New issuance marches on as demand for quality paper prevails

New Issue Weekly Monitor

For the week beginning 26th Aug 2019
Asia ex-Japan G3


Asia G3 Year-to-date issuance: USD 223.3bn

Key Market Data
CT10 @ 1.499% (-3.8bps Week-on-Week)
S&P 500 @ 2926.46 (+2.79% Week-on-Week)
HSI @ 25724.73 (-1.74% Week-on-Week)
JACI Index @ 241.72 (+0.56% Week-on-Week)

For the week beginning 26 Aug 2019, USD 3bn of bonds was issued from 8 deals.

Breakdown: USD 2.4bn of Investment Grade, USD 100mm of High Yield bonds, USD 500mm of Non Rated bonds.

Last Friday’s exchange of tariff blows between China and the US, followed by this year’s G7 summit that concluded without the traditional affirmative nod of a communique, poured cold water on any hopes of a quick resolution to the trade spat between the world’s superpowers. However, conciliatory remarks on both sides helped stabilize equity markets as the week progressed, whilst Treasury spreads remained relatively unchanged amidst low summer volume. 

Against this backdrop, new issuance only picked up midweek with Hysan Development, Port of Singapore Authority (PSA) and UOB tapping the dollar bond markets with benchmark size issues. Underlining the demand for quality paper, Singapore IG issuance increased ~30% MoM in Aug.

Commanding S&P and Moody’s top credit rating, UOB issued a 3yr, 1.625% coupon covered bond at MS+32bps (1.73% yield) that was (against trend) taken up by a majority of European buyers. Compatriot PSA’s 10yr issue saw books approximately 3x covered, with an IPG to FPG tightening of 22.5bps for a final price of T+77.5bps.

Elsewhere, BOCOM Financial Leasing printed a USD 200mn fixed and USD 400mn FRN tranche in the 5yr tenor, pricing tight to its secondary curve at T+135bps and 3mL+117.5bps respectively. Books were 4.5x oversubscribed and buyers mostly Asian banks.

On the back of an earlier bond issue guaranteed by KEXIM, Korean Air Lines again came to market with a 3yr USD 300mn 2% coupon bond, this time guaranteed by KDB and assigned a Moody’s rating of Aa2.

For the week, 25 banks were involved either as Bookrunners or Lead Managers. HSBC continues to hold the crown for most active Bookrunner during the week, participating in 3 out of the 8 deals that were priced.

The new issue pipeline has revived somewhat, with 6 new mandates announced and 3 roadshows taking place during the week.

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