Outside of China, Asian issuance was subdued as high-yield and risk took a step back, with some lesser-loved HY names failing to assert any downward pressure on IPG

New Issue Weekly Monitor

For the week beginning 2nd Dec 2019
Asia ex-Japan G3

Summary

Asia G3 Year-to-date issuance: USD 337.6bn

Key Market Data (as at 12pm, 6 Dec 2019)
CT10 @ 1.798% (+2.6bps Week-on-Week)
S&P 500 @ 3117.43 (-1.14% Week-on-Week)
HSI @ 26,396.92 (+0.12% Week-on-Week)
JACI Index @ 242.34 (-0.12% Week-on-Week)

For the week beginning 2nd Dec 2019, USD 6.32bn of bonds was issued from 15 deals.

Breakdown: USD 4.65bn of Investment Grade, USD 1.02bn of High Yield bonds, USD 654.7mm of Non Rated.

** As of this Friday morning, Xinyi City Investment (issuing under Xingang International Holding Ltd) is out with a 100mn capped 3yr new issue at IPG 7%. **

Commentary:
US Legislation requiring a stronger response to China’s treatment of its Uighur minority, following hot on the heels of the Hong Kong Human Rights and Democracy Act (2019), did nothing to improve already-strained bilateral relations. As the December 15 deadline for more tariff increases by the US on China looms, policy clarity proved ever more elusive as conflicting statements by President Trump with respect to trade talks kept markets locked in a seesaw of uncertainty. US Treasuries were largely unmoved and awaited direction over the week.

Outside of China, Asian issuance was subdued, with only REC Limited (India) and Serba Dinamik Holdings (Malaysia) making an appearance on the international bond market stage this week. High-yield and risk took a step back as well, with some lesser-loved HY names failing to assert any downward pressure on IPG.

One such example was the above-mentioned Malaysian credit, a specialist in energy services, which printed a 200mn 5.25yr offering stubbornly positioned at 7%. REC fared better, as state-owned public infrastructure status conferred IG ratings, and priced a benchmark-sized 5yr bond at T+192.5bps, 27.5bps below IPG. 

Fujian-based real-estate developer Ronshine Holdings issued its fifth dollar bond YTD with a 3.5yr nc2 note priced at 8.1%, 45bps south of IPG. Closing to an enthusiastic 7.7x oversubscription, mainly by Asian FMs, issue size was 324mn.

LGFV Chenzhou Hi-Tech Investment, solely responsible for infrastructure construction within Chenzhou Hi-Tech Development Zone of Hunan province, debuted in the EUR bond markets with a 77mn 3yr unrated offering. The bond, which priced flat to IPG at 3%, included a credit-enhancement feature in the form of an irrevocable standby letter of credit from the Bank of Changsha (itself unrated internationally).

State-owned power producer China Huaneng came to market with a 3-tranche deal totalling 1.5bn. Pricing for the A2-rated 3, 5 and 10yr tranches came in at T+88bps, T+103bps and T+125bps respectively, with average book coverage >2x and IPG tightening ~30bps. Demand came overwhelmingly from Asia, with banks favouring the shorter-dated bonds while FMs leaned more toward the 10yr issue.

China Resources Land, the real-estate subsidiary of state-owned China Resources, issued a subordinated perpetual nc5 priced at 3.75%. With an issue size of 1.05bn, the bond was rated one notch below its parent rating of Baa1, and featured a 300bps step-up if not called at first call date.  

Baa1-rated LGFV Kunming Rail Transit also tapped the dollar bond markets for the first time ever with a dual tranche deal of 3yr and 5yr bonds priced at 3.5% and 3.9% respectively. The operator of the rapid transit system in Yunnan province’s capital saw books at over 9x oversubscribed and final issue size across both tranches at 500mn.

For the week, 39 banks were involved either as Bookrunners or Lead Managers. With China issuance dominating, Bank of China topped the dealboards this week with 6 deals valued at 3.95bn.

Seven new mandates were announced during the last two weeks. 

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