The Asia primary debt market hit a new high-water mark last week, clocking in the largest volume in weekly issuance year to date.

New Issue Weekly Monitor

For the week beginning 3rd Jun 2019
Asia ex-Japan G3

Summary

For the week beginning 10th June 2019, USD 14.8bn of bonds was issued from 24 deals.

Breakdown: USD 10.2bn of Investment Grade, USD 2.52bn of High Yield bonds, USD 2.08bn of Non Rated bonds.

The Asia primary debt market hit a new high-water mark last week, clocking in the largest volume in weekly issuance year to date. High grade issuers seized the opportunity to take advantage of the continued rally in US treasuries to tap pent-up investor demand. Average book coverage for investment grade issues climbed to 6.0x(up from 3.9x the week before) and average price tightening from initial price guidance also increased 0.8bps to 26.5bps.

Sovereign issuers were active. Republic of Indonesia priced EUR 750m of 7 year bonds and USD 750m of 10 year bonds at MS+145bps and 3.45% respectively. The Republic of Korea priced USD 1.5bn across 5 and 10 year tranches at T+30bps and T+55bps.

The highlight of the week would be Shanghai International Port Group’s USD 700mm dual tranche deal. The Chinese port operator saw very strong investor demand for the new bonds as the orderbook crossed USD 10.7bn from more than 200 accounts – eclipsing all other deals in the week. Banks took majority of the allocation for the 5 year tranche while Asian fund managers took majority of allocation for the 10 year tranche.

China National Chemical Corporation priced USD 2.3bn in a four tranche deal across 3, 5, 10 & 30 year tenors. When compared to the Chinese state-owned enterprise’s USD 6.4bn deal in March last year, the 2019 new bonds were priced 55.6bps tighter on average, with the new 10 year bonds at 52.5bps tighter. Last week’s deal was priced at a time where US Treasuries yields were significantly lower as compared to when the company’s bonds were priced in 2018.

  • New 3-year tranche priced at T+135bps vs T+182.5bps in March 2018
  • New 5-year tranche priced at T+155bps vs T+202.5bps in March 2018
  • New 10-year tranche priced at T+182.5bps vs T+235bps in March 2018
  • New 30-year tranche priced at 4.75% vs 5.5% in March 2018
  • 10 Year UST when 2019 bonds were priced: 2.126%
  • 10 Year UST when 2018 bonds were priced: 2.861%

For the week, 50 banks have been involved as Bookrunners or Lead Managers. Standard Chartered Bank was the most active Bookrunner during the week, participating in 11 out of the 24 deals that were priced.

The new issue pipeline continues its streak with 9 new mandates announced in the week. There are 12 outstanding mandates announced over the last 2 weeks yet to price.

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