-

West Power.

JIHYE HWANG

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COUNTRY REPORT TAIWAN

In April, Moody’s placed Sri Lanka’s long-term foreign currency issuer and senior unsecured B2 ratings under review for downgrade.

TAIWAN


› ISRAEL PRINTS FORMOSA

The STATE OF ISRAEL last Monday priced a US$5bn 40-year Formosa bond offering at par to yield 3.8%, inside initial guidance of 3.8%–3.9%.

Orders were over US$11bn at launch.The Reg S offering of senior unsecured

bonds has expected ratings of A1/AA–/A+, in line with the sovereign.

The bonds will be listed in London and Taipei.

Goldman Sachs was global coordinator, and bookrunner with Deutsche Bank. Merrill Lynch was structuring adviser.

SYNDICATED LOANS

› YAGEO PREPS TAKEOUT FOR KEMET BUY

Eight banks are tipped to win the mandate on a NT$45bn (US$1.5bn) loan for electronic components maker YAGEO that will take out a bridge financing signed in March for its acquisition of US rival Kemet.

The eight banks are Bank of Taiwan, DBS Bank, First Commercial Bank, Hua Nan Commercial Bank, Mega International Commercial Bank, Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp.

BoT is the coordinator of the takeout financing, which is expected to comprise three and a five-year portions.

Yageo had raised a US$1.1bn 12-month bridge loan in March for the US$1.8bn acquisition of Kemet, which marks a rare outbound acquisition from Taiwan.

Citigroup, DBS and MUFG were the MLABs on the bridge loan, which offered an interest margin of 60bp over Libor.

On April 23, Yageo said that it had received approval for the acquisition from the Committee on Foreign Investment in the United States.

Antitrust regulators in Taiwan approved the deal on April 15, while approval is awaited from Chinese regulators.

Yageo is expected to wrap up the deal in the third quarter this year.

In November last year, Taiwan and New York-listed Yageo announced that it will offer US$27.20 per Kemet share. The

combined company would have annual revenues of about US$3bn.

Yageo last tapped the loan markets in April 2017 for a NT$10.8bn five-year loan. Mega International Commercial Bank and Taipei Fubon Commercial Bank were the mandated lead arrangers and bookrunners of the transaction, which pays an interest margin of 60bp over Taibor, with a pre-tax interest rate floor of 1.7%.

› BANK OF TAIWAN STEERS AIRLINE LOANS

Bank of Taiwan is providing bridge loans totalling NT$40bn to state-controlled CHINA

AIRLINES and private sector operator EVA

AIRWAYS to help the duo navigate difficult market conditions arising from the coronavirus pandemic.

The bank is providing the two carriers NT$20bn each.

The bridge loans offer an interest margin of 29bp over the one-year post office savings rate.

The takeout financings with likely tenors of five years are expected to be launched in the next few weeks.

Separately, smaller carriers including newly established STARLUX AIRLINES, MANDARIN

AIRLINES, TIGERAIR TAIWAN and UNI AIRWAYS are also reaching out to state-owned banks for bilateral loans totalling more than NT$8bn.

The loans are part of the Taiwanese government’s NT$50bn bailout for the aviation industry announced in April.

The Ministry of Transportation and Communications unveiled new measures that include loans and tax relief for the aviation industry, replacing a NT$30bn bailout announced in March.

› CHENYA ENERGY OBTAINS SOLAR PF

Taiwanese solar power developer and operator CHENYA ENERGY has obtained a NT$7.2bn six-year loan to back the construction of a solar power project, close on the heels of the company’s acquisition by Japanese trading house Marubeni.

Seven international and local banks are providing the loan, which finances a 180MW floating solar project in the Changhua Coastal Industrial Park.

Bank SinoPac, DBS Bank, E.Sun Commercial Bank, First Commercial Bank, KGI Bank, Societe Generale and Sumitomo Mitsui Banking Corp are the lenders.

The participation from local financial institutions surpassed 40% of the size, which is a record for a single project in Taiwan, the company said.

The loan, which carries an extension option of up to 12 years, offers interest margins ranging from 150bp to 180bp over Taibor.

The solar plant is expected to be connected to state-owned Taiwan Power’s grid by the end of this year. Upon completion, it will be the largest of its kind in the world.

Marubeni completed its acquisition of Chenya Energy and its power assets of over 340MW from private equity firm I Squared Capital, according to a press release from the latter on April 21.

In February, I Squared Capital, through its ISQ Global Infrastructure Fund I, signed an agreement to divest its entire stake in Chenya Energy to the Japanese firm.

Before the sale, Chenya Energy was a wholly owned subsidiary of Asia Cube Energy, which I Squared Capital set up in 2017 to invest in renewable energy projects in Asia.

Chenya Energy builds and operates solar photovoltaic plants in Taiwan.

› YIEH UNITED STEEL LIFTS REFI

Taiwanese stainless steel producer YIEH

UNITED STEEL has increased a five-year refinancing to NT$12bn from a NT$10bn target after attracting a dozen banks in general syndication.

Mega International Commercial Bank was the sole mandated lead arranger and bookrunner of the transaction, which offers an interest margin of 135bp over Taibor, with a pre-tax interest rate floor set at 2.25%.

Banks were offered a top-level upfront fee of 25bp.

The loan is secured by land, a factory and machinery. It carries personal guarantees from the borrower’s chairman Lin Yi-Shou.

Funds are to refinance a NT$12.65bn five-year financing signed in August 2017 and for working capital purposes.

Agricultural Bank of Taiwan, Chang Hwa Commercial Bank, First Commercial Bank, Land Bank of Taiwan, Mega International Commercial Bank, Taiwan Business Bank and Taiwan Cooperative Bank were the MLABs on the previous loan, which pays an interest margin ranging from 125bp to 135bp over Taibor, with a pre-tax interest rate floor set at 2.2%.


› HANNSTAR WRAPS UP NT$5BN REFI

HANNSTAR BOARD CORP has closed a NT$5bn five-year loan with nine lenders joining in general syndication.

First Commercial Bank is the mandated lead arranger and bookrunner on the deal, which comprises NT$1.5bn for tranche A, and NT$3.5bn each for tranches B and C, which are revolving credit facilities. The latter two tranches cannot exceed NT$3.5bn combined.

The loan offers an interest margin of


52bp over Taibor, with a pre-tax interest rate floor set at 1.7% and a commitment fee of 50bp.

Banks were invited to join as MLAs, co-arrangers and participants.

Co-arrangers with commitments of NT$750m or more were offered upfront fees of 7bp, while participants with NT$500m or more received a 4bp fee.

Repayment of the loan will take place in four semi-annual instalments following a grace period of 3.5 years.

The first two instalments account for 20% of the financing, and the next two the remaining 80%.

A covenant relating to debt service coverage requires the ratio to be at least 3x.

The unsecured facility is to fund working capital requirements and to refinance a NT$5bn five-year loan the borrower obtained in December 2015.

That loan offers a margin of 65bp to 78bp over Taibor depending on the borrower’s pre-tax net profit margin.

Far East International Bank was the facility agent on that deal, while First Commercial Bank and Taishin International Bank were the MLAs.

Signing for the latest deal is slated for Thursday.

The borrower, which is listed on the Taiwan Stock Exchange, makes printed circuit board for computers, cell phones, game consoles and car control panels.


› UPCB INCREASES REFI TO NT$3.8BN

Taiwanese electronics components maker UNITECH PRINTED CIRCUIT BOARD has increased its refinancing to NT$3.8bn from NT$3.5bn after attracting nine banks in general syndication.

Bank of Taiwan was the sole mandated lead arranger and bookrunner of the five-year facility, which comprises a NT$2.9bn tranche A and a NT$900m tranche B.

The deal pays an interest margin ranging from 80bp to 110bp over three or six-month Taibor based on the borrower’s pre-tax net profit margin.

Lenders were offered a top-level upfront fee of 12bp.

The borrower’s factory and machinery serve as security, while its chairman is the guarantor.

Funds are to refinance a NT$4.5bn five-year loan the borrower raised in March 2017 and for working capital purposes. BoT also led that deal, which offers a margin ranging from 85bp to 110bp over three or six-month Taibor based on the borrower’s pre-tax net profit margin.

BoT was also an MLAB on loans totalling Rmb471m-equivalent (US$66m) last September for two units of UPCB. That

borrowing comprises three-year portions of US$24m and Rmb300m for Shanghai Unitech Electronics and Shanghai Unitech Electronics (Nantong), respectively.

UPCB makes printed circuit boards for computers, smart devices and smart cars.


› TA YA ELECTRIC SIGNS SOLAR POWER PF

TA YA ELECTRIC WIRE & CABLE on April 22 signed a NT$3.2bn five-year project financing to back the construction of a solar power plant, the company said at a press conference.

Bank SinoPac was the mandated lead arranger and bookrunner of the transaction, while KGI Bank, Hua Nan Commercial Bank and International Bills Finance Corp joined as equal status arrangers.

The financing has a NT$3bn tranche A and a NT$3.2bn tranche B. The two tranches cannot exceed a combined NT$3.2bn.

Tranches A and B offer interest margins of 145bp and 135bp over Taibor, respectively, with an after-tax interest rate floor set at 2%.

Repayment of the loan will take place in 20 instalments, 19 of which account for 34% combined with the final instalment for the remaining 66%.

A covenant relating to debt service coverage requires the ratio to be at least 1.1x after the solar plant is operational for a year.

Proceeds will be used to construct a 76MW solar power plant in Tainan city located on Taiwan’s southwest coast.

Ta Ya chairman Ryan Shen said construction of the power plant is targeted for completion by the end of this year.

The company would be selling the electricity to Taiwan Power under the state-owned company’s feed-in tariff scheme, with total profit forecast to be at least NT$2.4bn.

The borrowing marks Ta Ya’s second visit to the loan market in three years.

In June 2017, Ta Ya’s subsidiary Heng Ya Electric raised a US$50m three-year loan from Mega International Commercial Bank and Taishin International Bank plus five banks, according to Refinitiv LPC data.


› HONGWELL TRIMS PROJECT FINANCING

Taiwanese property developer HONGWELL

GROUP has closed a build-operate-transfer project financing at NT$2.8bn following commitments from four banks in general syndication.

Chang Hwa Commercial Bank was the mandated lead arranger and bookrunner of the borrowing, which was launched in early March at a slightly higher NT$3bn size.

The financing now comprises a

NT$2.34bn tranche A and a NT$460m tranche B.

Signing of the loan took place last Monday.

Tranches A and B offer interest margins of 79bp and 69bp over the one-year post office savings rate, with a pre-tax interest rate floor of 1.7%.

Proceeds are to back the construction of Neihu Technology Park and Hongwell Plaza in Taipei.

Hongwell and the New Taipei City government are jointly developing the two property projects.

Proceeds from the loan will also be used to finance the Taipei Twin Towers project, for which Taiwanese conglomerate Clevo is looking to raise a separate loan of up to NT$30bn.

Hongwell, Clevo and the Taipei city government are joint developers for the more than NT$60bn Taipei Twin Towers.

Hongwell’s previous visit to the loan market was in June 2018 for a NT$3.3bn five-year loan. First Commercial Bank led that borrowing, which comprised a NT$3bn term loan tranche A and a NT$300m guarantee tranche B.

The interest margin on tranche A is 88bp over the one-year post office savings rate, with a pre-tax interest rate floor of 1.7%, while tranche B pays an annual guarantee fee of 80bp.


THAILAND


› BANGCHAK GOES WIDE

BANGCHAK, rated A by Tris, last Tuesday found good demand to meet its targeted maximum issue size of Bt8bn (US$246.2m) after pricing three bond tranches at the wide ends of guidance.

A two-year tranche priced at par to yield 2.6%, a seven-year tranche will yield 3.0% and a 10-year piece will yield 3.4%. Respective price guidance was 2.5%–2.6%, 2.9%–3.0% and 3.3%–3.4%.

The Thai oil refiner and fuel retailer and its leads had lowered their expectations when books were opened with an indicated minimum size of Bt2bn–Bt3bn, which would have been sufficient to cover the refinancing of a Bt3bn bond that will mature in August.

Much of the demand came from insurance companies and cooperatives for the deal.

Bangkok Bank, Bank of Ayudhya and Kasikornbank were joint lead managers.

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ASIA DATA

LAST WEEK’S ECM DEALS

Stock Country Date Amount Price Deal type Bookrunner(s)

Keppel DC REIT Singapore 27/04/2020 S$92m S$2.42 Follow-on (secondary) Credit Suisse

Leadlease Group Australia 29/04/2020 A$950m A$9.80 Follow-on (primary) Goldman Sachs, Morgan Stanley, UBS

National Australia Bank Australia 28/04/2020 A$3bn A$14.15 Follow-on (primary) Goldman Sachs, Macquarie

Charter Hall Retail REIT Australia 28/04/2020 A$275m A$2.90 Follow-on (primary) JP Morgan, UBS

Source: IFR Asia

LAST WEEK’S EQUITY-LINKED ISSUANCE

Issuer Country Date Amount Greenshoe Maturity Coupon/YTM % Premium (%) Bookrunner

Country Garden Service China 28/4/2021 HK$3.875bn 363 days 0% 11% UBS

Source: IFR Asia

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