An in-depth review of Asia G3 new issue market in Q1 2019

Asia G3 New Issue Review – Q1 2019

Asia ex-Japan G3

2019 Q1 Review

Total Issuance in Q1: USD 79.3b

Investment Grade: USD 39.3b (+4%YoY) 
High Yield: USD 25.2b (+106%YoY) 
Unrated: USD 5.26b (-39%YoY)
FRNs: USD 1.08b (-87%YoY)
Perpetuals: USD 2.5b (-26%YoY)
Sovereign bonds: USD 5.9b (+18%YoY)

  • Total issuance in the first quarter increased by 5.15% year-on-year to USD 79.3b from 162 deals. A total of 86 banks acted as lead managers and bookrunners, bringing 184 bonds to the market.
  • Investor momentum was strong in the first quarter of 2019 with Average Price Tightening from Initial Price Guidance staying above 25bps.
  • Maturity profile of bond issuance in Q1 2019 skewed towards front end. The 1-3yr tenor bucket saw an increase of 76.7% year-on-year – Chinese issuers made up 85.2% of issuance in the 1-3yr tenor bucket.
  • Real Estate sector drove the Asia G3 bond market as issuance surged in Q1, accounting for 64.8% of total Real Estate issuance in FY2018. Chinese issuers made up 93.2% of  bond issuance in the Real Estate sector.
  • Significant fall in issuance of Unrated bonds and FRNs in Q1 2019.

Looking ahead for the week, 6 out of 8 mandates announced in the last 2 weeks were for deals in the 144A/RegS format.

Average Price Tightening from Initial Price Guidance stayed above 25bps in Q1

Issuance in most tenors in Q1 2019 lagged behind Q1 2018. The exception is in the >1-3yr tenor bucket(Increase of 76.7%).

Real Estate issuers priced USD 31.1b of bonds in Q1 2019, which accounts for 64.8% of FY2018’s total volume issued by Real Estate issuers.

Dominance of Chinese Issuers

Strong demand for Chinese risk as the Top 10 Book Coverage deals are all from Chinese issuers – with the exception of Towngas.

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