New Issue Weekly Monitor
For the week beginning 13th May 2019
Asia ex-Japan G3
For the week beginning 13th May 2019, USD 4.098bn of bonds was issued from 10 deals.
Breakdown: USD 3.3bn of Investment Grade, USD 720m of High Yield bonds, USD 78m of Non Rated bonds.
The intensifying Sino-American trade war continues to tighten its grip on global markets. There was a significant rush for investment grade risk last week with issuers capitalising on the flight to quality. The market’s demand resulted in strong price revisions during book-building. Investment Grade new issues saw an average of 32.5bps tightening from Initial Price Guidance. In contrast, High Yield new issues averaged just 3.75bps.
Last week’s Investment Grade issues were relatively small in deal sizes. Amongst the biggest Investment Grade deals printed last week, only State Development & Investment Corporation printed a jumbo deal (at least USD 1bn). China Ping An Insurance Overseas printed the second largest deal at USD 600m while Huatai Securities and Shougang Group printed USD 500m each. Zhuzhou City Construction Development Group printed USD 400m and Export-Import Bank of Thailand tapped the market for USD 300m of its 5 year floating rate notes. In contrast, Investment Grade issues had an average deal size of USD 857.4m in April 2019.
State Development & Investment Corporation returned to the dollar bond market after its debut in 2017 to price USD 1bn across 5 year green bonds and 10 year bonds at T+110bps and T+140bps respectively. The Chinese state-owned investment company last priced 5 year and 10 year bonds in April 2017 at T+115bps and T+135bps respectively. Final orders were over USD 4.7bn as both tranches priced 30bps tighter from initial price guidance. The new bonds were mostly placed into Asian fund managers and traded tighter on the secondary market.
Shougang Group priced USD 500m of 5 year bonds at T+195bps. Strong investor demand built an order book that was 7.8x covered, allowing bonds to price 40bps tighter from initial price guidance. Investor demand spilled over into the secondary market as bonds traded 16bps tighter on the break.
For the week, 38 banks have been involved as Bookrunners or Lead Managers. HSBC was the most active Bookrunner during the week, participating in 4 out of the 10 deals that were priced.
The new issue pipeline continues to swell with 7 new mandates announced in the week. There are 13 outstanding mandates announced over the last 2 weeks yet to price.