Primary issuance toned down this week as Chinese issuers dominate, covering 91.4% of the total issuance volume.

New Issue Weekly Monitor

For the week beginning 18th Nov 2019
Asia ex-Japan G3

Summary

Asia G3 Year-to-date issuance: USD 318.56bn

Key Market Data (as at 12pm, 22 Nov 2019)
CT10 @ 1.781% (-5.8bps Week-on-Week)
S&P 500 @ 3103.54 (+0.22% Week-on-Week)
HSI @ 26,536.06 (+0.48% Week-on-Week)
JACI Index @ 242.4 (+0.38% Week-on-Week)

For the week beginning 18th Nov 2019, USD 2.902bn of bonds was issued from 9 deals.

Breakdown: USD 1.082bn of Investment Grade, USD 1bn of High Yield bonds, USD 820mm of Non Rated.

** As of this Friday morning, Chinese LGFVs Zhenjiang Transportation Industry Group is out with a 3yr offering at IPG 7.15% level. **

Commentary:
Relatively muted new issue market as US/China “Phase One” trade negotiations continue to whipsaw treasuries market after the White House released statement indicated “negotiations are continuing and progress is being made on the test of the phase-one agreement”. FOMC meeting notes for October indicated no need to cut interest rates again citing US economy strength. Despite heading into the year end, books are still well covered for the deals. 

Primary issue dealflow toned down this week with continued Chinese issuers domination as they issued USD 2.652bn of new bonds, 91.4% of the total issuance volume. Chinese property developer Agile Group extends its streak in perpetual bonds issuance, pricing USD 200mm of perpetual non-call 5.5 year bonds to yield 7.75%. Investor demand was strong for Agile Group’s fourth perpetual bond issue this year, as order books were over 8.8 times covered, allowing the deal to be priced 50bps tighter from IPT.

Richard Li’s PCGI Limited returned to the market with another 5 year bond paying 5.5%. The new bonds issued by PCGI Intermediate Holdings (II) Limited were priced 75bps wider than the 5 year bonds issued by  PCGI Intermediate Limited in October this year – The latter bonds included CoC put provisions for key man (Mr. Li) ownership change and an issuer call upon IPO.  

Zhuhai Da Heng Qin Investment, wholly-owned by Hengqin SASAC, priced a dual-currency bond that will be dual-listed on SEHK and MOX. The 3 year USD tranche priced at 3.8%, with 3.8 times book coverage, tightening 50bps from IPT. The company is engaged in primary land development and construction projects including Hengqin New Area Municipal Infrastructure BT project, a batch of provincial key projects, city major projects and district key projects.

Miniature components manufacturer AAC Technologies Holdings made its debut to the offshore market with a USD 388mm 5NC3 year senior bond at T+150bps. Book coverage crossed 2.8 times and the deal priced 25bps tighter from IPT. The bonds traded more than 10bps wider on the break.

Chinese LGFV Shaanxi Xixian New Area Fengxi New City Development priced USD 120mm of 3Y bonds at 3.5%. The bond has the benefit of an irrevocable standby letter of credit to be issued by Hua Xia Bank, Xi’an branch. 

For the week, 33 banks were involved either as Bookrunners or Lead Managers. HSBC topped the dealboards this week with USD 1.24bn in deal volume.

10 new mandates were announced during the last two weeks.

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