New Issue Weekly Monitor
For the week beginning 1st Feb 2021
Asia ex-Japan G3
Asia G3 Year-to-date issuance: USD 81.7bn
Key Market Data (as at 10am, 5th Feb 2021):
CT10 @ 1.133% (+8.5bps Week-on-Week)
S&P 500 @ 3871.74 (+2.23% Week-on-Week)
HSI @ 29458.94 (+2.82% Week-on-Week)
JACI Index @ 257.87 (-0.15% Week-on-Week)
For the week beginning 1st Feb 2021, USD 12.8bn of bonds was issued from 17 deals.
- Investment Grade: USD 10.84bn
- High Yield: USD 1.26bn
- Non-Rated: USD 699mm
** As of this Friday morning, there are no deals in play.**
US equity indices rallied to hit new all time highs with the S&P500, Dow Jones and Nasdaq up 4.24%, 3.57% and 5.4% respectively for the week. 10 year and 30 year US Treasury yields also rose to 1.13% and 1.92% respectively, spurred by the progress in President Biden’s stimulus plan. Over in China, China Fortune Land receives another credit downgrade from B2 to Caa1 as the company continues to work through struggle with the liquidity crunch.
Primary markets in Asia took it down a notch this week as the markets digests the record month in January. Nonetheless, some issuers caught the window of opportunity to secure financing before the Chinese New Year festivities. Most notably, Alibaba bagged a USD 5bn deal overnight post the resurface of Jack Ma. With the exception of China Overseas Grand Oceans Group, all IG issuers managed to price deals at negative NIP, averaging 36.7bps of IPG Tightening this week.
Indonesian state-owned oil giant Pertamina made a strong comeback to the dollar bond market with a dual-tranche offering in 5yr and 10yr, amounting USD 1.9bn in total. The investment grade bonds priced at absolute yield of 1.4% and 2.3% respectively, with the 5 year bond achieved the lowest yield for any Indonesian dollar bond. Final order books were over 2.5x oversubscribed on average, allowing both tranches to price 40bps tighter from IPG.
The largest issuance this week came from Chinese e-commerce giant Alibaba, which printed a four-tranche USD 5bn offering of 10yr, 20yr, 30yr and 40yr bonds at T+100bps,T+100bps,T+120bps and T+130bps respectively. The deal also saw the first sustainability bond(20yr tranche) issued by the tech giant. The secondary curve tightened in on the announcement of the deal. On Tuesday, Alibaba reported a 37 per cent surge in its third quarter revenue and Ant Group, the digital payment affiliate of Alibaba, was reported to reach agreement with China regulators after the halting of its USD 37bn stock market listing last year October.
Mongolian Mortgage Corporation successfully printed a US dollar bond after postponing its initial offer 2 weeks ago citing political issues. The USD 250m bond was priced to yield 9.125%, unchanged from its FPG level, with a coupon of 8.85%. The issue was guaranteed by its parent company MIK Holding, along with a letter of support from the Mongolian Central Bank. 69% of the bonds were placed into Asset Managers and Hedge Funds. Net proceeds will be used to fund a concurrent tender offer on the issuer’s outstanding 9.75% bond due 2022.
Export-Import Bank of Korea rides on the strong performance from Korean issuers to successfully price a triple tranche deal, achieving the lowest-ever issue spread over Treasuries in the Korean offshore market. Orderbooks peaked at USD 9.2bn and the 3yr, 5yr and 10yr bonds priced at T+23bps, T+28bps and T+38bps, after having tightened 27-32bps from IPG. The deal was heavily subscribed by Central Banks taking 64%, 43% and 49% respectively for the 3yr, 5yr and 10yr tranches. The bonds traded wider on the break.
For this week, 64 banks were involved either as Bookrunners or Lead Managers. BNP Paribas led the deal boards with 8 deals this week totaling USD 9.95bn.
New issue pipeline slows down ahead of Chinese New Year festive season, with 3 new mandate outstanding from the ones announced over the fortnight.