New Issue Weekly Monitor
For the week beginning 6th Jan 2020
Asia ex-Japan G3
Asia G3 Year-to-date issuance: USD 18.29bn
Key Market Data (as at 12pm, 10 Jan 2020)
CT10 @ 1.867%(+7.7bps Week-on-Week)
S&P 500 @ 3274.7 (+1.25% Week-on-Week)
HSI @ 28576.92 (+0.44% Week-on-Week)
JACI Index @ 244.46 (+0.42% Week-on-Week)
For the week beginning 6th Jan 2020, USD 18.29bn of bonds was issued from 32 deals.
Breakdown: USD 11.18bn of Investment Grade and USD 6.61bn of High Yield bonds, USD 500mm of Non Rated.
** As of this Friday morning, China Zhengtong Auto Services is marketing a new 2yr bond at 12% IPG.**
Markets opened to record highs in the new year, but the mood was swiftly derailed by an escalation of hostilities in the Middle East between US and Iranian forces. However, the furore seems to have died out as soon as it began, with both sides signalling a step back from further conflict. Taking its cue from geopolitics, the 10yr Treasury is up ~7.5bps on the week as war fears receded.
Conflict or no, Asian G3 primary issues were like horses champing at the bit to get out the gate in the first full working week of 2020. Chinese Real Estate was at the forefront of the charge, with the issuer list reading like an industry roll-call and chomping up 46% of the week’s total volume and 22 bonds, or 58% of total number of issues.
Some China RE highlights (the exhaustive list is contained in the table above):
Asia and FMs dominated deal participation
The single B bucket saw the largest number of deals (45.5%) with an average yield of 9.17%
The gulf between average yields in the BBB and B buckets was 4.7%
Zhenro’s 7.875% 24s bond saw an astounding 18.3x oversubscription, the highest of the cohort
Yuzhou’s 7.375% 26s bond saw the largest tightening at 62.5bps
Outside of Real Estate, Baa2-rated Chinese e-commerce giant JD.com tapped the dollar bond markets again after a break of almost 4 years with a 1bn dual-tranche issue of 10 and 30-year bonds. Final issue size was split in the ratio of 7:3 in favour of the 10-year. While the 30-year priced in yield terms at 4.185%, the 10yr priced at T+160bps to yield 3.413%. From a geographical perspective, the Regs/144A deal attracted a majority of US buyers with 47% share; from the investor type perspective, 60% were asset managers.
Following competitor Muthoot Finance’s debut dollar issue late last year, gold-loan focussed NBFC Manappuram Finance Ltd followed suit with a 3yr senior secured issue priced at 5.9%, 35bps below IPG. Books were >3x oversubscribed for the BB- rated 300mn issue that boasted a first ranking pari passu charge over all current assets, book-debt, loans and advances, and receivables, and taken up mainly by Asian FMs.
Compatriot Shriram Transport Finance Co Ltd came to market with a 3.5yr senior secured bond with IPG 5.375% and final pricing at 5.1%. The BB+ rated issue was secured by a fixed charge over specified accounts receivable, in addition to other bond covenants.
Policy bank Export-Import Bank of India (EXIMBK) printed a 1bn 10yr deal at T+150bps, or 25bps tighter than IPG. The BBB- bond, rated pari passu with the Indian sovereign and featuring a change of control put should the Government of India cease to be majority owner of the issuer, saw books oversubscribed by 2.7x and taken up mainly by asset managers.
The Republic of Indonesia (ROI), which since May 2019 has enjoyed Baa2/BBB ratings from all 3 major rating agencies, was the first Asian sovereign of the year to issue new G3 bonds. It did so with a bang, hitting both the euro and dollar markets for 1bn and 2bn notional issue size respectively. The 7yr EUR deal priced at MS+103bps, for an equivalent 0.953% absolute yield, while the USD deal was split into 10 and 30-yr tranches. The 800mn 30yr tranche priced at 3.55% while the 1.2bn 10yr tranche, interestingly, was priced in yield terms as well at 2.88%.
Established Philippine conglomerate Aboitiz Equity Ventures printed a 400mn 10nc5 unrated senior bond at 4.2%, from an IPG of 4.5%. Having taken full ownership of Singapore-based agribusiness giant Gold Coin Management Holdings Ltd last year, one stated use of bond proceeds was the repayment of funding for the acquisition. Besides food, the company has interests in power, financial services, real estate and infrastructure.
For the week, 69 banks were involved either as Bookrunners or Lead Managers. HSBC topped the dealboards this week with 8.2bn in volume.
12 new mandates were announced during the last two weeks.