New Issue Weekly Monitor
For the week beginning 14th Oct 2019
Asia ex-Japan G3
Asia G3 Year-to-date issuance: USD 280.24bn
Key Market Data (as at 12pm, 18 Oct 2019)
CT10 @ 1.741% (+7.5bps Week-on-Week)
S&P 500 @ 2,997.95 (+2.04% Week-on-Week)
HSI @ 26,824.9 (+2.11% Week-on-Week)
JACI Index @ 241.28 (-0.40% Week-on-Week)
For the week beginning 14th Oct 2019, USD 5.95bn of bonds was issued from 13 deals.
Breakdown: USD 4.35bn of Investment Grade, USD 1.3bn of High Yield bonds, USD 300mm of Non Rated bonds.
** As of this Friday morning, Ronshine China Holdings is out with a tap of its 8.95% Jan 2023 notes at 9% reoffer. **
Treasury yields rose on increasing optimism of a successful conclusion to the so-called ‘Phase 1’ deal between China and the US, but ended the week just marginally higher as the reality of the deal not being as substantive or as certain sank in. Rounding off the week, soft retail sales data and a more hard-line stance by the US on China’s handling of pro-democracy protests in Hong Kong provided plenty more fodder for market worryworts in the Asian context.
Despite domestic and international travails, China continued to dominate an albeit quieter market in new issuance with 84.9% of deals done. Industrial Bank of Korea and HPCL-Mittal Energy (HMEL) were the only two non-greater China issuers to come to market this week, the former with a 600mn dual-tranche FRN/bullet deal in the 3/5yr space respectively.
The latter issuer HMEL, a Ba2-rated JV between Hindustan Petroleum Corporation and Mittal Energy Investment (Singapore), issued 300mn worth of 7nc4 senior bonds at 5.45%. Pricing 30bps below IPG, the deal was over 4x oversubscribed with Asia FMs taking the lead in orders.
In 2015, Kaisa Group went down in history as the first Chinese property developer to default on its offshore debt with missed interest payments. It has since reverted to profitability and, it seems, popularity as well, if accessing the USD capital markets 5 times this year has been any indication. Nevertheless, the latest 400mn 3yr offering came at the cost of the highest coupon YTD at 11.95% for a yield of 12.25%.
Buoyed by steady ratings upgrades since its 2014 debut on the international scene at Baa3, A3-rated and state-owned China National Travel Services (CNTS), via wholly-owned subsidiary Sunny Express Enterprises, printed a 2-tranche deal worth a total 600mn and tightening by an average of 35bps from IPG. The company’s main business units are in travel services, property development and financial services.
CNTS’ coup of pricing their perpetual nc3 below peers at 3.35% and against 9.7x oversubscription saw AVIC Leasing Co printing a similar structure the following day. The small 200mn issue ended up priced just 10bps higher at 3.45%, attracting over 1.4bn worth of orders, close to half of which was JLM interest from 57 accounts. Issuing through wholly-owned subsidiary Soar Wise, AVIC Leasing at Baa3 is rated one notch below parent AVIC Capital, which is the sole domestic supplier of aviation products for the PLA’s Air Force and 100% owned by the central government.
Finally, nutrition and wellness specialist Health and Happiness (H&H) International Holdings Ltd. came to market for the first time since 2016 with a Ba3 rated, 5nc2 300mn issue priced at 5.625%. It was happiness indeed for the issuer to pay a coupon 162.5bps lower than that paid at its prior outing and tightening 50bps from IPG to boot.
For the week, 34 banks were involved either as Bookrunners or Lead Managers. Bank of China led the league tables this week with 7 deals, followed closely by HSBC which tied with the former for volume issued (3.05bn).
Eleven new mandates were announced during the last two weeks.