Asia G3 bond market steamrolled through this week's market volatility to set a new highest issuance volume month on record

New Issue Weekly Monitor

For the week beginning 25th Jan 2021
Asia ex-Japan G3

Summary

Asia G3 Year-to-date issuance: USD 68.5bn
Key Market Data (as at 12pm, 29th Jan 2021)
CT10 @ 1.048% (-6.1bps Week-on-Week)
S&P 500 @ 3787.38 (-1.7% Week-on-Week)
HSI @ 28652.12 (-2.81% Week-on-Week)
JACI Index @ 258.27 (+0.21% Week-on-Week)

For the week beginning 25th Jan 2021, USD 18.12bn of bonds was issued from 32 deals.
Breakdown: 

  • Investment Grade: USD 8.22bn
  • High Yield: USD 3.35bn
  • Non-Rated: USD 6.55bn

** As of this Friday morning, there are no deals in play.**

Commentary:

This week, global markets cast its spotlight on the monumental battle between Reddit retail traders versus Wall Street hedge funds. The scale of this retail movement have us pondering if a shift in the balance of power away from institutional balance sheet heavy weights is in place. Time will tell. 

In Asia, a multi-year trend continues into 2021 with record setting pace. The Asia G3 bond market steamrolled through this week’s market volatility to set a new highest issuance volume month on record. January 2021 issuance volume hits USD 68.6bn, surpassing the previous record month(Sept 2020) by USD 14.85bn. 

Issuance momentum was geared towards IG new issues this week with 37bps average IPG Tightening(vs 34bps for HY/NR) and -26.7bps of average NIP(vs 2.0bps for HY/NR). While average book coverage ratio for deals from Chinese issuers have outperformed versus wider Asia week-on-week, the secondary trading of bonds from Asia ex-China issuers have outperformed instead.

With the ambition of becoming a leading green finance hub in the APAC region, The Government of Hong Kong SAR returned to the ESG market with its second US dollar denominated green bond. A 5 year, 10 year and 30 year 2.5bn deal drew strong investor demand, resulting in orderbooks peaking at USD 17bn. This allowed the bonds to price at T+22.5bps, T+37.5bps and OLB+62.5bps respectively, after having tightening 27.5bps, 22.5bps and 27.5bps from their respective IPG levels. The 30yr bond is the first ever green bond of such tenor to be issued by an Asian Government and the longest tenor issued by the Hong Kong Government.

Bank of China returns to the market, through its HK branch, to issue a maiden 3yr dollar denominated Yulan bond. The bond was priced at T+67bps after tightening from its IPG level of T+100bps, to yield 0.859%. Yulan bond is a new asset class created through the collaboration between Euroclear and the Shanghai Clearing House with the aim to improve investment flows between China and the international markets.

Following last week’s string of new issues from Korean issuers, Woori Bank came to the market with a dollar denominated sustainability bond aimed to develop new and renewable energy and creating jobs to support COVID 19 victims. The 5yr bond was priced slightly under par at 45bps above Treasuries, landing a 0.75% coupon, the lowest ever for dollar bonds among Korean domestic banks. The deal was 3.8x oversubscribed, with majority of placements going to Asset Managers/Fund Managers.

For this week, 90 banks were involved either as Bookrunners or Lead Managers. HSBC led the deal boards with 13 deals this week totalling USD 11.69bn.

New issue pipeline remains strong with 6 new mandate outstanding from the ones announced over the fortnight.  

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