New Issue Weekly Monitor
For the week beginning 28th Jan 2019
Asia ex-Japan G3
For the week beginning 28th Jan 2019, USD 7.57 bn of bonds was issued from 19 deals.
Breakdown: USD 4.075 bn of Investment Grade, USD 2.675 bn of High Yield bonds and USD 820m of Unrated Bonds.
Given the ideal condition for issuance of risk on and low rate environment, new issue market kick-started the week in a frenzy, pricing 9 deals on Monday itself. There was a good diversification of issuers from Korea, India, Macau, Indonesia, Thailand, Hong Kong and Mongolia. In general book coverage ratio was much better compared to recent times and the secondary market performance of the bonds reflected that.
Oil India Limited returned to the offshore bond market, after an almost 2 year hiatus, to issue USD 550m of 10 year bonds at a spread of 250bps. The Indian state-owned oil company last issued 10 year USD bonds in April 2017 at a spread of 172.5bps. Bonds were placed mostly into Asian fund managers and performed well in the secondary market.
PT Lestari Banten Energi issued USD 775m of 20 year bonds(weighted average 10.1 years) at an yield of 6.875%. The deal, priced in 144A/RegS format, saw good demand from US investors as books were more than 4x covered and bonds were mostly placed into US fund managers. Bonds traded more than 4 points up in the secondary market.
The Hong Kong and China Gas Company Limited (Towngas) priced USD 300m of Perpetual Non-Call 5 year bonds at 4.75% yield. The Hong Kong gas company saw strong investor demand as book coverage hit 14.3x. The bonds eventually priced 55bps tighter from initial price guidance. Compared to FY 2018, the only deal with a higher book coverage was Sunny Optical Technology Group’s 5 year USD bonds issued in January 2018, with a book coverage of 15.16x. Asian fund managers took majority of the allocation and bonds performed on the secondary market.
For the week, 43 banks have been involved as Bookrunners or Lead Managers. HSBC was the most active Bookrunner during the week, participating in 9 out of the 19 deals that were priced.
Overall, the month of January saw a total of USD 30.25 bn of bonds issued, a 8.85% decrease from USD 33.19 bn in January 2018.
As we head into the into the festive season new mandates dried up, with 2 new mandates announced and yet to be priced. The Republic of Indonesia has mandated 5 banks for a proposed USD denominated Sukuk deal. Given the market conditions, we are sure there is a lot of new deal action coming up.
** Special Mention ** There was a Suntec REIT deal in SGD on 29th January 2019, which was executed on OMAS. Big Thank You to all parties involved