Investment Grade new issuance continues to drive Asia G3 primary bond market with the escalation of the Sino-American trade war fuelling the flight to quality while Mongolian High Yield issuers continue to stumble in accessing the bond market.

New Issue Weekly Monitor

For the week beginning 20th May 2019
Asia ex-Japan G3

Summary

For the week beginning 20th May 2019, USD 6.6bn of bonds was issued from 11 deals.

Breakdown: USD 5.15bn of Investment Grade, USD 750m of High Yield bonds, USD 700m of Non Rated bonds.

Investment Grade new issuance continues to drive Asia G3 primary bond market with the escalation of the Sino-American trade war fuelling the flight to quality. With strong demand, Investment Grade new issues saw an average of 30.9bps tightening from Initial Price Guidance while High Yield new issues averaged just 20.5bps. The extremities of last week’s market saw Chinese state-owned enterprise – China Huadian Corporation accessing the market with a USD 500m Investment Grade corporate perpetual at 4% yield. The deal was 12.8x covered. On the other hand, Mongolian High Yield issuers continue to stumble in accessing the bond market – Trade and Development Bank of Mongolia postponed its new issue last week, Tavan Bogd Trade pulled its new issue in the week before.

China Huadian Corporation priced the first dollar perpetual bonds by a Chinese state-owned enterprise this year. The USD 500m perpetual non-call 5 year bonds drew strong investor demand, allowing the deal to price 50bps tighter from initial price guidance. Bonds were mostly placed into Asian fund managers and traded up on the break.

China Huarong Asset Management priced USD 1.9bn of bonds across the 3, 5 and 10 year tenors at T+135bps, T+165bps and T+220bps respectively. The secondary curve tightened in 8bps upon the deal announcement. There were 30 bookrunners involved in the deal, the largest consortium of bookrunners in a single deal for 2019 so far. The front end drew the largest demand. The 3 and 5 year tranches were mostly placed into Asian banks while Asian fund managers took most of the 10 year tranche. The new bonds traded wider in the secondary market.

For the week, 54 banks have been involved as Bookrunners or Lead Managers. HSBC was the most active Bookrunner during the week, participating in 6 out of the 11 deals that were priced.

The new issue pipeline continues to build with 5 new mandates announced in the week. There are 8 outstanding mandates announced over the last 2 weeks yet to price.

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