IFR Asia August 31 2019 PDF

IFRASIA
INTERNATIONAL FINANCING REVIEW ASIA
AUGUST 31 2019 ISSUE 1104 www.ifrasia.com
Japanese investors flock to Triple B

credits in quest for positive yields
Lotte REIT banks on renowned brand

and rate cuts for record REIT IPO
AI unicorn files for Hong Kong listing

as protests continue to rattle city
BONDS BONDS LOANS PEOPLE & MARKETS

Australia’s Green Temasek-linked China’s new loan Indian government
bond pipeline gets issuers benefit from prime rate may fall reverses budget tax
bigger as new flight to safety and short without more changes to revive
projects crop up yield compression monetary easing battered markets
07 08 08 10
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OPINION INTERNATIONAL FINANCING REVIEW ASIA
Taste for Triple B to broaden their horizons even further. That will mean EM
corporate bonds and more exotic structures. Additional Tier
I
n an ordinary credit market, logic dictates that the ûCAPITALûCOULDûEVENûBEûONûTHEûCARDS
world’s best borrowers should be rewarded with the %VENTUALLYû*APANûWILLûNEEDûTOûDIPûITSûTOESûINTOûSUB
lowest borrowing costs. The Japanese bond market, investment grade credits. That really would be a break from
however, is far from ordinary. the ordinary.
Yields in Japan plunged in August, as global markets
reacted to a worsening outlook for the US economy and
a further escalation of trade tensions with China. If the Accommodating India
world’s top issuers are hoping to take advantage of cheaper
I
borrowing costs, however, they may be disappointed. NDIASûLATESTûREGULATORYûVOLTE FACEûISûHARDLYûAûSURPRISEû
Japanese government bonds are now well below zero INûAûCOUNTRYûWITHûSUCHûAûSTOP STARTûLEGISLATIVEûRECORDû
nûTHEûlVE YEARûBENCHMARKûHITû ûLASTûWEEKûnûBUTû 4OûRESTOREûCONlDENCEûFULLYûHOWEVERûMOREûDRASTICû
YENûINVESTORSûHAVEûNOTûYETûEMBRACEDûNEGATIVE YIELDINGû measures may be needed.
investments in the same way as their European peers. Finance Minister Nirmala Sitharaman may be new to the
Bank deposits still pay positive interest, however tiny. JOBûBUTûSHEûAPPEARSûTOûBEûFOLLOWINGûTHEûAGE OLDûAPPROACHûTOû
And negative yielding debt is a rare sight beyond the JGB lNANCIALûREGULATIONûINû)NDIAûSPEAKûlRSTûTHINKûLATER
MARKETû*ASSOûTHEûSTATEûSCHOLARSHIPûAGENCYûlNALLYûPRICEDûAû 3ITHARAMANûONû!UGUSTûûUNWOUNDûTAXûINCREASESûFROMû
HERûMAIDENûBUDGETûANNOUNCEMENTûONû*ULYûûTHATûHADûHURTû
foreign portfolio investors and roiled Indian stocks. She also
The yen bond market is becoming pledged to speed up a recapitalisation of state banks and
attractive for the Triple B crowd, IMPROVEûLIQUIDITYûFORûHOUSINGûlNANCEûCOMPANIESûAMONGû
other things.
as depressed domestic yields have Investors naturally welcomed the repeal, and the stock
index rebounded early last week, helped by news of a
forced Japanese investors to look massive transfer from the central bank.
down the credit curve. Those gains, however, did not last, and by the end of
the week the focus was back on India’s stalling economy.
'ROWTHûSLUMPEDûTOûAûSIX YEARûLOWûOFûûINûTHEû!PRIL *UNEû
TWO YEARûBONDûATûAûNEGATIVEûYIELDûOFû ûINû!UGUSTûBUTû quarter, according to data released on Friday. The consumer
ITûSTILLûHADûTOûPAYûAûPOSITIVEûCOUPONûOFû sector is wilting.
4HEû#ITYûOFû+OBESû YEARû53ûDOLLARûBONDSûPRICEDûLASTû It is now clear that the problems in India’s credit markets
WEEKûSWAPûTOûYENûATûAROUNDû ûEVENûTHOUGHûMUNICIPALû are having a profound impact on the economy. With the
governments still need to pay positive coupons at home. banks still in capital conservation mode, the liquidity crisis
On the other side of that equation, swap costs and a AFFECTINGûNON BANKINGûlNANCIALûCOMPANIESûHASûHALTEDûTHEû
demand for positive coupons mean the yen bond market is mOWûOFûCREDITûTOûTHEûREALûECONOMY
effectively closed for the world’s top credits. Triple A issuers Economists expect next month’s festival season to drive
have long vanished from the Samurai bond market, and less some recovery, but it is clear that Sitharaman’s ministry
THANûûOFûûISSUANCEûCAMEûFROMû$OUBLEû!ûBORROWERS will need to come up with new measures to restart
Increasingly, however, the yen bond market is becoming CONSUMERûLENDINGûANDûRESTOREûCONlDENCEûINûTHEûlNANCIALû
attractive for the Triple B crowd, as depressed domestic sector. Consolidation of state banks, also announced on
yields have forced Japanese investors to look down the Friday, is a good place to start.
CREDITûCURVEû%MERGING MARKETûGOVERNMENTSûAREûNOWûTHEû Now that the accommodative central bank has given the
HOTûTICKETûTAKINGûTHEûPLACEûOFûLOSS ABSORBINGûSENIORûBANKû government more room – and more funds – to manoeuvre,
debt last year. Sitharaman and her colleagues can do more. They just need
If yields continue to slide, Japanese investors will need to make sure they think before they speak.
International Financing Review Asia August 31 2019 1

INDEX Delta Dunia Sandang Tekstil 26 LIC Housing Finance 24 SK Hynix 32

36Kr 20 Delta Merlin Dunia Textile 26 Lotte REIT 5 Small Industries Development
Adira Dinamika Multi Finance 26 Digi Telecommunications 29 Louis Dreyfus 31 Bank of India 25
Aditya Medisales 23 Digital Mediatama Maxima 27 Macquarie Bank 16 Southwest Securities 21
Agricultural Bank of China 18 Eclipx Group 29 Macquarie Group 9 Sta Lucia Land 30
Alphalogic Techsys 25 Export-Import Bank of India 4 Malaysia 28 State Bank of India 24
Aozora Bank 27 Gansu Jingyuan Coal Industry and Manila Water 29 Suncorp-Metway 16
ARA Asset Management 30 Electricity Power 22 Mapletree Investments 8 Takara Leben Real Estate Investment 28
Ascott Residence Trust 8 Global Switch 23 Megvii Technology 6 Tata Capital Housing Finance 25
Asia United Bank 29 Gruh Finance 26 Minsheng Hong Kong Tianjin Rail Transit Group 19
Asset World 32 Guangxi Financial Investment Group 18 International Leasing 19 Tianma Microelectronics 21
Axelum Resources 30 Guosen Securities 21 MMI Holdings 30 Times China Holdings 17
Bank of Communications Haitong Securities 18 Muyuan Foods 21 Toyota Finance New Zealand 29
Financial Leasing 18 Hanwha Systems 32 MyState Bank 17 Transpower New Zealand 29
Bank of Guizhou 20 HDB Financial Services 23 New Hope Liuhe 22 UBS Group 30
Bank of the Philippine Islands 29 Hyflux 31 Nippon Sheet Glass 27 Union Bank of the Philippines 29
Bapton 22 Hysan Development 22 Nuvoco Vistas 24 United Asia Finance 22
Beijing Sinovoice Technology 7 Indiabulls Consumer Finance 24 Oil and Natural Gas Corp 23 United Overseas Bank China 18
Beijing Unisound Information Indian Railway Finance Corp 24, 25 One REIT 28 Usen-Next Holdings 27
Technology 7 Indonesia Eximbank 27 Origin Energy 16 Volkswagen Finance 25
Bendigo and Adelaide Bank 16 Indorama Ventures 32 Pacific National Holdings 16 WCT Holdings 28
Berli Jucker 32 IndusInd Bank 25 Perenti Global 17 Xtep International Holdings 23
Bloomage Biotechnology 20 Integral Diagnostics 17 Perusahaan Listrik Negara 4, 26 Yes Bank 23
Bumi Serpong Damai 26 Japan Finance Organization for Pharmaron Beijing 20 Yitu Technology 7
CGN Power 20 Municipalities 27 PSA International 8 Yunnan Metropolitan
Changchun Urban Development & Jiumaojiu International 21 PTT Global Chemical 32 Construction Investment Group 19
Investment Holdings (Group) 17 Keboda Technology 21 Recruit Holdings 28 Zhangzhou Jiulongjiang Group 17
China Industrial Securities Korea Development Bank 31 Rentenbank 16 Zhejiang Satellite Petro Chemical 21
International Financial Group 17 Korean Air Lines 31 S Hotels and Resorts 32 Zhengzhou Coal Mining
China Pipeline Corp 19 Kuala Lumpur Kepong 28 SenseTime 6 Machinery Group 21
China Zheshang Bank 21 Latitude Australia Credit Card SF Holding 22 Zhenjiang City Construction
CIFI Holdings (Group) 19 Loan Note Trust, Series 2019-1 17 Shanghai Bright Power Industry Group 19
City of Kobe 27 Latitude Finance Australia 16 Semiconductor 20 Zijin Mining 22
CloudMinds Technology 7 Lendlease Group 31 Shanghai Henlius Biotech 20 Zip 16
CloudWalk Technology 7 Liberty Financial 16 Singapore Technologies Engineering 30 Zip Master Trust Series 2019-1 16
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2 International Financing Review Asia August 31 2019

Contents
AUGUST 31 2019 ISSUE 1104
COVER STORIES COUNTRY REPORT

BONDS
04 Japan welcomes BBB rated credits 16 AUSTRALIA 29 PHILIPPINES
Pacific National Holdings has BPI raised SFr100m from two-
A heavily oversubscribed Samurai bond from Export- mandated five for a 10-year year debut Green bonds at
Import Bank of India provided fresh evidence of Japan’s benchmark Australian dollar, a yield of -0.020%, the first
growing appetite for Triple B rated overseas issuers. sterling or US dollar Reg S negative-yielding bonds to be
bond offering. issued out of the Philippines.
EQUITIES
17 CHINA 30 SINGAPORE
05 Lotte to test Korea REIT market Changchun Urban ST Engineering North America
Lotte REIT is to test appetite for the country’s largest Development & Investment set up a US$1.5bn commercial
real estate investment trust, hoping interest rates and Holdings has mandated banks paper programme guaranteed
Lotte Group’s backing help quell skepticism. to arrange investor meetings in by parent company Singapore
Hong Kong from September 3. Technologies Engineering.
EQUITIES
22 HONG KONG 31 SOUTH KOREA
06 Megvii seeks IPO recognition Hong Kong property company Korean Air Lines priced
Megvii Technology has filed for a US$500m–$1bn IPO Hysan Development sold US$300m three-year 2% senior
in Hong Kong, where controversy over surveillance US$500m 2.82% 10-year senior unsecured notes guaranteed
unsecured Reg S bonds at by Korea Development Bank at
technologies has been a feature of the ongoing protests.
99.577 to yield 2.869%. 99.641 to yield 2.124%.
23 INDIA 32 THAILAND
NEWS Oil and Natural Gas Corp has Indorama Ventures has
set up a US$2bn euro MTN mandated four to arrange
07 Aussie Green patch set to bloom programme to access global investor meetings in Hong
Australia remains the third largest issuer of Green markets and widen their Kong, Singapore and London,
bonds in the Asia Pacific region, behind China and investor base. which began on August 28.
Japan, and has plenty of scope for further growth.
26 INDONESIA
08 Investors flock to Singapore Inc Investors turned to high-quality Bumi Serpong Damai has
13
government-linked issuers insulated from the US-China trade war. offered to buy any and all of its
08 China rate reforms may fall short China’s interest rate reforms are US$300m 7.25% bonds due
unlikely to support the economy without action to lower funding costs. 2021, issued by wholly owned
09 Macquarie surprises with A$1bn placement Macquarie Group has subsidiary Global Prime Capital.
sealed the largest share placement in Australia so far this year.
27 JAPAN
Aozora Bank priced US$300m
PEOPLE & MARKETS 2.55% three-year bonds at
99.914 to yield 2.58%, inside
10 India resuscitates capital markets initial price thoughts of
Treasuries plus 135bp area.
India’s financial markets heaved a sigh of relief after
the government rolled back tax hikes on foreign and 28 MALAYSIA
domestic equity investors. Malaysia is considering a
second Samurai bond issue
11 Najib’s main 1MDB trial kicks off Prosecutors say Najib Razak abused his
with a guarantee from JBIC
power to cover up the theft of hundreds of millions of dollars from 1MDB.
following an oversubscribed
12 Credit Suisse merges syndicate teams Credit Suisse has merged its loan sale in March.
and bond syndicate teams in Asia.
12 CSRC issues draft rules on A-share spin-offs CSRC has issued draft 29 NEW ZEALAND
rules to allow A-share companies to spin off units through an IPO. Transpower New Zealand
10 Who’s moving where Daniel Ng Meng Hua, head of investment banking raised the maximum NZ$150m
at BOC International, is to retire from the bank. it was seeking from a six-year
13 In brief China has opened up its capital markets further by allowing retail note offer via sole lead
global banks to be lead underwriters in its interbank bond market. manager ANZ.

NewsAI IPO in Hong Kong 06 Green Australia 07 Safe-haven Singapore 08
Japan welcomes BBB rated credits

Bonds Exim India Samurai shows appeal of absolute spreads offered by Asian quasi-sovereigns
BY TAKAHIRO OKAMOTO year is back down below 30% or higher, however, have had on Samurai bonds – even when
of the Samurai market, and the a tougher time borrowing in yields on Japanese government
Last week’s heavily response to India Exim suggests yen in recent years because of bonds are sinking further
oversubscribed Samurai bond there is plenty of untapped a widening in dollar/yen basis below zero. This has made it
from EXPORT-IMPORT BANK OF INDIA demand for lower-rated deals. swaps and Japanese investors’ difficult for issuers with high
provided fresh evidence of Global issuers rated Single A insistence on positive coupons credit ratings to sell bonds in
Japan’s growing appetite for yen as they would need to pay
Triple B rated overseas issuers. well over their euro or dollar
India Exim’s ¥32bn DOWN THE CURVE curves to offer positive coupons
(US$302m) dual-tranche SAMURAI BOND BUYERS HAVE EMBRACED RISKIER DEBT (% OF NEW ISSUES) in yen.
offering on Thursday drew 100
total demand of around ¥90bn, TIGHT-END PRICING
surprising even bankers on the 80 India Exim is the latest
deal. sovereign or quasi-sovereign
“Triple B rated bonds are now 60 credit to enjoy such a strong
wanted in the yen market,” said response in Japan, following
a banker on the deal. “Investors 40
earlier deals from the Republic
no longer expect attractive of the Philippines (Baa2/BBB+),
coupons in the domesic credit which printed ¥92bn of four-
20
market as yen rates have tranche Samurai bonds in early
dropped, but Asian credits 0 August, and the Republic of
still offer reasonable absolute 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Indonesia (Baa2/BBB), which
levels.” AAA AA A BBB BB
raised a massive ¥177bn from
As well as reaffirming a six-tranche offering in May.
Japanese investors’ hunger International rating bands from S&P/Moody’s. Issuer rating used where bonds are unrated The latter was the biggest Asian
for yield, the deal is seen Source: Refinitiv, IFR public offering of standalone
as a curtain-raiser for the
international yen market,
ending a summer recess that
began after Corning’s 12 and
20-year Global yen transaction
on August 6.
Indonesia’s state-run
electricity company PERUSAHAAN
LISTRIK NEGARA filed a securities
registration statement on
Monday to price its inaugural
Samurai bond as early as
September 12. PLN is rated
Baa2/BBB/BBB (Moody’s/S&P/
JCR), in line with India Exim at
Baa2 from Moody’s and BBB+
from JCR.
With no active high-yield
bond market in Japan, Samurai
bonds with Triple B ratings
are among the few remaining
assets to offer attractive
spreads.
A record 51% of Samurai
bonds by volume sold in 2018
had implied international
ratings of BBB+ or lower, up
from less than 8% in 2014,
according to IFR calculations.
Triple B issuance so far this

For daily news stories
visit www.ifrasia.com
Little impact from LPR 08 Macquarie’s A$1bn surprise 09
Samurai bonds on record.

The Exim India deal, led by
Daiwa, Mitsubishi UFJ Morgan
Lotte to test Korea REIT market
Stanley, Mizuho and SMBC Nikko,
consisted of a ¥25bn three-year Equities Rate cuts and brand name expected to arouse investor interest
tranche with a 0.59% coupon
and a ¥7bn five-year piece with BY CANDY CHAN is expected to list on the bourse Lotte REIT said it has filed
a 0.66% coupon. They priced in October with a market administrative documents
at 70bp and 78bp over the LOTTE REITis set to test investor capitalisation of W817bn– to the Korean bourse to kick
respective yen offer-side swaps, appetite for South Korea’s W860bn. off the listing process, with
both at the tight ends of the largest real estate investment The price range represents a bookbuilding set for September
initial guidance ranges of 70bp– trust, hoping that favourable forecast 2020 dividend yield of 23–October 2 and the public
75bp and 78bp–85bp, after interest rates and strong 6.3% to 6.6%, higher than that subscription scheduled for
the book quickly reached the backing from Lotte Group will offered by the current biggest October 8–11.
target size in the early stages of overcome the local market’s K-REIT. E Kocref CR-REIT, which After the completion of the
marketing. scepticism towards the format. listed on the bourse last year IPO, Lotte Shopping will own
The pricing levels were South Korea’s REIT market and runs three commercial a 50% stake in Lotte REIT and
deemed satisfactory for the has struggled to catch up Lotte AMC will manage the
issuer. According to estimates with its peers in Asia and REIT’s assets.
by two bankers on the deal, the these aspirations were dealt In 2014, Lotte Shopping
three-year priced very close to a major blow in March, when “Both the US Federal tried to list a US$1bn REIT in
its US dollar curve, while the supermarket chain Homeplus Reserve and Bank of Singapore comprising shopping
five-year priced only about 5bp pulled the plug on the W1.7trn Korea have lowered mall assets but the deal did not
over. (US$1.5bn) listing of Korea interest rates, and that make it to the pre-marketing
Another significant Retail Home Plus REIT on weak stage.
aspect of the transaction investor demand.
encourages investors A KRX listing for Lotte REIT
was the diversified investor But market participants who are looking for would be the biggest equity
participation. While asset expect a different result this yield to look to the raising for the Lotte group
managers and lifers were key time as Lotte REIT will hold REIT market.” since 2017, when it listed a
investors in the three and a diversified portfolio of petrochemical venture, Lotte
five-year tranches, about 20 four department stores, four Chemical Titan, in Malaysia.
Japanese regional accounts discount stores and two retail The deal was downsized to
participated, illustrating outlets, all owned by Lotte properties, traded at a forecast US$877m, only for the stock to
growing recognition of Indian Shopping, the country’s largest yield of about 5.65% with lose a third of its value in its
credits across Japan. department store chain. The a market capitalisation of first month of trading.
“I assume regional banks are deal, at up to W430bn, is also W390bn. A corruption scandal
familiar with Indian credits much smaller, and market involving the group’s chairman,
as they made loans there,” conditions have changed RENOWNED BRAND Shin Dong-bin, and other
said one banker. India was the markedly in the past five While a stable yield in volatile Lotte executives also led to
second largest destination for months. markets is a key selling point, the cancellation of a planned
Samurai loans in the first half “Both the US Federal Reserve the familiarity and status of the US$4.5bn Hong Kong listing
of this year, according to LPC, and Bank of Korea have Lotte brand will also help. in 2016 for Hotel Lotte, which
IFR’s sister publication. lowered interest rates, and that “Many Lotte affiliates, holds lucrative duty-free
Large orders for the bonds encourages investors who are which are the major tenants shopping licences. The group
also came in from foreign looking for yield to look to the in the REIT, are recognised as has since tried to revive the
investors, including a foreign REIT market,” said a person creditworthy issuers in the offering in Korea as part of a
public fund and a major global away from the deal. “Market Korean capital markets,” said plan to simplify its corporate
asset manager. conditions and sentiment the second person. structure, but no deal has
India Exim last issued should be strong enough to The success of the deal is materialised.
Samurai bonds in 2014, with a support the deal.” crucial to the development of Shin was jailed in February
guarantee from the Japan Bank Another person said the South Korea’s REIT market, 2018 for his role in a bribery
for International Cooperation. deal should not be difficult for which has struggled since it scandal that led to the ousting
Having now seen the depth of investors to digest given its size. launched in 2001. Only six of former South Korean
demand for its own credit, it is “I would not be surprised REITs trade on the country’s President Park Geun-hye, but
keen to become a repeat issuer to see other Lotte affiliates stock exchange, out of 2,303 was released in October that
in yen. backing the deal as a means of listed companies. year after an appeals court
“This widespread investor re-investment into the REIT,” Most listed K-REITs are also suspended his jail term.
base will provide a good ground the person said. relatively small with a single HSBC, Korea Investment &
for Exim Bank’s future Samurai Lotte REIT, which will offer investment property and a Securities and Nomura are
transactions,” CFO Harsha 86m shares in an indicative market capitalisation of less working on the latest Lotte
Bangari said in a statement. price range of W4,750–W5,000, than W100bn. REIT.

News
Megvii seeks IPO recognition
Equities IPO filings come amid continuing protests in the city
BY FIONA LAU the year. It raised US$750m its strong shareholder backing and businesses, in 112 cities in
from a private financing in and solid business growth, we China.
MEGVII TECHNOLOGY, the facial April at a valuation of about believe the deal will manage Such solutions encompass
recognition specialist best US$4bn. to generate a decent level of algorithms, software as well as
known for its Face++ software, The company planned at interest,” said a person close to AI-empowered sensors to allow
has filed for a US$500m–$1bn one point to file the listing the IPO. government agencies to enhance
IPO in Hong Kong, where application in the second Megvii is aware of the public safety, optimise traffic
controversy over surveillance quarter. However, in May, New public concern on the use of management and improve urban
technologies has been a feature York-based Human Rights its technology. In the filings, it resource planning, according to
of the ongoing protests. Watch said in a report that said it requires its customers to the filing.
As the first artificial Megvii might be behind a promise that they will not use City IoT solutions was the
intelligence start-up to plan a mobile app that forms part its technology for any illegal biggest revenue and gross profit
listing in Hong Kong, Megvii of the mass surveillance or inappropriate purposes, contributor for Megvii in the
will test investor appetite for infrastructure set up by including infringement of first half of 2019, representing
the fast-growing and cash- Chinese authorities in the human rights. The company 73% and 67% of the total
hungry industry. However, majority-Muslim Xinjiang has also recently set up an AI respectively.
its software focus will also Uygur autonomous region. A Ethics Committee to consider Megvii’s other clients
invite scrutiny after local month later, the human rights ethical issues in the industry include fintech companies, car-
protesters recently tore down advocacy group withdrew such and the company. hailing service providers and
so-called smart lampposts claims. Beijing-based Megvii is the smartphone makers.
that they believed were The company’s filing last largest AI-focused solution Joint sponsor Citigroup,
equipped with Chinese facial week is a vote of confidence provider in terms of revenue in Goldman Sachs and JP Morgan are
recognition technology. Since that the Hong Kong market will what it defines in its prospectus planning to bring the IPO to the
the beginning of the unrest remain open for new-economy as China’s smart city and market by the end of the year.
in June, many protesters have IPOs after a turbulent summer, community management
also systematically hidden their marked by political unrest and vertical with a 7.4% market INVESTOR EDUCATION
faces using masks and glasses the ongoing US-China trade share in 2018. As of June 30 Megvii is joining many other
to foil government surveillance. dispute. 2019, it provided City IoT Chinese AI companies that are
Alibaba-backed Megvii kicked “Megvii’s facial recognition (internet of things) solutions planning to go public this year
off preparation for the Hong technology will unavoidably to 339 domestic customers, or next.
Kong IPO at the beginning of draw some attention but given including government agencies Bigger rival SENSETIME is

tipped to be the next big AI

listing candidate, while YITU
TECHNOLOGY, which also develops
Aussie Green patch set to bloom
facial recognition technology, is Bonds Project pipeline and large investor base will fuel market expansion
working on a domestic IPO.
CLOUDMINDS TECHNOLOGY, a BY JOHN WEAVERS A$20bn (US$13.6bn), according and sustainable bond issuance
developer of cloud-based robots to the GIIO. in Australia of A$15.6bn
backed by SoftBank Group, Australia remains the third David Jenkins, head of (US$11.6bn) as of June 30 2019,
pre-marketed a NYSE IPO of largest issuer of Green bonds sustainable finance at NAB, behind only China (US$91.5bn)
US$500m in July. Meanwhile, in the Asia Pacific region, sees a lot more opportunities and Japan (US$12.4bn) in
speech recognition companies behind China and Japan, and for sustainable financing across Asia Pacific, according to the
BEIJING UNISOUND INFORMATION has plenty of scope for further both bond and loan formats, Green Finance State of the
TECHNOLOGY, CLOUDWALK TECHNOLOGY growth, according to a pair including social, sustainability Market Australia 2019 report,
and BEIJING SINOVOICE TECHNOLOGY of reports from the Climate and green instruments, that published at the same time as
are all planning to list on the Bonds Initiative. will help transition Australia to GIIO.
Shanghai tech board. Green Infrastructure a low-carbon economy. Globally, Australia lay 10th
These companies, however, Investment Opportunities “The growth of overall with a cumulative
will have to spend a lot of effort Australia 2019 (GIIO) identified sustainability-linked loans, 35 deals from 15 issuers in
to educate investors about their a pipeline of over 400 green which incentivise borrowers Australian dollars following an
industry. infrastructure projects and to materially improve their upturn in issuance in recent
“There is no direct listed called for a greater range of sustainability performance years.
comparable from China. You financing tools to support by linking incentives (and Australian Green bond
have to convince investors the transition to a low-carbon penalties) to predetermined sales reached an annual
about the valuation models and economy. sustainability targets rather record of A$6.0bn in 2018,
you can imagine the difficulty It also welcomed the than use bonds/loans to almost double the A$3.3bn
involved,” said a person close to formation of the Australian finance finite green or social total in 2017, with the first
the CloudMinds deal. Sustainable Financial Initiative, projects, is another important six months of 2019 raising
CloudMinds will decide in which brings together the development going forward,” A$3.9bn before QIC and
September whether to push the country’s major banks, he said. European agencies KfW and
deal ahead, according to other superannuation funds, This is especially important BNG Bank added a further
people close to the deal. insurance companies, financial for borrowers looking to A$850m to the total.
People close to the Megvii industry groups and academia support the green-to-brown On a cumulative basis, low-
IPO, however, strike a confident with the aim of developing transition, especially in sectors carbon buildings dominate
note. a roadmap for the financial not usually considered green Green bond allocations with an
“Investors will find it easier sector’s contribution to a more such as industrials, metals and approximate 43% share of the
to value Megvii as the company sustainable future by 2020. mining and shipping. use of proceeds, followed by
already turned profitable,” said “Australia has both the Jenkins also expects more energy with 25%, low-carbon
one of the people. opportunity and the capital to offshore issuers to access the transport at 24%, water at 6%
Founded in 2011, Megvii meet its green infrastructure Australian green market to and waste at 2%.
posted a loss of Rmb5.2bn challenges and create a take advantage of a deep and Large scale Green bond
(US$729m) for the first half of climate-ready, resilient and rapidly growing investor base. issuance has come mainly
2019 mainly due to changes in robust economy, fit for the Responsible investments from the state governments
fair value of preferred shares future,” said Sean Kidney, under management in of Victoria, New South Wales
and investment in research and CEO, Climate Bonds Initiative. Australia rose 13% last and Queensland, while the
development. But its adjusted net “Investing in low carbon year to A$980bn, or 44% of four major banks have all
profit for the first half of 2019 transition will create jobs, the A$2.24trn total assets issued Green bonds of A$500m
was Rmb32.7m, compared to an boost economic growth professionally managed in the or more and supported new
adjusted net loss of Rmb137m in and help Australia meet its country at year-end, according issuers coming to market.
the first half of 2018. international obligations.” to the Responsible Investment “The domestic green finance
Megvii is also the third The GIIO report highlights Benchmark Report 2019 market is an example of
company planning to list in solar and wind energy as areas Australia, released in July. international best practice
Hong Kong with weighted with the greatest investment The scale of buyside interest with ongoing commitment
voting rights, after Xiaomi and potential, while battery storage Down Under was underlined from the banking sector
Meituan Dianping. and pumped hydro will be by the huge A$2.0bn and acting as an underlying driver
Under the structure, founders the likely winners of the A$1.5bn order books for this of both market growth and
and executive directors Yin Qi, increasing focus on storage. year’s respective A$400m innovation,” the CBI report
Tang Wenbin and Tang Mu, Australia trails other five-year and A$300m six- noted.
who own a combined 16.8% OECD countries in the use of year Green bond sales from Outside the banking/
stake in Megvii, will enjoy renewable energy sources with Woolworths and QIC Shopping financials, property and retail
voting rights 10 times higher a 21% share of national energy Centre. sectors, green issuance from
than other shareholders. in 2018. However, this was up ASX-listed corporates remain
Ant Financial and Taobao from 17% in 2017 thanks to a RAPID GROWTH a lagging indicator compared
China own 15.1% and 14.3% doubling in annual investment, The Climate Bonds Initiative with the US and European
stakes in Megvii, respectively. mainly in wind and solar, to recorded cumulative green markets, however.

News
Investors flock to Singapore Inc
Bonds Government-linked issuers benefit from flight to safety, yield compression
BY DANIEL STANTON US$500m 10-year bonds via Asia took 92% of the Reg S in which they took up 17%.
DBS and HSBC at a neglible bonds and EMEA 8%. However, the final order book
Singapore Inc took advantage new issue premium, drawing There was lower was bigger than the 2016 total
of strong issuance conditions of US$1bn, and the yield and
last week as investors turned to spread were 37bp and 10bp
high-quality government-linked tighter, respectively, than the
issuers insulated from the US- Just as the US 10-year Treasury yield has reduced respective levels three years
China trade war. by more than 100bp this year to around 1.5%, ago.
MAPLETREE INVESTMENTS and PSA Singapore government yields have compressed The low yield was heard
INTERNATIONAL, which are both to deter some investors, with
tremendously in the past few months. In early
wholly owned by Singapore insurers receiving half the
state investment holding
May, 10-year Singapore government securities allocation they did in the 2016
company Temasek Holdings, were yielding 2.32%, but that had dropped to deal, though there were plenty
printed Singapore dollar and 1.73% by Monday. of orders from existing holders.
US dollar bonds, respectively, By investor type, funds booked
while ASCOTT RESIDENCE TRUST, in 46%, banks 34%, public sector
which Temasek has an indirect institutions 9%, insurers 8%,
stake, sold Singapore dollar a book of over US$1.5bn from participation from European and private banks, corporates
hybrids. 106 accounts (See Singapore Debt investors than in PSA’s last and others a combined 3%.
PSA on Wednesday priced Capital Markets.). dollar bond offering in 2016, The global port operator is
China rate reforms may fall short margin compression.

However, experts believe the
PBoC will take additional steps
Loans Economists see little impact on borrowing costs without further monetary easing to curb banks’ risk-taking by
lowering their funding costs,
BY APPLE LI lenders are under pressure to first quotation after the reform, either by cutting the reserve
protect their lending margins. to 4.25%. That is 10bp below requirement ratio or easing the
China’s interest rate reforms “Unless the one-year LPR the 4.35% PBoC’s one-year MLF – used as a policy lending
are unlikely to support a falls below 90% of the official benchmark lending rate. tool to manage liquidity in the
slowing economy without benchmark rate, or around financial system.
further monetary policy 3.9%, the actual impact on FURTHER EASING StanChart’s Li expects the
measures to lower banks’ corporate borrowing costs will The latest reform has PBoC to lower the one-year
funding costs, economists have be limited,” said Wei Li, senior effectively put the PBoC in MLF rate twice by 10bp each
warned. China economist at Standard better control of banks’ lending time this year, with the first
On August 17, the People’s Chartered, adding that the rates as the new LPR is to be rate cut occurring as soon as
Bank of China mandated the pressure on banks’ profitability quoted based on the one-year September.
use of the loan prime rate could eventually be transmitted medium-term lending facility “If the LPR, to be announced
(LPR) as a substitute to the to smaller enterprises. (MLF) policy rate (currently at on September 20, stays more
official benchmark lending “As banks are not able to 3.3%) plus a premium to reflect or less the same as 4.25%, or on
rate. An above-five-year LPR significantly lower deposit banks’ own funding costs, risk a much higher level than 4%,
will be introduced in addition rates, they may selectively price premium and credit supply and the PBoC may start lowering
to the current one-year LPR the loans higher for some of demand. the MLF rate with an aim of
to serve as pricing references the weaker borrowers in order While the shift gives the lowering banks’ funding costs,”
for new loans, improving the to protect their net interest central bank a more efficient Li said.
transmission efficiency of margin,” Li said. monetary policy tool, since Christiaan Tuntono, senior
market interest rates. Published on the 20th of the MLF is more flexible and Asia Pacific economist at
The revamp will lead to every month, the new LPRs market-driven than the PBoC’s Allianz Global Investors, sees
lower corporate borrowing are set by average quotations benchmark rate, lenders are the PBoC cutting the RRR by
costs and is seen as China’s submitted monthly by 18 likely to be at a disadvantage. at least 100bp in the second
latest effort to support local commercial banks, including Moody’s said in an August half of the year in addition to
businesses as the country’s GDP two foreign lenders, after 19 report that banks could be lowering the MLF policy rate.
growth has slumped to a 27- discarding the highest and the tempted to increase their risk “We think that lowering the
year low. However, economists lowest quotes. appetite to compensate for RRR remains a better option
expect the effects on the cost The one-year LPR, which had shrinking margins. Lenders as that would allow greater
of credit to be marginal as the remained largely unchanged with large loan exposures due room for banks to guide down
LPR is anticipated to decline at 4.30%-4.31% since October for repricing in the near term the price for their new lending
gradually, especially when 2015, fell 6bp on August 20, the will be immediately exposed to products,” he said.

rated Aa1/AA (Moody’s/S&P) and which focuses on property early May, 10-year Singapore insurers, but the deal drew
marketed its bonds using the development, investment and government securities were demand from a mix of
Moody’s rating, just one notch capital management in Asia yielding 2.32%, but that had investors.
off Singapore’s Triple A country Pacific, Europe and the US. dropped to 1.73% by Monday. Singapore accounts took
rating. ART is a serviced-residence That has proved 99% of the Mapletree bonds. By
On Monday, Mapletree REIT with a portfolio of 74 advantageous for local high- investor type, fund managers
Investments priced a S$300m properties in 14 countries in quality issuers, as investors booked 50%, private banks
(US$216m) 12-year bond at par Asia Pacific, Europe and the US, including private bank clients 36% and agencies and banks a
to yield 3.15%, inside initial and is in the process of merging seek to deploy cash before combined 14%.
guidance of 3.3% area, while with Ascendas Hospitality yields drop any lower. Singapore investors took
Ascott Residence Trust sold Trust to create a trust with ART took the opportunity to 96% of the ART bonds, with
S$150m subordinated perpetual combined assets of S$7.6bn. lock in a low yield for a new asset managers, banks and
non-call five securities at par Property developer CapitaLand issue to refinance S$150m corporates booking a combined
to yield 3.88%, inside 4.125% owns a 45% stake in ART, and a perps that are callable on 54% and private banks taking
area guidance. Both issues were 28% stake in AH-Trust through October 27 and bear a much 46%, helped by a 25-cent rebate
estimated to print close to fair wholly owned subsidiary higher coupon of 5%. for private bank orders.
value. Ascendas. Temasek owns a 40% Mapletree, meanwhile, Mapletree’s bonds will be
Orders were over S$900m stake in CapitaLand. benefited from investors who issued through Mapletree
from 42 accounts for the Just as the US 10-year have had to either move down Treasury Services with a
Mapletree bonds and over Treasury yield has reduced the credit curve or extend guarantee from Mapletree
S$1.05bn from more than 56 by more than 100bp this year duration in the search for yield Investments, while DBS Trustee
accounts for ART’s hybrid. to around 1.5%, Singapore as it seized the 12-year sweet is issuer for ART’s bonds in its
Both issuers are unrated but government yields have spot. That has typically been capacity as trustee.
benefit from links to Temasek. compressed tremendously too long for many investors OCBC was sole bookrunner
Temasek owns Mapletree, in the past few months. In outside pension funds and for both deals.
Macquarie surprises with A$1bn placement

Equities Solid investor demand allows shares to sell at slim discount
BY CANDY CHAN, THOMAS BLOTT signifies. the minimum 9.5% regulatory levels in light of regulatory
Analysts at Goldman Sachs requirement it is supposed to changes, and Macquarie’s
MACQUARIE GROUP has sealed the said they were surprised since meet from 2020 onwards. domestic banking unit will take
largest share placement in the group said last month it As well as the placement, up A$100m of extra capital to
Australia so far this year with a had a A$5bn surplus capital the company will now launch expand its mortgage business.
finely priced A$1bn (US$675m) position when it give its fiscal a security purchase plan The Australian investment
follow-on that analysts labelled first quarter trading update. allowing eligible shareholders bank also said last week that
a “surprise” capital raising. it expected profit for the first
The non-underwritten half ending September 30 to be
deal surpassed the A$900m up 10%, although it maintained
placement from real estate “Management has a very good track record in its earlier forecast that its
investment trust Dexus in May effectively deploying its marginal capital, and so annual profit would be slightly
this year. It received strong we remain comfortable with today’s decision to down on the previous financial
support from institutional raise capital.” year.
shareholders, according to the Macquarie, which is known
company. for its conservative forecasts
The group sold 8.3m new and has delivered higher
shares at A$120 each, or a 2.8% “That said, management to subscribe to up to A$15,000 earnings for seven consecutive
discount to last Tuesday’s close has a very good track record of new shares each from years, had a blowout year
of A$123.51. The marketed in effectively deploying its September 4–20. The Goldman in its markets division last
price range was A$118–$123.50 marginal capital, and so we Sachs report expects the SPP to year, which it said it does not
per share. remain comfortable with raise a further A$300m–$600m. expect to repeat this year. Its
Macquarie’s shares closed today’s decision to raise The proceeds will contribute core annuity-style businesses,
above the placement price last capital,” Goldman said in a to the bank’s projected A$1.6bn which includes its investment
Thursday at A$122.53. The report. capital needs in 2020, of management arm, has shown
stock is up 14.1% year to date, UBS analyst Jonathan Mott which a large portion will be signs of a slowdown with net
compared with the benchmark said the deal indicated that used by Macquarie Capital to profit down 4% last year.
ASX 200’s 16.9% gain. Macquarie’s capital position invest in renewable energy, Macquarie was the sole global
The decision to raise was not as strong as previously technology and infrastructure. coordinator, and lead manager
additional capital took analysts indicated. Macquarie had a The commodities and global and bookrunner on the
by surprise and they had mixed common equity Tier 1 ratio markets division will use about placement with Bank of America
views on what the raising of 12% last month, well above A$600m to maintain capital Merrill Lynch and JP Morgan.

People
& Markets
TOP STORY EMERGING MARKETS
India resuscitates capital markets

Window reopens for block trades after tax changes shelved
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Who’s moving where...

Daniel Ng Meng 2012. He then worked CREDIT SUISSE has he was managing Brad Scott has Peel, who previously
Hua, head of at China Merchant hired Chirag Agrawal director. He become managing worked as a director
investment banking Securities (Hong and Nilaya Agrawalla previously worked at director and head of for DCM at ASB Bank,
at BOC INTERNATIONAL, Kong) as head of as directors for Goldman Sachs and debt capital markets Commonwealth Bank
is to retire from the investment banking investment banking Deutsche Bank. at BANK OF CHINA in of Australia’s New
bank. before returning to and capital markets Agrawalla was most Sydney after leaving Zealand subsidiary,
Ng first joined BOCI, BOCI in 2016 to take in India. recently an executive National Australia having performed
the Hong Kong up the role of head They report to Gaurav director at Goldman Bank, where he was a similar role in
investment banking of IB. Pradhan and Sumit Sachs having joined director for corporate Deutsche Bank’s
arm of Bank of China, Ng will leave the Jalan, co-heads of from JP Morgan debt capital markets Sydney office for
in 2004 and rose bank after serving his India IBCM. around 18 months origination for seven almost a decade.
to vice-chairman of notice period. Agrawal has spent ago. He spent 10 years. Both Scott and Peel
investment banking the past decade years at JP Morgan. Scott was replaced remain based in
before leaving in at Jefferies, where at NAB by Brad Sydney.

Please send job moves to
[email protected]
– MAZAGON DOCK SHIPBUILDERSûINDIAN RAILWAY

CATERING AND TOURISM CORPORATION and INDIAN Najib's main 1MDB trial kicks off
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MARKETvûSAIDû2AOûATû$"3ûh)NDIAûWILLûLOOKû WRONGDOINGûANDûSAYSûTHEûCHARGESûAGAINSTû SUBMITûTHEIRûCLOSINGûARGUMENTSûFORûTHATû
ATûFAVOURABLEûMARKETûCONDITIONSûTOûRAISEû HIMûAREûPOLITICALLYûMOTIVATED CASEûINû/CTOBERûFOLLOWEDûBYûAûRULINGûBYûTHEû
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WHICHûWASûINDICATEDûEARLIERv OFûPOWERûFORûALLEGEDLYûRECEIVINGûILLEGALû DEFENCE
S ANURADHA, KRISHNA MERCHANT TRANSFERSûOFûATûLEASTû-BNû53M û ROZANNA LATIFF
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COMMONWEALTH CBA in 2016 and Morgan Stanley’s Stanley colleagues at Chin Ping Chia, Chia left MSCI in May
BANK OF AUSTRALIA has overseen the former head of the Shenzhen-based MSCI’s former after 18 years with the
has made two bank’s response to foreign exchange startup. The company head of research US index provider.
appointments to its recommendations and derivatives was founded two for Asia Pacific, has Last year, MSCI
executive committee from last year’s report trading in Asia, years ago by five resurfaced at INVESCO. began adding China
with Carmel Mulhern into governance Jeffrey Wang, has Morgan Stanley Chia has joined the A-shares to its
joining as general and culture by the joined cryptocurrency traders including global investment emerging markets
counsel and Scott prudential regulator trading company Michael Wu, who firm as head of index, which was
Wharton appointed following a money AMBER GROUP as its Wang once hired as business strategy widely touted as the
to the newly created laundering scandal. Americas head. a trader at Morgan and development biggest endorsement
position of group Mulhern is due to Wang, who will be Stanley. for China A-share so far of Beijing’s
executive for start in January next based in Vancouver, Wang worked at investment. He efforts to open up its
programme delivery. year. She joins from is joining several of HSBC prior to Morgan continues to be based capital markets.
Wharton joined Telstra. his former Morgan Stanley. in Hong Kong.

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& Markets
Credit Suisse PRIVATEûBANKINGûADVISORYûUNDERWRITINGû
ANDûlNANCING CSRC issues
merges %ARLIERûTHISûYEARû9VES !LAINû
3OMMERHALDERûWASûAPPOINTEDûHEADûOFû draft rules on
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INVESTMENTûBANKINGûUNIT 4HEûSHIFTûTOWARDSûAûMOREûGENERALISTû THEûlRSTûTIME
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YEARûFROMû".0û0ARIBASûASûHEADûOFûLOANû CAPITALûMARKETSûANDûLEVERAGEDûCAPITALûMARKETSû HAVEûSAIDûTHEYûPLANûTOûSPINûOFFûUNITSûINûTHEû
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NOWûREPORTûTOû#HIAû#HIAûMAINTAINSûHISû "ASSOLINOûWASûAPPOINTEDûHEADûOFûTHEû$#-û INû*ANUARYûTHATû3HANGHAISûNEWûTECHûBOARDû
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#REDITû3UISSEûHASûWORKEDûTOûBETTERûALIGNû #REDITû3UISSEûHASûALSOûAPPOINTEDûLewis )Nû!PRILû3HENZHEN LISTEDûPRINTERûTUNGKONG
ITSûDISPARATEûBUSINESSESûINûTHEûREGIONûSINCEû Wong and Riddhi Shah ASûCO HEADSûOFûTHEû SAIDûITûWASûCONSIDERINGûAûSEPARATEûLISTINGûFORû
#%/û4IDJANEû4HIAMûOUTLINEDûHISûSTRATEGYûFORû !0!#ûlNANCINGûGROUPû"OTHû7ONGûANDû WHOLLYûOWNEDûCLOUDûSTORAGEûUNITûTUNGKONG
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ANDûCONNECTEDûGROUPûENCOMPASSINGû THOMAS BLOTT ONLYûTOûTHEûTECHûBOARDûBUTûTHEûSCOPEûOFûTHEû
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JP Morgan DAYûOPERATIONS
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appoints China PRELIMINARYûAPPROVALûFROMû#HINASû

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JP MORGANûHASûAPPOINTEDûSEVERALûDIRECTORSû DISAGREEMENTSûWITHûITSûPARTNER TOûSHAREHOLDERSûSHOULDûBEûNOTûLESSûTHANû
FORûITSûNEWû#HINAûSECURITIESûJOINTûVENTUREû 'LOBALûBANKSûAREûCURRENTLYûNEGOTIATINGûTOû 2MBBNû53M ûFORûTHEûTHREEûYEARS
*0û-ORGANû3ECURITIESû#HINA RAISEûTHEIRûSHAREHOLDINGSûINûTHEIRûEXISTINGû 4HEûSCALEûOFûANYûSPIN OFFûISûALSOûRESTRICTEDû
David LiûSENIORûCOUNTRYûOFlCERûFORû#HINAû *6SûORûSTARTûPARTNERSHIPSûFROMûSCRATCHû TOûNOûMOREûTHANûûOFûTHEûPARENTû
ANDûVICEûCHAIRMANûOFûGLOBALûBANKINGûPark AFTERûTHEû#HINAû3ECURITIESû2EGULATORYû COMPANYSûNETûPROlTûANDûûOFûITSûNETû
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and Stephen DavisonûHEADûOFû#HINAûSTRATEGYû FOREIGNûOWNERSHIPûTOû 3ENIORûMANAGEMENTûANDûEMPLOYEESûOFû
ANDûCHIEFûOFûSTAFFûTOûTHEû#HINAû#%/ûAREû 5"3ûSOûFARûISûTHEûONLYûFOREIGNûBANKûTHATû THEûPARENTûCOMPANYûANDûTHEûPROPOSEDû
AMONGûTHEûDIRECTORS HASûACQUIREDûAûMAJORITYûSTAKEûUNDERûTHEû SPIN OFFûCANNOTûHOLDûMOREûTHANûûOFûTHEû
4HEûOTHERû*6ûSHAREHOLDERSûAREûALSOû NEWûRULESû(3"#ûWHICHûINVESTEDûUNDERû SPIN OFFSûSHAREûCAPITALûBEFOREûTHEû)0/
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Zhou XiaoqiongûCHAIRMANûOFû3HENZHENû -EANWHILEû#REDITû3UISSEûANDû-ORGANû +ONG
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,IUûHASûALSOûBEENûAPPOINTEDûVICEûCHAIRMAN PARTNERSûTOûTAKEûMAJORITYûPOSITIONSûINûTHEIRû OFFûUNITSûTHATûHAVEûBEENûACQUIREDûORûFUNDEDû
*0û-ORGANûHASûYETûTOûANNOUNCEûAûHEADû *6Sû%ARLIERûTHISûMONTHû'OLDMANû3ACHSûALSOû THROUGHû)0/SûORûOTHERûFUNDRAISINGûMETHODSû
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ANDûPRIMEûSERVICESû-ARKû,EUNGûWASû SCRATCHûMUCHûLIKEû*0û-ORGANûALSOûRECEIVEDû SPUNûOFFûANDûLISTEDûSEPARATELY
APPOINTEDû#HINAû#%/û(EûISûEXPECTEDûTOû PRELIMINARYûAPPROVALûINû-ARCHûFORûTHEûNEWû 4HEûPUBLICûCONSULTATIONûPERIODûONûTHEû
HAVEûOVERSIGHTûOFûTHEû*6ûBUTûTHEûBANKûWILLû ENTITY DRAFTûRULESûWILLûRUNûUNTILû3EPTEMBERû
APPOINTûAûSEPARATEûHEADûTOûRUNûTHEûDAY TO THOMAS BLOTT, KAREN TIAN KAREN TIAN, FIONA LAU

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BNP Paribas 2EUTERSûREPORTEDûLASTûMONTHûTHATû

$EUTSCHESûDERIVATIVESûEXPOSUREûISûTYINGûUPû
IN BRIEF
eyes Deutsche's CAPITALûTHATûCOULDûHAVEûGENERATEDûINCOMEû

OFûõMû53M ûAûYEARû2EUTERSûALSOû
NAFMII
Foreign banks to act as lead underwriters
derivatives book REPORTEDûTHEûBANKûHASûSETûASIDEûOVERûõBNû

TOûCOVERûTHEûCOSTûOFûOFmOADINGûDERIVATIVESû China has taken another step forward in the
MOVEDûTOûITSûSO CALLEDûhBADûBANKvûORûCAPITALû opening up of its capital markets with a move to
BNP PARIBASûPLANSûTOûBIDûFORûDEUTSCHE BANK’s RESTRUCTURINGûUNITûTOûBEûWOUNDûDOWNûORûSOLD allow global banks to act as lead underwriters in
EQUITYûDERIVATIVESûBOOKûANDûISûHOPEFULûITûCANû 4HEûRESTRUCTURINGûHASûSEENûTHEûBANKû its vast interbank bond market.
BEATûOFFûRIVALûBIDDERSûTOûSECUREûAûDEALûINûTHEû HIVEûOFFûõBNûOFûASSETSûINTOûTHEûBADûBANKû The National Association of Financial Market
NEXTûFEWûWEEKSûACCORDINGûTOûSOURCESûFAMILIARû %QUITIESûINCLUDINGûEQUITYûDERIVATIVESû Institutional Investors said that it would begin
WITHûTHEûMATTER ACCOUNTEDûFORûAROUNDûõBNûOFûTHOSEûASSETSû accepting applications from foreign banks
$EUTSCHEûISûSELLINGûTHEûPORTFOLIOûASûPARTûOFû &IXED INCOMEûASSETSûINCLUDINGûLONG DATEDû for type A lead underwriting licences, which
AûRESTRUCTURINGûTHATûWILLûSEEûITûEXITûEQUITIESû INTERESTûRATEûANDûCREDITûDERIVATIVESûACCOUNTEDû would allow them to lead sales of all forms of
TRADINGûANDûOTHERûUNWANTEDûBUSINESSESûANDû FORûõBN corporate debt including negotiable certificates
4HEûEQUITYûDERIVATIVESûAREûSHORT DATEDû of deposit and asset-backed notes.
ANDûEXPECTEDûTOûATTRACTûAûLOTûOFûINTERESTû NAFMII, the main regulator for non-financial
Deutsche is under pressure to FROMûBUYERSûMEANINGû$EUTSCHEûMAYûNOTû bonds in the interbank market, has so far
complete the prime brokerage HAVEûTOûTAKEûAûDISCOUNTûTOûOFmOADûTHEMû4HEû restricted foreign banks to acting as lead
deal quickly or risk losing BANKSûLONGER DATEDûINTERESTûRATEûANDûCREDITû underwriters only on Panda bonds, referred to
clients. Barclays is looking to DERIVATIVESûAREûEXPECTEDûTOûBEûMUCHûHARDERû as type B underwriting licences. HSBC was the
take on a US$20bn portion of TOûSELLûASûTHEYûREQUIREûHIGHûLEVELSûOFûCAPITALû first to receive such a licence in 2017 followed
TOûBEûHELDûAGAINSTûTHEMûANDûCOULDûREQUIREû by Standard Chartered and BNP Paribas a year
the US$200bn business.
DEEPûWRITEDOWNSûSOURCESûFAMILIARûWITHûTHEû later. The three banks plus Citigroup, Deutsche
SITUATIONûSAID Bank and JP Morgan also hold licences to act
SHEDûûSTAFFûGLOBALLYû#%/û#HRISTIANû ".0û0ARIBASûEXPRESSEDûITSûINTERESTûINû as more junior syndicate members on corporate
3EWINGûISûHOPINGûTHEûPLANûWILLûTURNûAROUNDû $EUTSCHESûEQUITYûDERIVATIVESûBUSINESSûEARLIERû bonds.
THEûBANKûWHOSEûSHARESûHITûAûRECORDûLOWûINû THISûYEARûBUTûTHEû'ERMANûLENDERûDECIDEDû NAFMII laid out several criteria banks need
!UGUST AGAINSTûENTERINGûINTOûEXCLUSIVEûTALKSûHAVINGû to meet for the type A underwriting licence.
$EUTSCHEûPLANSûTOûAUCTIONûITSûEQUITYû ALSOûRECEIVEDûINTERESTûFROMûOTHERûPARTIESû Applicants must be designated global
DERIVATIVESûPORTFOLIOûINû3EPTEMBERûHAVINGû SOURCESûTOLDû2EUTERS systemically important banks, need to have
RECEIVEDûSIGNIlCANTûEXPRESSIONSûOFûINTERESTû $EUTSCHEûISûUNDERûPRESSUREûTOûCOMPLETEû underwritten at least US$20bn of bonds
FROMûBANKSûPRIVATEûEQUITYûlRMSûANDûHEDGEû THEûPRIMEûBROKERAGEûDEALûQUICKLYûORûRISKû globally on average over the past three years
FUNDSûTHEûSOURCESûTOLDû2EUTERSû)TûMAYûSELLû LOSINGûCLIENTSû"ARCLAYSûISûLOOKINGûTOûTAKEûONûAû and must have held a licence to act as part of
THEûBOOKûINûSEPARATEûTRANCHESûRATHERûTHANûINû 53BNûPORTIONûOFûTHEû53BNûBUSINESSû the underwriting syndicate for corporate bonds
ITSûENTIRETYûTHEYûSAID SOURCESûTOLDû2EUTERSûLASTûMONTH for at least a year, among other conditions.
".0û0ARIBASûISûALREADYûCLOSEûTOûTAKINGû $EUTSCHEûPLANSûTOûCLOSEûTHEûPRIMEû
CONTROLûOFû$EUTSCHESûPRIMEûBUSINESSû!û BROKERAGEûDEALûINûTHEûlRSTûHALFûOFû3EPTEMBERû Barclays
PRELIMINARYûDEALûWASûSTRUCKûINû*ULYûWHICHûISû ANDûTOûBEGINûTHEûAUCTIONûOFûITSûEQUITYû Expansion into Australian equities
EXPECTEDûTOûBEûFORMALISEDûINûEARLYû3EPTEMBERû DERIVATIVESûBOOKûSHORTLYûAFTERWARDSûTHEû
!NYûEQUITYûDERIVATIVESûDEALûWOULDûBEûSEPARATEû SOURCESûSAIDû4HEûDEALSûAREûEXPECTEDûTOûTAKEû BARCLAYS has made a further push into Australia
FROMûTHATûTRANSACTIONûTHEûSOURCESûSAID MONTHSûTOûCOMPLETEûASûBUYERSûTAKEûOVERû after it was given the go-ahead to begin trading
".0û0ARIBASûANDû$EUTSCHEûDECLINEDûTOû INDIVIDUALûCLIENTûACCOUNTS shares Down Under by the local stock exchange
COMMENT MATT SCUFFHAM operator.

People
& Markets
Barclays Capital Asia has been admitted as following revelations stemming from the and the company whose bonds were traded.
a foreign ASX market participant, allowing country’s Royal Commission inquiry including The Asia Securities Industry and Financial
it to trade shares from its Hong Kong-based that it had doctored a supposedly independent Markets Association said in a paper last month
subsidiary without going through a local broker. report to the corporate regulator about charging that extending the settlement period to T+3
SK Lee, who runs prime services in the region, customers for advice they never received. would help attract more foreign institutional
will oversee the business. BNP Paribas will The revelations led to the resignation of investors by reducing settlement risk.
provide clearing services for Barclays’ trades. its chairman, chief executive and several The move by Beijing also comes after index
Last year, Barclays reopened an office in Sydney other board members, triggered a wave of provider FTSE Russell confirmed in April that
only two years after closing down its operations withdrawals from angry customers and saw the it was considering adding Chinese government
in Australia. Paul Early and Richard Satchwell company’s market capitalisation plummet by bonds to its flagship World Government Bond
were appointed joint heads. almost 70% since the inquiry began last year. index. FTSE Russell considers entry into the
In 2016, Barclays pulled back from cash equities Earlier this month, AMP raised A$650m index based on market accessibility factors such
in Asia, although it has retained its electronic through an institutional share placement to as the settlement and custody regime.
execution-only services as well as derivatives fund a turnaround plan that includes growing In April, Chinese government and policy bank
and prime brokerage. its banking and investment management arms bonds were added to the Bloomberg Barclays
by double-digits over the medium-term and Global Aggregate index, the country’s first
AMP potentially selling off its New Zealand wealth inclusion in a major fixed-income index.
One-notch downgrade by S&P management unit.
MSCI
S&P has downgraded the credit rating of AMP People's Bank of China A-share weighting in EM index lifted
one notch to BBB+ on the back of the Australian T+3 settlement for bonds introduced
financial services company’s plans to revive the MSCI increased the market capitalisation
sale of its life insurance business. China will extend the settlement period for weighting of China A-shares in its benchmark
AMP detailed a three-year transformation foreign institutional investors trading in the emerging markets index last week, the second
plan this month alongside plans to sell its life interbank bond market to T+3. of three steps outlined earlier this year that will
insurance unit to the UK’s Resolution Life for a In a joint statement issued on August 23, China eventually see mainland Chinese shares given a
reduced figure of A$3bn (US$2.03bn). Foreign Exchange Trade System, China Central 20% weighting.
A previous deal for a total consideration of Depository and Clearing and Shanghai Clearing The US index provider said in an update earlier
A$3.3bn collapsed last month after New House said that foreign investors would still this month that the market cap weighting for
Zealand’s central bank asked the UK company be able to opt for existing settlement cycles, the 260 existing A-shares would be increased
to ring-fence its assets held in New Zealand. namely T+0, T+1 and T+2. to 15% from 10%. It also said it would add eight
S&P said it had lowered AMP’s rating because The extended settlement period applies to spot new stocks to the index with an initial weighting
the sale of the company’s life insurance business bond transactions, pledge-style repo, outright of 15%.
would reduce revenue diversification and repo and bond lending, the joint statement said. MSCI plans to increase the weighting further in
increase its reliance upon its troubled wealth HSBC said last Monday said that it had November when it will reach 20%. It said back
and investment management operations as well completed the first T+3 trade in the interbank in March that upon completion there will be 253
as its small domestic banking franchise. bond market involving an overseas institutional large-cap and 168 mid-cap China A-shares in the
The rating agency said AMP’s outlook was investor. index, equivalent to 3.3% of the overall index.
negative due to potential further pressures A spokesperson for HSBC said that the trade The changes follow last year’s landmark
on the group’s capitalisation from possible was carried out via CIBM direct and also inclusion of A-shares in the emerging markets
further legal action and risks associated with involved Nomura and Sumitomo Mitsui Banking index, which at the time was interpreted as the
implementing a new strategy. Corporation. The spokesperson declined to biggest endorsement yet of Beijing’s efforts to
AMP has undergone a bruising 18 months provide further details on the size of the trade open up its capital markets to foreign investors.
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Interview
First State bets on Aussie loans

Australian institutions see opportunities in direct lending
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credit income at POOLûOFûNON LENDINGûSTRATEGYûANDûKEENûTOûBUILDûAû lNANCINGSûTYPICALLYûOFFERûTHEûRETURNSû
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ASûTHEûCOUNTRYSû WHICHûCURRENTLYûSPANSûNINEûINDUSTRIESû INSTANCEû(EALTHSCOPESû,"/ûLOANûPAYSû
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LENDINGûBOOKûTOûAROUNDû!BNnBNû and retail and &IRSTû3TATEû3UPERûTYPICALLYûLENDSûANû
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COUNTRY REPORT
Australia 16 China 17 Hong Kong 22 India 23 Indonesia 26 Japan 27 Malaysia 28
New Zealand 29 Philippines 29 Singapore 30 South Korea 31 Thailand 32
3.25-year FRN that priced inside 103bp area STRUCTURED FINANCE

guidance at three-month BBSW plus 101bp.
AUSTRALIA › ZIP BREAKS ABS GROUND
› LIBERTY PRINTS A$200M FLOATER
Financial technology company ZIP broke
DEBT CAPITAL MARKETS LIBERTY FINANCIAL,rated BBB– (S&P), priced new ground on August 23 with the first
a A$200m 3.5-year floating-rate note last Master Trust securitisation by a fintech
› PACIFIC NATIONAL TAPS BENCHMARK Thursday inside 265bp area guidance at issuer in the Asia Pacific region.
three-month BBSW plus 260bp. The enlarged A$500m (US$340m) debut
PACIFIC NATIONAL HOLDINGS, rated BBB–/BBB– Deutsche Bank, NAB and Westpac were joint ABS offering, ZIP MASTER TRUST SERIES 2019-
(S&P/Fitch), has mandated BNP Paribas, CBA, lead managers for the transaction, which had 1, will refinance the funding of existing
Credit Suisse, MUFG and NAB for a potential an indicative minimum issue size of A$100m. receivables within Zip’s portfolio.
10-year benchmark Australian dollar, The speciality finance group, one of Zip offers point-of-sale credit and digital
sterling or US dollar Reg S bond offering the lowest rated regular visitors to the payment services to the retail, education,
off the rail freight operator’s A$3bn Australian bond market, issued a A$200m health and travel industries.
(US$1.04bn) MTN programme. three-year FRN on February 26, priced at Arranger and sole lead manager NAB
An Australian, Asian and UK roadshow three-month BBSW plus 325bp. said all the notes were significantly
starts on September 2 following on from It previously sold a A$150m 5.1% three- oversubscribed.
investor updates in London, Geneva and year MTN at asset swaps plus 300bp The A$260m Class A1 notes priced at the
Zurich in March that were arranged by in March 2018 that was subsequently tight end of one-month BBSW plus 180bp–
Credit Suisse. increased to A$225m. 200bp guidance.
Pacific National Holdings has an In May 2017 Liberty had to ramp up The A$105m Class A2, A$50m Class B,
outstanding US$600m 4.625% September pricing by 50bp, to asset swaps plus 325bp, A$15m Class C and A$20m Class D notes
2020 Eurobond. for a A$200m three-year MTN, following a matched respective guidance of one-month
one-notch S&P ratings downgrade to BBB– BBSW plus 240bp, 365bp, 540bp and 790bp.
› ORIGIN TARGETS REPLACEMENT EMTN just after announcing the deal. The A$25m Class E notes priced at the
tight end of one-month BBSW plus 950bp–
ORIGIN ENERGY,rated Baa2/BBB (Moody’s/S&P), › SUNCORP GOES SHORT 1000bp price talk.
has mandated BNP Paribas, Citigroup and The transaction was completed by
Goldman Sachs to arrange investor meetings SUNCORP-METWAY (A1/A+/A+) last Thursday A$25m of retained Class F notes.
and calls in Europe beginning September 2 raised A$350m from a one-year floating- All the notes have 2.0-year soft bullet
for a potential 10 to 12-year euro or sterling rate note offering priced inside 43bp area maturities while the Class A1 to E notes
Reg S bond offering under its EMTN guidance at three-month BBSW plus 40bp. have respective credit support of 48%, 27%,
Programme. ANZ and CBA were joint bookrunners 17%, 14%, 10% and 5%.
The integrated Australian energy on the first domestic one-year sale since Zip is the second public master-trust
company has an outstanding €500m higher-rated Royal Bank of Canada, Sydney issuer in Australia after Latitude Finance
(US$555m) 2.875% Eurobond set to mature branch, rated Aa2/AA– (Moody’s/S&P), which printed the inaugural trade in March
on October 11. issued a A$625m FRN on July 25 which 2017, a A$1bn credit card ABS, Credit Card
priced 28bp wide of three-month BBSW. Loan Note Trust Series 2017-1.
› BEN BANK FIVE-YEAR NETS A$500M Latitude returned in August 2017 for a
› MACQUARIE ADDS A$115M A$500m issue through Credit Card Loan
BENDIGO AND ADELAIDE BANK (A3/BBB+/A–) gained Note Trust Series 2017-2 before another
limited traction for a dual-tranche five-year MACQUARIE BANK (A2/A/A) tapped its June 21 A$500m sale this March via Latitude
senior unsecured note offering via joint 2022 senior unsecured floating-rate note for Australia Credit Card Loan Note Trust,
lead managers ANZ, NAB, UBS and Westpac. A$115m last Thursday, bringing the total Series 2018-1.
The regional lender raised A$500m last size to A$1.265bn. Latitude is now planning an indicative
Wednesday, below the A$750m maximum The reopening, via sole lead manager A$500m Credit Card Master Trust ABS in
indicative issue size at margins at the wide Westpac, priced at 100.146 for a reoffer Reg S format.
end of guidance. spread of three-month BBSW plus 70bp. Master trusts are a good fit for ABS that
A A$300m floating-rate note came at are revolving in nature. They tend to have
three-month BBSW plus 97bp versus › RENTENBANK TAPS FOR A$200M soft bullet maturities rather than weighted-
95bp–97bp price talk, while a A$200m 1.7% average lives, which attracts domestic and
fixed-rate note priced at 99.869 for a yield German agency RENTENBANK (Aaa/AAA/AAA) foreign investors only willing or able to
of 1.7275%, 97bp wide of asset swaps. tapped its 3.2% May 25 2029 Kangaroo bond purchase the former.
Pricing was 20bp wider than the 77bp for A$200m last Tuesday to increase the
margin paid by major bank ANZ (Aa3/AA–/ issue size to A$450m. › LATITUDE CONCLUDES REG S ROADSHOW
AA–) for a A$1.8bn dual-tranche five-year JP Morgan was sole lead manager for the
issue on August 23. reopening, which priced at 116.411 to yield will complete
LATITUDE FINANCE AUSTRALIA
At its previous senior unsecured sale in 1.39%, 44bp wide of asset swaps and 48.5bp investor meetings in Mebourne on
October 2018 BEN Bank issued a A$500m over the April 2029 ACGB. September 2 for an indicative A$500m

COUNTRY REPORT CHINA
Reg S securitisation under its Credit Card by debt and escrowed new ordinary State-owned Assets Supervision and
Master Trust programme, LATITUDE AUSTRALIA shares to be issued to the vendors at the Administration Commission. Its business
CREDIT CARD LOAN NOTE TRUST, SERIES 2019-1. entitlement offer price at completion of the includes urban drainage pipelines,
Meetings have already been held in acquisition. engineering construction, water treatment
Sydney and London for Latitude’s inaugural Macquarie is the sole underwriter, and financial services.
ABS offering in Reg S format. bookrunner and lead manager.
Bank of America Merrill Lynch is arranger › CISI SELLS SHORT-TERM NOTES
and joint lead manager with Deutsche Bank, › PERENTI GLOBAL BLOCK FETCHES A$90M
NAB and Societe Generale. CHINA INDUSTRIAL SECURITIES INTERNATIONAL
Latitude Finance issued the first public Gresham Private Equity has raised A$90.2m FINANCIAL GROUP last Monday priced US$200m
master-trust securitisation in Australia from a block in Australia’s PERENTI GLOBAL. 364-day notes at par to yield 5%, inside
in March 2017, a A$1bn credit card ABS, It sold 48m shares at A$1.88 each, equal initial guidance of 5.25% area.
Credit Card Loan Note Trust Series 2017-1. to the August 29 pre-deal close. Wholly owned subsidiary China
It returned in August 2017 for a A$500m Perenti is a Perth-based mining Industrial Securities International
issue through Credit Card Loan Note Trust contractor formerly known as Ausdrill. Brokerage will guarantee the Reg S
Series 2017-2 before another A$500m sale Following the transaction, Gresham, securities, which mature on August 28
in March 2018 via Latitude Australia Credit previously Perenti’s second largest 2020.
Card Loan Note Trust, Series 2018-1. shareholder, no longer has an interest in China Industrial Securities International,
Credit-card ABS are typically sold out the company. China Minsheng Banking Corp Hong Kong
of master trusts, which purchase eligible Perenti Global shares closed up 6.1% at branch and Zhongtai International were joint
receivables from the sellers on a revolving A$1.995 last Friday. The stock is up 68% global coordinators. They were also joint
basis. year to date. The company, which acquired bookrunners with Industrial Bank Hong Kong
They tend to have soft bullet maturities underground mining contractor Barminco branch, Orient Securities (Hong Kong) and China
rather than weighted-average lives, which last year, posted strong annual results last Everbright Securities (HK).
attracts domestic and foreign investors only Thursday. The Hong Kong-headquartered financial
willing or able to purchase the former. JP Morgan is the sole manager on the deal. services provider, which has China’s
Industrial Securities as its controlling
› MYSTATE READIES A$400M RMBS shareholder, plans to use the proceeds for
general corporate purposes.
Tasmania’s MYSTATE BANK has mandated
Macquarie, NAB and Westpac to arrange CHINA › TIMES CHINA TAPS BONDS
investor meetings in Sydney on September
2 and 3 for an indicative A$400m prime Property developer TIMES CHINA HOLDINGS last
RMBS from the issuer’s ConQuest DEBT CAPITAL MARKETS Wednesday tapped its US$400m 6.75% senior
programme. notes due July 16 2023 for a further US$100m.
MyState Bank previously issued a no- › CHANGCHUN URBAN PLANS BOND The bonds are rated B1/B+/BB–.
grow A$400m prime RMBS in March last Haitong International, CCB International and
year, ConQuest 2018-1 Trust. CHANGCHUN URBAN DEVELOPMENT & INVESTMENT China Industrial Securities International led the
HOLDINGS (GROUP), rated Baa1/BBB+ (Moody’s/ reopening, which priced at par and will
Fitch), has mandated banks to arrange settle on September 4.
EQUITY CAPITAL MARKETS investor meetings in Hong Kong from Proceeds will be used to refinance debt
September 3. and for general corporate purposes.
› INTEGRAL COMPLETES INSTO RIGHTS Industrial Bank Hong Kong branch, BoCom
International, Guotai Junan International, › ZHANGZHOU JIULONGJIANG HIRES
Australian radiology services company OCBC and CMBC Capital are joint global
INTEGRAL DIAGNOSTICS has raised A$41m coordinators. They are also joint ZHANGZHOU JIULONGJIANG GROUP has mandated
from the institutional portion of a A$72m bookrunners with ICBC (Asia), ABC banks to arrange investor meetings in
(US$48.5m) entitlement offer to part fund International, Bank of China, CCB International, Singapore and Hong Kong. Meetings began
the acquisition of Imaging Queensland. CEB International, Standard Chartered, DBS, on August 30 and run until September 2.
The 1–for–5.91 rights offer had a 93% Haitong International, China Industrial Securities Bank of China and Industrial Bank, Hong
take up. It was strongly supported by International and TF International. Changchun Kong branch are joint global coordinators.
eligible institutional shareholders. The Securities is structuring and finance adviser. They are also joint bookrunners with
shortfall was oversubscribed by both A Reg S offering of US dollar senior CCB International, CEB International, China
eligible institutional shareholders and new unsecured bonds may follow, subject to Citic Bank International, China Industrial
institutional investors. market conditions. Securities International, CICC, China Minsheng
The company is issuing 26.6m shares, Wholly owned subsidiary Chang Banking Corp, Hong Kong branch, Guotai Junan
or 17% of the existing shares on issue, at Development International will issue the International, Haitong International, HSBC and
A$2.71 each, representing a discount of 14% bonds with a guarantee from the company. Huatai Financial Holdings (Hong Kong).
to the pre-deal close of A$3.15 on August The proposed bonds are expected to be The proposed US dollar bonds are
23. rated Baa1 by Moody’s. expected to be rated BB+ by Fitch, in line
The retail portion of about A$31m will Changchun Urban Development with the issuer.
run from September 2–20. & Investment Holdings (Group) is an The pharmaceutical and machinery
Proceeds will be used to help fund the investment and financing vehicle in manufacturer is wholly owned by
acquisition of Imaging Queensland for Changchun City in Jilin province and Zhangzhou State-owned Assets Supervision
A$104m, with the remainder to be funded is wholly owned by the Changchun and Administration Commission.

to non-bank institutions and ease liquidity
BoCom Leasing goes tighter concerns.

China Chengxin has assigned a AAA
rating to both the issuer and the bonds.
Bonds Chinese leasing unit prints inside curve using new guarantee structure
› LGFVS FACING BIG MATURITIES - S&P
BANK OF COMMUNICATIONS FINANCIAL LEASING (A2/ Books were over US$1.8bn from 53
A–/A) drew a solid order book last Thursday accounts for the floater, including US$1.1bn Local government financing vehicles in
for US$600m of five-year senior unsecured of demand from the leads. The geographical China’s smaller cities are facing heavy debt
bonds in two tranches, despite tightening distribution matched the fixed-rate tranche, repayment pressure in the next three years,
pricing substantially during bookbuilding. while by investor type banks took 64%, fund according to a report by S&P.
A US$200m 2.625% fixed-rate tranche managers and others 34%, and private Chinese LGFVs have around Rmb3.8trn of
priced at 99.374 to yield 2.76%, equivalent to banks 2%. onshore bonds due to mature in 2019-2021,
Treasuries plus 135bp, inside initial guidance Wholly owned subsidiary BoCom Leasing according to the rating agency.
of 165bp area. Management Hong Kong will issue the Large banks may be willing to offer a hand
A US$400m floating-rate tranche priced at bonds off a US$3bn MTN programme with to help LGFVs from provincial governments
par with a coupon of three-month Libor plus the benefit of a keepwell deed and asset and top-tier cities refinance their debt, but
117.5bp, inside initial guidance of 150bp area. purchase deed from BoCom Financial lower-tier borrowers – for instance, below the
Nomura’s sales and trading desk had Leasing, which will be required to purchase prefectural city level – face the most risk, as
put fair value for the fixed-rate tranche at assets from the issuer if it runs into difficulties they have limited access to the capital market
Treasuries plus 145bp and for the floater at repaying the bonds. and bank facilities, S&P said.
Libor plus 125bp–130bp. However, it noted This is a new offshore bond guarantee Some banks have been in talks with
that Chinese leasing subsidiaries offered an structure for the group. Previously, offshore LGFVs in Shanxi, Jiangsu, Yunnan, Hunan
attractive pick-up over their parent banks’ units issued with either a guarantee from and Guizhou provinces, where S&P
senior bonds. BoCom Financial Leasing or a keepwell from estimates that off-balance-sheet provincial
“Anything that’s investment grade and pays BoCom Leasing International. government debt over GDP reached
a bit of a pick-up is going to do well in this The Reg S benchmark bonds have 169.5%, 345.7%, 230.1%, 239.2% and 291.6%,
market,” said a banker away from the deal. expected ratings of A3/A (Moody’s/Fitch). respectively, by the end of 2017.
Books were over US$900m from 24 Bank of Communications, BoCom While debt restructuring can reduce
accounts for the fixed-rate tranche, including International, Bank of China, DBS, HSBC, some pressure for struggling borrowers,
US$660m of demand from the leads. Asia Mizuho and Standard Chartered were joint S&P analyst Gloria Lu said it could take 10
took 99% of the Reg S bonds and Europe 1%. bookrunners. years or more for some borrowers to bring
By investor type, banks booked 87%, fund The bonds were around 2bp tighter in debts to a sustainable level.
managers, insurers and others 12%, and secondary trading. Ultimately, repayment of most debt will
private banks 1%. DANIEL STANTON hinge on improving the fiscal income of local
and regional governments, such as through
land sales and higher taxation, Lu said.
S&P also warned that widespread defaults
› AGRICULTURAL BANK TO ISSUE PERPS up to Rmb1bn from 270-day short term or bankruptcies among high-profile LGFVs
notes, with initial guidance of 4.2%–4.8%, would destabilise the financial system, if debt-
AGRICULTURAL BANK OF CHINA plans to issue according to market sources. strapped local governments are unable to bail
Rmb35bn (US$4.88bn) of perpetual bonds to The issuer is yet to make an official out distressed LGFVs in a timely manner.
replenish its capital, completing a Rmb120bn announcement on the plan. The state- “For the next 12-18 months, LGFVs still
issuance plan approved by financial owned investment vehicle in southwest have systemic importance to the economy
regulators, according to a public filing. China is fully owned by the Guangxi and the financial system. Regulators are
Bookbuilding starts on September 3 and State-owned Assets Supervision and likely to be assessing the implications,
the settlement date is on September 5. Administration Commission. practicality, and timing of letting go of
Citic Securities is the lead underwriter The company has outstanding debt of some insolvent LGFVs,” said Lu.
and lead bookrunner, while ICBC, CICC, Rmb19.6bn, according to Refinitiv data.
Guotai Junan, China Securities, Bank of China › UOB CHINA PLANS TIER 2 BONDS
International, Everbright Securities, Huatai › HAITONG SECURITIES ISSUES
Securities, Haitong Securities, China Merchants UNITED OVERSEAS BANK CHINA is planning to raise
Securities, Shenwan Hongyuan Securities and GF HAITONG SECURITIESissued Rmb7bn of three- up to Rmb2bn from Tier 2 bonds to boost
Securities are joint underwriters. year financial bonds at 3.39% last Thursday, its capital, according to market sources.
China Chengxin has assigned a AAA near the tighter end of initial guidance of Books for the first tranche of the bonds
rating to the bonds and the issuer. 3%–4%, according to a public filing. are expected to open next month, subject
The bank issued Rmb85bn perpetual The bonds drew orders valued at to market conditions, with initial guidance
bonds at 4.39% last month after deciding Rmb7.84bn from eight qualified investors. set at 150bp above China Development
not to raise the full Rmb120bn in one go. ICBC was the lead underwriter and lead Bank’s curve.
The bonds were 2.5 times subscribed. bookrunner, while Agricultural Bank of China, China Chengxin has assigned a AAA rating
Bank of China, China Construction Bank, Bank of to the issuer and a AA+ rating to the bonds.
› GUANGXI FINANCIAL INVEST EYES NOTES Communications, China Merchants Bank, Postal The bank has yet to disclose information
Savings Bank of China and Shanghai Pudong about the plan.
GUANGXI FINANCIAL INVESTMENT GROUP, rated AA+ Bank were joint underwriters. A spokeswoman with the bank declined
by Shanghai Brilliance, is planning to raise Proceeds will be used to provide support to comment.

In March, corporate parent United or investment purposes, is also Tianjin was on August 19.
Overseas Bank issued a debut Rmb2bn Rail’s first euro-denominated assignable China Construction Bank (Asia) was the
three-year Panda bond at 3.49%. The loan, the press release said. Investors mandated lead arranger and bookrunner
first Panda offering from a Singaporean primarily comprised German banks, savings and the facility and security agent of the
issuer was 2.7 times oversubscribed, banks and insurance companies looking for financing, which paid a top-level all-in
receiving orders from asset managers and a buy-and-hold investment. pricing of 390bp based on an interest
commercial banks in Asia. “This transaction opens a new foreign margin of 310bp over Libor or Hibor and
In April 2018, United Overseas Bank currency funding source for Chinese an average life of 3.175 years.
China sold Rmb1bn three-year bonds at sponsors in long-term asset sectors like CIFI Holdings is rated B1/BB/BB.
4.93% in the onshore market. infrastructure and energy,” said Hunter For full allocations, see www.ifrasia.com.
Xiong, head of the Belt & Road Initiative
› YUNNAN LGFV ISSUES NOTES office at Deutsche Bank. “We expect CORRECTION
Schuldschein loans to become a valuable In the story “Quartet funds Global Switch
YUNNAN METROPOLITAN CONSTRUCTION INVESTMENT alternative international financing option LBO loan” published in our August 24
GROUP issued Rmb1bn three-year medium- for more Chinese sponsors, particularly for edition, we incorrectly stated that Bank
term notes at 5.96% last Friday, near the Belt & Road Initiative businesses.” of America Merrill Lynch is a bookrunner
upper end of initial guidance of 5%–6%, The Tianjin-based borrower offers urban for the planned Hong Kong IPO of Global
according to a public filing. metro and railway construction, operation, Switch. This is not the case.
The issue did not attract strong demand and maintenance services.
because of credit quality concerns. It drew
final orders from seven qualified investors, › MINSHENG FL IN THE MARKET EQUITY CAPITAL MARKETS
said a banker close to the deal.
The local government financing vehicle Minsheng Financial Leasing is seeking a › BANKS PITCH FOR PIPELINE COMPANY
plans to use the proceeds to repay debts. loan of up to US$125m for refinancing
ICBC was the lead underwriter and lead purposes. Banks are pitching for roles on the
bookrunner, while China Minsheng Bank was Emirates NBD is the sole mandated restructuring of a Chinese oil and gas
the joint underwriter. lead arranger and bookrunner of the pipeline company which will house the
Lianhe Credit has assigned a AAA rating transaction, which has a base size of pipeline assets owned by China’s energy
to both the issuer and the notes. US$75m and carries a greenshoe option of giants, according to people with knowledge
up to US$50m. of the matter.
› ZHENJIANG LGFV EYES NOTES The loan offers an interest margin of A small group of banks have been invited
120bp over Libor and has an average life of to pitch to be financial advisers on the
ZHENJIANG CITY CONSTRUCTION INDUSTRY GROUP one year. restructuring, said the people.
plans to issue up to Rmb1bn three-year Banks have been invited to join with Bankers are hoping a mandate would
medium-term notes, part of a Rmb4bn tickets of US$30m or more for the MLA help them secure a role in the pipeline
programme the company registered with title and a top-level all-in pricing of 170bp, company’s future IPO. Market participants
financial regulators, according to a public based on a 50bp fee; commitments of have estimated that the valuation of the
filing. US$20m–$29m for the lead arranger title company, which is likely to be called CHINA
Bookbuilding starts on September 2 and and an all-in pricing of 165bp, based on a PIPELINE CORP, would be about Rmb300bn–
the settlement date is on September 4. 45bp fee; and tickets of US$10m–$19m for Rmb500bn (US$42bn–$70bn).
China Construction Bank is the lead the arranger title and an all-in pricing of Given the complexity of the
underwriter and lead bookrunner, while 160bp, based on a 40bp fee. restructuring, bankers said it is hard to
Industrial Bank is the joint underwriter on Minsheng Financial Leasing is the estimate when the IPO will happen.
the deal. guarantor, while its wholly owned “It will take them at least a year or so
Shanghai Brilliance assigned a AA+ rating subsidiary MINSHENG HONG KONG INTERNATIONAL to complete the restructuring, so it’s hard
to both the issuer and the bonds. LEASING is the borrower. to say when the IPO will come,” said one
The LGFV in Jiangsu province plans In September 2018, the borrower and of the bankers. “We expect the size of the
to use the proceeds to repay debts of guarantor obtained a US$510m three-year IPO to be bigger than that of China Tower
subsidiaries. loan from 14 lenders. Corp.”
That three-year facility, arranged by China Tower raised HK$58.8bn
Credit Suisse and E. Sun Commercial Bank, (US$7.49bn) from a Hong Kong IPO in
SYNDICATED LOANS offered a top-level all-in pricing of 170bp August last year.
via an interest margin of 150bp over In March, the National Development
› TIANJIN RAIL COMPLETES SCHULDSCHEIN Libor. China Minsheng Banking Corp was a and Reform Commission announced a plan
coordinator but did not lend. to create a national oil and gas pipeline
Chinese rail infrastructure operator company, the first public statement on a
TIANJIN RAIL TRANSIT GROUP has raised €200m › CIFI HOLDINGS LOAN ATTRACTS FOUR reform that had been anticipated by the
(US$222m) from a 10-year Schuldschein, energy industry.
becoming the first Chinese borrower to Shanghai-headquartered and Hong Kong- The company is expected to house the
use the private placement format to tap listed property developer CIFI HOLDINGS pipeline assets owned by Sinopec, China
Germany’s domestic loan market, according (GROUP) has closed a US$364m-equivalent National Petroleum Corp and China
to a press release from sole underwriter 3.5-year term loan after four banks joined National Offshore Oil Corp, helping
Deutsche Bank. in syndication. them to separate the cost of pipeline
The loan, which is governed by German The loan is split into US$160m and transportation from the sale of oil and
law and is used domestically for financing HK$1.598bn (US$204m) tranches. Signing gas.

Earlier expectations were that the US$100m–$200m as early as September, revenue of Rmb1.26bn.
pipeline company would be formed around according to people close to the deal. Huatai United Securities is the sponsor.
the middle of the year. The current plan is to pre-market in
By the end of 2018, China had about September but the final listing timetable › BPS CLEARS IPO HEARING
140,000 km of oil and gas pipelines, of will depend on market conditions, said one
which 65% belonged to CNPC, 15% to of the people. SHANGHAI BRIGHT POWER SEMICONDUCTOR
Sinopec and the rest to CNOOC. CICC and Credit Suisse are leading the has cleared a hearing at the Shanghai
transaction. Stock Exchange for a tech board IPO of
› HENLIUS PRE-MARKETS IPO Founded in 2010, the Beijing-based Rmb710m.
company has published more than 100,000 The SSE had cancelled a previous hearing
Fosun-backed SHANGHAI HENLIUS BIOTECH started articles, according to its website. set for July 23 because the company was
pre-marketing last Monday for a Hong Kong being sued.
IPO of about US$500m. › PHARMARON FILES FOR HK IPO The issuer's updated IPO filing said it
The company is tentatively planning to was being sued by Silergy Semiconductor
open books on September 9 if feedback Shenzhen-listed medical contract research Technology (Hangzhou) for patent
from investors is positive, said people close company PHARMARON BEIJING has filed to the infringement and that it received a
to the deal. Stock Exchange of Hong Kong for an IPO. subpoena from the Hangzhou Intermediate
Henlius, a subsidiary of Shanghai Fosun Pharmaron announced earlier this People’s Court on July 22.
Pharmaceutical and Fosun International, month it plans to offer a maximum 15% of The stock exchange did not disclose any
has launched one drug commercially and the enlarged share capital in the H-share information on the lawsuit.
has more than 20 biologics drug candidates offer. Bright Power Semiconductor, a power
in its pipeline, focusing on oncology and The company’s current market management driver chip manufacturer,
autoimmune diseases. capitalisation is Rmb27.7bn. plans to offer 15.4m A-shares, or 25% of the
Founded in 2010, the biopharmaceutical Pharmaron provides laboratory services, enlarged capital.
company posted a loss of Rmb158m in the clinical development services and GF Securities is the sponsor.
first three months of 2019 from a loss of chemistry, manufacturing and controls
Rmb67.8m in the same period in 2018. It services, with customers ranging from large › CGN POWER'S A-SHARES SOAR ON DEBUT
reported an annual loss of Rmb505m in multinational pharmaceutical companies
2018. to venture-backed start-ups and biotech CGN POWER made a stellar 44% gain on its
Bank of America Merrill Lynch, CICC, companies. debut on the Shenzhen Stock Exchange
Citigroup, CMB International and Fosun Hani It posted a profit of Rmb157m for the after it completed the largest A-share IPO in
are the sponsors. UBS is the financial six months ended June 30, up 30% from more than a year.
adviser. Rmb120m in the same period last year. It The stock closed at Rmb3.59 on its first
had an annual profit of Rmb336m in 2018. trading day last Monday compared to the
› BANK OF GUIZHOU ARRIVES CLSA, Goldman Sachs and Orient Securities IPO price of Rmb2.49, after the float raised
are the joint sponsors. Rmb12.6bn. The shares rose further over
BANK OF GUIZHOU plans to start pre-marketing the week to close at Rmb4.79 last Thursday,
a Hong Kong IPO of up to US$1bn as early › BLOOMAGE BIOTECH PASSES HEARING 92% over the IPO price.
as this week, said people close to the deal. The performance was in contrast to CGN
The lender sought listing approval from BLOOMAGE BIOTECHNOLOGY has cleared a hearing Power’s H-shares in Hong Kong, which
the Stock Exchange of Hong Kong last for a proposed Rmb3.15bn Shanghai Star were down 3.3% at HK$2.06 (Rmb1.87) on
Thursday, said the people. board IPO. August 26 amid a sell-off in the broader
Bank of Guizhou was formed in 2012 The company delisted from the Hong market on a further escalation of the US-
through the merger of three commercial Kong bourse in November 2017. China trade war. The Hang Seng Index
lenders in China’s south-western Guizhou The deal is set to be the third largest was down more than 3% at one point,
province. proposed float on the new tech board following a 2.4% drop in the US market on
It posted a net profit of Rmb957.4m for behind that of China Railway Signal and August 23.
the first quarter of 2019 on net interest Communication (Rmb10.5bn) and Chinese China’s largest nuclear power producer
income of Rmb2.34bn. Its net profit for full- cloud service provider Ucloud Technology, sold half of the 5.05bn A-shares in the IPO
year 2018 was Rmb2.87bn. which plans to raise Rmb4.7bn. CRSC listed to eight strategic investors and the rest to
Its total assets stood at Rmb362bn as of on the new board among the first batch of retail and institutional investors.
March. companies in July. The company plans to use Rmb11bn
Guizhou Provincial Finance Bureau is Bloomage, which produces hyaluronic of the proceeds to build four nuclear
the largest shareholder of Bank of Guizhou acid used in medical and skin care power units in the provinces of Guangdong
with a 14.3% stake. Spirits maker China products, is offering 49.6m A-shares, or not and Guangxi and the rest for working
Kweichow Moutai Winery is the second less than 10% of its enlarged capital. There capital.
largest with 14.1%. is a 15% greenshoe. CGN Power ran 22 nuclear power units
ABC International, CCB International and Proceeds will be used to renovate an in China as of last December, 12 of which
CLSA are the sponsors. R&D centre, build a new production were located in Guangdong province.
centre in Tianjin province, and expand the CICC was the sponsor and joint
› 36KR PLANS US IPO company’s headquarters in Jinan, Shandong bookrunner with China Development
province. Bank Securities, while China Securities
36KR, an information service that tracks According to its pre-prospectus, and Minsheng Securities. Guotai Junan and
start-up fundraisings in China, is planning Bloomage’s net profit was Rmb424m in BOC International (China) are the junior
to start pre-marketing a US IPO of 2018, a 91% increase year on year, on bookrunners.

› CSRC APPROVES GUOSEN PLACEMENT › KEBODA TECH WINS IPO FINAL APPROVAL The company aims to sell 410m shares
or 20% of the existing capital to up to 10
Shenzhen-listed GUOSEN SECURITIES has KEBODA TECHNOLOGY has won final approval investors who will face lock-up period of 12
received final written approval from the from the China Securities Regulatory to 36 months.
China Securities Regulatory Commission Commission for a Rmb1.09bn Shanghai IPO. Hubei Changjiang Tianma Private
for a proposed Rmb15bn private The company conducted price Placement Investment Fund Partnership,
placement. consultation on August 30 and will owned by Wuhan city’s State-owned
The brokerage plans to sell 1.64bn announce the price on September 2. Books Assets Supervision and Administration
shares to up to 10 investors. Shenzhen will be open for a day on September 4. Commission, has committed to buy 81.9m
Investment Holdings, Yunnan Hehe The automotive lighting control system shares or up to 20% of the placement.
(Group) and China Resources SZITIC manufacturer plans to offer up to 40.1m Hong Kong-listed AVIC International,
Trust have committed to buy 33.5%, A-shares or 10% of its enlarged capital. the company’s biggest shareholder, owns
16.8% and 1% of the placement, The company will use the proceeds to a 33.2% stake through direct and indirect
respectively. They will face lock-up expand production, build an R&D centre, shareholdings.
period of 12-60 months. and replenish working capital. Proceeds will be used for the production
Shenzhen Investment Holdings, CICC is the sponsor. of sixth-generation LTPS AMOLED displays.
owned by Shenzhen city’s State-owned
Assets Supervision and Administration › MUYUAN FOODS COMPLETES PLACEMENT › ZCM CANCELS PRIVATE PLACEMENT
Commission, is the biggest shareholder in
the company with a 33.5% stake. Shenzhen-listed MUYUAN FOODS has raised Hong Kong and Shanghai-listed ZHENGZHOU
Proceeds will be used to replenish capital Rmb5bn from a private placement of 76.7m COAL MINING MACHINERY GROUP has decided
and working capital and repay debt. shares at Rmb65.22 per share. to cancel a proposed Rmb1.8bn private
The company’s A-shares closed at The issue price represents a 19% discount to placement.
Rmb13.12 on August 29, down 0.9%. the closing price of Rmb80.31 on August 29. Reasons include changes in the
China Galaxy Securities is the sponsor and The shares were sold to Henan Hongbao company's situation, the industry's
joint bookrunner with GF Securities and Group (7.67m), Beixin Ruifeng Fund environment and the capital markets,
Hongta Securities. Management (61.3m) and Sinosafe Asset according to the company.
Management (7.67m). The buyers face a 12- It planned to sell 346m shares, or 20% of
› CSRC TO REVIEW ZSPC’S PLACEMENT month lock-up period. the existing capital, to up to 10 investors.
Proceeds will be used to expand the Proceeds were intended for the
The China Securities Regulatory company’s pig raising capacity and to repay construction of an intelligent coal
Commission has agreed to review a debts. production base, two R&D centres and a
proposed Rmb3bn A-share private China Merchants Securities is the sponsor. new production base in Anhui province.
placement from Shenzhen-listed ZHEJIANG The proposal had been approved by
SATELLITE PETRO CHEMICAL. › SW SEC EYES PRIVATE PLACEMENT shareholders and Henan provincial
The acrylic acid and acrylates State-owned Assets Supervision and
manufacturer will sell up to 213m A-shares, Shanghai-listed SOUTHWEST SECURITIES plans to Administration Commission but had
or 20% of its existing capital, to up to 10 raise Rmb7bn from a private placement. not been filed to the China Securities
investors. The company will sell 1bn shares Regulatory Commission yet.
Proceeds will be used for three to four investors – Chongqing Yufu The company’s A-shares closed at
polyethylene projects. Assets Management Group, Chongqing Rmb5.91 on August 29, down 4.7%, while
The issuer said the placement would help City Construction Investment (Group), its H-shares dropped 5.7% to HK$3.65.
reduce its debt-to-equity ratio from 44.2% Chongqing Real Estate Group and
to 36.8%. Chongqing Development Investment. They › ZHESHANG BANK CLEARS IPO HEARING
Guosen Securities is the sponsor. have committed to buy 330m, 350m, 120m
and 200m shares for up to Rmb2.31bn, Hong Kong-listed CHINA ZHESHANG BANK has
› JIUMAOJIU PLANS HK IPO Rmb2.45bn, Rmb840m and Rmb1.4bn, cleared a China Securities Regulatory
respectively. Commission hearing for a proposed
JIUMAOJIU INTERNATIONAL, a Chinese restaurant Chongqing Yufu Assets Management Shanghai IPO.
chain, plans to raise about US$200m from a Group and Chongqing City Construction The Chinese lender said in its
Hong Kong IPO this year, said people close Investment (Group) currently hold respective preliminary prospectus last year that it
to the deal. 28.89% and 6.01% stakes in the company. planned to offer 4.49bn A-shares, or up to
The company filed a listing application Proceeds will be used to increase the 20% of its enlarged capital.
last Wednesday, with CMB International as capital of two subsidiaries, fund the main Based on a net asset value per share of
the sole sponsor. business, expand physical outlets and for IT Rmb4.59 in 2018, the lender could raise
Jiumaojiu operates 269 restaurants services. Rmb20.6bn from the IPO.
and manages 41 franchised restaurants, The private placement proposal still The bank’s H-shares closed at HK$4.30
covering 31 cities in eleven provinces and needs approval from shareholders and the (Rmb3.92) on August 30, 15% below the
four municipalities in the PRC. It has five Chinese regulators. 2018 NAV. The stock changed hands at
brands – Jiu Mao Jiu, Tai Er, Double Eggs, HK$4.29 in the afternoon of last Friday,
Cooking Spicy Kebab and Uncle Chef. › TM EYES PRIVATE PLACEMENT down 0.2%.
The company posted a net profit of The proceeds will be used to replenish
Rmb102m for the first half of 2019, up 88% Shenzhen-listed TIANMA MICROELECTRONICS core Tier 1 capital.
over the same period of 2018. Its full-year plans to raise Rmb7.3bn from a proposed Citic Securities is the sponsor and joint
profit in 2018 was Rmb74m. private placement. bookrunner with CICC.

› ZIJIN MINING CLEARS HEARING Rmb2.72bn on revenue of Rmb69.1bn in transaction, which includes a US$500m
2018. facility that can be further split into a
ZIJIN MINING’s proposed Rmb8bn A-share The company is a subsidiary of New Hope three-year tranche A and a five-year tranche
placement has been approved by the China Group, which floated New Hope Dairy B. There is a greenshoe option of up to
Securities Regulatory Commission at a on the Shenzhen Stock Exchange to raise US$300m.
hearing. Rmb465m in January. The deal pays interest margins of 115bp
The Hong Kong and Shanghai-listed China Merchants Securities is the sponsor. and 145bp over Libor for the three and five-
company plans to sell 3.4bn new A-shares, The two CB offerings still need final year tranches, respectively.
or not more than 15% of its enlarged written approval from the CSRC. Banks have been invited to join either
capital, to finance the purchase of a 100% or both tranches, with commitments of
stake in Toronto-listed mining company US$50m or above for the lead arranger title,
Nevsun Resources for Rmb9.36bn. Nevsun tickets of US$30m–$49m for the arranger
will delist when the transition is completed. title, and commitments of US$10m–$29m
According to an announcement from HONG KONG for the manager title.
Zijin Mining, Minxi Xinghang State-owned Lead arrangers will receive top-level all-in
Assets Investment & Operation Co, which pricing of 135bp and 160bp, respectively,
currently holds 25.88% of the total issued DEBT CAPITAL MARKETS for tranche A and tranche B, based on
shares of the company, intends to purchase upfront fees of 60bp and 75bp; arrangers
up to 1.2bn A-shares in the placement. › HYSAN SLIDES IN SECONDARY earn all-ins of 132bp and 157bp, based
Minxi Xinghang’s holding in Zijin will rise on upfront fees of 51bp and 60bp, for the
to 26.99% if it purchases 1.2bn A-shares. Hong Kong property company HYSAN respective tranches; while managers earn
The placement price will not be less than DEVELOPMENT (A3/BBB+/A–) last Wednesday all-ins of 130bp and 155bp, based on fees of
the average trading price of the A-shares sold US$500m 2.82% 10-year senior 45bp and 50bp, respectively.
for the 20 trading days prior to the date of unsecured Reg S bonds at 99.577 to yield The borrower is BAPTON, a Hong Kong-
publication of the offering documents, or 2.869%. This was equivalent to Treasuries incorporated wholly owned subsidiary of
the average trading price of the A-shares on plus 140bp, inside initial guidance of 160bp Joy City Property. Joy City Property is the
the trading day before the publication of area. guarantor.
the documents, whichever is lower. Hysan’s only outstanding US dollar bond Commitments are due by September 13.
The public placement still needs final is a 2023, which was seen at a G spread of Chinese state-owned food processor
written approval from the CSRC. 95bp. COFCO became an indirect controlling
Essence Securities is the sponsor. Pricing for the new issue was around shareholder of Joy City Property in January
15bp–20bp back of Single A rated Hong 2019, after a COFCO unit, COFCO Property
› GANSU JINGYUAN COAL EYES SIX-YEAR CB Kong developers CK Hutchison and Sun (Group), completed the acquisition of a
Hung Kai Properties, yet the bonds widened 64.18% interest in Joy City, according to Joy
Shenzhen-listed GANSU JINGYUAN COAL INDUSTRY about 10bp in morning trading. City’s 2018 annual report.
AND ELECTRICITY POWER plans to raise Rmb2.8bn The final book was over US$890m from
from a six-year convertible bond. 56 accounts. Asia took 95% of the Reg S › UA FINANCE UPSIZES TO HK$4.15BN
The company will use the proceeds for a bonds and Europe 5%. By investor type,
coal project. fund managers booked 69%, banks 28% and UNITED ASIA FINANCE has increased a four-
The CB proposal still needs approval private banks 3%. year loan to HK$4.15bn (US$529m) from
from shareholders and the Chinese Wholly owned subsidiary Hysan (MTN) HK$1.6bn after attracting 17 banks in
regulators. will issue the proposed bonds under syndication.
a US$1.5bn MTN programme with a Mizuho Bank and Standard Chartered Bank
› TWO COMPANIES CLEAR CBS HEARINGS guarantee from the company. The bonds are the mandated lead arrangers and
are expected to be rated A3 by Moody’s. bookrunners of the deal, while Mizuho is
SF HOLDING and NEW HOPE LIUHE have cleared Goldman Sachs, JP Morgan, Mizuho and also the facility agent. Signing is slated for
China Securities Regulatory Commission UBS were joint global coordinators and August 30.
hearings for proposed convertible bond bookrunners. The company scrapped a US dollar loan
offerings of a combined Rmb9.8bn. Hysan has more than 4 million square of an unspecified size after receiving a
Shenzhen-listed SF Holding plans to raise feet of office, retail and residential strong response for the Hong Kong dollar
Rmb5.8bn from a six-year CB to buy cargo properties in Hong Kong, mainly in tranche.
planes, trucks and electric delivery vehicles. Causeway Bay. The US dollar loan, targeted at Japanese
It will also invest in automation, repay lenders, had sought commitments on four
bank loans and build a smart logistics IT levels compared with three for the Hong
system. SYNDICATED LOANS Kong dollar portion.
The Chinese express delivery company Pricing on both tranches was the same –
posted net profit of Rmb4.46bn on revenue › JOY CITY SEEKS UP TO US$800M the top-level all-in pricing was 215bp based
of Rmb90.9bn in 2018. on an interest margin of 190bp over Hibor
Huatai United Securities is the sponsor. Hong Kong-listed developer Joy City and an average life of three years.
Shenzhen-listed New Hope Liuhe, which Property has launched an up to US$800m The loan is partially for refinancing,
makes animal feed and meat products and dual-tranche bullet loan into general while the remainder is new money.
breeds livestock, will use the proceeds of syndication. UA Finance last tapped the loan
a Rmb4bn six-year CB to fund eight pig Agricultural Bank of China, Bank of China, markets in July 2018 when it completed a
breeding projects in seven Chinese cities. DBS Bank and HSBC are the mandated HK$4.72bn-equivalent financing that paid
The company posted net profit of lead arrangers and bookrunners of the a top-level all-in pricing of 220bp based on

COUNTRY REPORT INDIA
the same margin and average life as the press release. 3.75% dollar bonds due February 2023
latest loan. MLABs Mizuho, StanChart and Shagang bought its 24% stake from slumped to 86.33/87.53 from 91.82 and
Taipei Fubon Commercial Bank brought in Aldersgate Investments, a Reuben Brothers the yield hit at an all time high of 8.43%
18 other banks, including three Japanese company. Simon Reuben and Alexander last Thursday morning, according to
lenders that lent US dollars. Bushaev, representatives of Aldersgate Tradeweb.
On June 27, UA Finance completed a Investments, have resigned from the board This came after its shares had declined
buyback of its own shares representing of Global Switch. 8% to Rs60 last Wednesday, with the stock
a 7.27% stake from Orix Asia Capital, a He Chunsheng, Nie Wei and Shen Qian down 67% year to date.
wholly owned subsidiary of Japan’s Orix will be appointed to the board as Shagang’s Moody’s kept its outlook negative, which
Corp. Hong Kong-listed Sun Hung Kai & representatives. it said reflected a deterioration in the
Co now owns 62.74% in UA Finance, up Global Switch is planning to file an bank’s solvency and liquidity buffers.
from 58.18%. The other shareholders of UA application for a Hong Kong listing of Yes Bank sold a Rs19bn (US$265m)
Finance are Itochu and UA Finance’s CEO at least US$1bn as early as September, qualified institutional placement on August
and managing director Akihiro Nagahara. people close to the deal told IFR earlier. It 8 at Rs83.55 a share.
For full allocations, see www.ifrasia.com. is unclear whether the shareholding and Higher provisions on bad loans
board member changes will affect the plan. pushed the bank into the red in the
› XTEP LIFTS REFI TO HK$1.8BN CLSA, Goldman Sachs and JP Morgan are the fourth quarter that ended March 31, and
joint sponsors. Rs100bn of loans remain on the watch list
Hong Kong-listed sportswear manufacturer and may turn bad in the next two to three
XTEP INTERNATIONAL HOLDINGS has increased a quarters. In addition, around Rs75bn of
four-year amortising term loan to HK$1.8bn bond investments, or 10% of the bank’s
from HK$1.6bn. total investment holdings, have suffered
Mandated lead arranger and bookrunner INDIA rating downgrades in recent quarters,
HSBC brought in eight banks, including Moody’s said.
Bank of China (Hong Kong), CTBC Bank and Yes Bank was set to hold a meeting on
Hang Seng Bank that joined as MLABs. DEBT CAPITAL MARKETS August 30 to consider a second round
The financing offered a top-level all-in of fundraising through a share sale. But
pricing of 188bp based on an interest › ONGC SETS UP US$2BN EMTN Moody’s said the decline in the bank’s
margin of 152bp over Hibor and an average share price will challenge its ability to raise
life of 3.7 years. OIL AND NATURAL GAS CORP has set up a US$2bn sufficient capital to maintain its rating at
Xtep International Development, Xtep euro MTN programme which will be listed the previous level.
International Trading and Xtep (Hong Kong) on the Singapore Stock Exchange. The recent QIP will moderately improve
Enterprise are the guarantors. The EMTN will allow ONGC, ONGC the bank’s reported common equity Tier 1
Funds are to refinance a US$200m- Videsh and their subsidiaries to gain access ratio to 8.6% from 8% as of end-June, but the
equivalent 3.5-year amortising term to the international markets within a short bulk of the lender’s operating profit will be
loan signed in January 2017. BOCHK, period and to widen their global investor used up on bad loans over the next 12-18
CTBC, Hang Seng, HSBC and Industrial & base. months, leaving it dependent on external
Commercial Bank of China (Asia) were the “The current low yield environment in capital raising to improve its loss-absorbing
MLABs of the financing, which attracted international debt markets does provide buffers, according to the rating agency.
four other lenders in syndication. The top- attractive tenor funding options,” said
level all-in pricing was 200bp based on a Subhash Kumar, director (finance) at ONGC › ADITYA MEDI ISSUES ZERO-COUPON
margin of 165bp over Hibor or Libor. in a release. “However any drawdown
Founded in 2002, Xtep produces clothing, under the programme will be made to meet ADITYA MEDISALES has raised Rs5bn from zero
footwear and accessories for sports and its specific requirements of ONGC, ONGC coupon bonds maturing on September
products are sold in more than 6,200 stores Videsh or its subsidiaries.” 12 2022, according to a filing on National
in the PRC. India’s top oil and gas explorer is Securities Depository Limited.
For full allocations, see www.ifrasia.com. planning multi-billion dollar projects for The three-year 15-day bonds of the
new discoveries and to increase output Indian pharma company are rated AA+
from existing fields. It is on the prowl for (structured obligation) by Acuite Ratings.
EQUITY CAPITAL MARKETS overseas acquisitions, according to local The yield of 9.95% per annum will be
media reports. compounded annually and is payable at
› SHAGANG RAISES GLOBAL SWITCH STAKE Citigroup and Standard Chartered are heard maturity.
to be appointed as the advisers for the
Chinese steel maker Jiangsu Shagang EMTN. › HDB FINANCIAL PRINTS FIVE-YEAR BONDS
Group bought a further 24% stake in GLOBAL
SWITCH for £1.8bn (US$2.2bn) ahead of the › YES BANK'S US BONDS, SHARES PLUNGE has raised Rs3.5bn
HDB FINANCIAL SERVICES
Hong Kong IPO of the UK-based data centre from five-year bonds at 8.05%, according to
operator. YES BANK’s US dollar bonds and shares a filing on National Securities Depository
Shagang will become Global Switch’s plunged last week after Moody’s Limited.
largest shareholder with a 49% stake after downgraded its long-term foreign and local The housing finance company was eyeing
the purchase. currency issuer rating by two notches to Rs1bn plus a greenshoe amount of Rs2.5bn.
Shagang has confirmed there will be Ba3 from Ba1 on concerns over the lower Care and Crisil have assigned AAA ratings
no changes to the company’s strategic than expected size of its recent capital to the bonds.
direction, management or financial and raising. HDFC Bank is the arranger for the bond
operational policies, said Global Switch in a The cash price on the bank’s US$477m issue.

On August 8, HDB Financial raised according to market sources. › NUVOCO VISTAS PRINTS THREE-YEAR
Rs15bn from 10-year bonds at 8.05%. The state-owned issuer was targeting
Rs5bn, plus a greenshoe option of Indian building materials producer
› INDIABULLS EXTENDS RETAIL BOND ISSUE Rs20bn. NUVOCO VISTAS has raised Rs3.5bn from
Care, Crisil and Icra have assigned AAA three-year bonds at 9.15%, according to a
INDIABULLS CONSUMER FINANCE has extended ratings to the bonds. filing on National Securities Depository
the deadline to September 12 from August IRFC last raised Rs25.92bn from 10-year Limited.
30 for an offering of public bonds of up bonds at 7.48% on August 9. The August 30 2022 notes are rated AA
to Rs10bn, according to a filing on the The issuer is yet to make an official (stable) by Crisil.
exchanges. announcement on the final yield and The coupon will step up by 25bp if there
The issue opened on July 31 and was size. is a one-notch rating downgrade.
scheduled to close on August 30. In case the rating falls to A+ or below,
The NBFC is eyeing Rs1bn, plus a › LIC HOUSING ISSUES FIVE-YEAR BONDS debenture holders have an option to
greenshoe option of Rs9bn from retail accelerate the repayment by giving a 30-day
bonds. LIC HOUSING FINANCE has raised Rs7.7bn from notice.
Edelweiss Financial Services, AK Capital five-year bonds at 7.78%, according to a
Services, Axis Bank and Trust Investment filing on National Securities Depository › SBI PRINTS AT1 PERPETUALS AT 8.75%
Advisors are the lead managers. Limited.
The bonds are rated AA/AA+ (Care/ Crisil and Care have assigned a AAA STATE BANK OF INDIA has raised Rs31.05bn
Brickwork Ratings). rating to the August 2024 bonds. from Basel III-compliant Additional Tier 1
AK Capital is the lead arranger for the perpetual non-call five bonds at 8.75%.
› IRFC SEALS 15-YEAR PRINT AT 7.48% bond issue. There is a call option at the end of five
On August 22, LIC Housing Finance years and every year thereafter.
INDIAN RAILWAY FINANCE CORP has raised raised Rs11.65bn from November 2022 The AT1 notes are rated AA+ by Crisil
Rs21.07bn from 15-year bonds at 7.48%, bonds at 7.6%. and Icra.
S&P warns SME’s funding vulnerable

Loans Ratings agency points to difficulties for borrowers from some secfors amid tight credit environment
Nearly 200 Indian small and mid-sized at encouraging foreign investment, auto through a six-month long syndication. That
enterprises with high leverage and persistent demand, and bank lending,” said S&P credit outcome was mainly due to competition from
negative free cashflows will be vulnerable analyst Krishnakumar Somasundaram. a US$150m 3.1-year average life loan from
to funding and liquidity challenges over the The S&P report highlighted that although Indiabulls Housing Finance.
next 12–18 months, rating agency Standard & Indian corporates were growing faster International lenders have been wary
Poor’s said in a report published last Tuesday. than listed peers in Asia, they remained of lending to Indian NBFCs in the past 20
The report points to 190 companies, disproportionately dependent on bank months since news of a US$1.8bn fraud
mainly from the construction, steel, textile, financing. In contrast, regional listed peers at Punjab National Bank in January 2018
and real estate sectors, that have poor debt had access to larger and deeper local followed by defaults at Infrastructure Leasing
coverage metrics and continue to roll over currency debt markets. & Financial Services a few months later in
large amounts of short-term debt in a tight State-owned banks dominate the September.
credit environment. financing environment in India and S&P Earlier this month, Mumbai-based IndusInd
These companies are a subset of a sample expects them to continue to favour large Bank Ltd’s US$320m three-year loan attracted
of 1,330 listed Indian corporates with debt corporates. Making matters worse are the only one lender in general syndication despite
or revenues of Rs1bn (US$13.91m) or higher. woes of the credit-starved non-banking the deal offering richer pricing than a similar
The sample comprises Rs17trn of debt and financial companies in India, which further borrowing last year. The borrower is expected
Rs32trn of revenues, which represents compound the tight credit environment. to prepay one-third of the deal.
76% of the debt and 83% of the revenues A series of defaults and credit scares have The NBFC crisis in India is also spreading
respectively of all non-financial listed rattled Indian NBFCs over the past year and to the property sector with Lodha Developers
companies in India. posed hurdles to their access to the capital International, one of the largest real estate
The report forecasts India Inc’s revenues to markets. Dewan Housing Finance Corp, one developers in the country, suffering a ratings
grow 300bp–400bp slower than the revenue of India’s largest housing finance companies, downgrade from Moody’s earlier this month
growth in the last two years. Global growth is seeking approval from lenders on a in a reflection of tighter funding conditions
concerns, falling rural incomes, and a tight restructuring plan aimed at resolving a liquidity onshore.
credit environment add further pressure to a crunch and restarting its lending business. Lodha, which renamed itself Macrotech
weak outlook for overall economic output. DHFL has roughly Rs1trn in debt, of Developers earlier this year, has more than
“We expect Indian corporates to grow which approximately Rs380bn is owed to US$1bn of debt maturing over the next 12
earnings by 7%–8% annually over the next banks. The company had last tapped the months and Moody’s has a negative outlook
two years, down from the double-digit offshore loan markets nearly two years ago on its rating due to uncertainty on how the
growth of the past two years despite the in September 2017 for a US$125m three-year developer will deal with it.
recent stimulus announcement aimed loan that drew five lenders after crawling PRAKASH CHAKRAVARTI

COUNTRY REPORT INDIA
SBI Capital Markets is the arranger for the tranche at 8.15% and the same amount profit fell to Rs3.6bn (then US$50.4m) for
bond issue. from a 636-day portion at 8.25% per the quarter ending March 31, compared to
On June 29, SBI last raised Rs50bn from annum. Rs9.53bn a year ago.
10-year non-call five Basel III-compliant Tier India Ratings has assigned a AAA rating
2 bonds at 7.99%. to the secured bonds. › IRFC'S SAMURAI ATTRACTS 10 LENDERS
The pay-in took place on August 30.
› SIDBI ISSUES SEPTEMBER 2022 BONDS Ten lenders have joined state-owned INDIAN
RAILWAY FINANCE CORP’s ¥32.856bn (US$300m)
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SYNDICATED LOANS seven-year Samurai loan in general
has raised Rs9.5bn from three-year one- syndication.
month bonds at 6.80%, according to market › INDUSIND IN PARTIAL PRE-PAYMENT Mizuho Bank, MUFG and Sumitomo
sources. Mitsui Banking Corp were the mandated
The notes mature on September 29 2022. INDUSIND BANK is expected to pre-pay one- lead arrangers and bookrunners of the
It was targeting Rs5bn, plus a greenshoe third of a US$320m three-year loan which financing, for which substitution signing
option of the same amount. recently closed with only one bank in is expected to take place this week and
Care has assigned a AAA rating to the general syndication. transfers are slated for the first week of
bonds. Citigroup, Commerzbank, First Abu Dhabi September.
On August 7, Sidbi raised Rs10bn from Bank, HSBC, LBBW and MUFG were the The three Japanese megabanks signed
three-year bonds at 6.99%. mandated lead arrangers and bookrunners the deal on March 29 and fully pre-funded
The issuer is yet to make an official of the loan, which was pre-funded before it on June 4.
announcement on the final yield and size launch. The facility amount will be reduced The transaction paid a top-level all-in
of the issue. on a pro-rata basis between the lead banks. pricing of 93bp based on an interest margin
Korea Development Bank Singapore of 90bp over yen Libor and a remaining life
› TATA CAPITAL EYES MARCH 2021 NOTES branch was the only lender to join in of 6.75 years.
syndication and will be transferred into the Proceeds are for the purchase of railway
TATA CAPITAL HOUSING FINANCE plans to raise up deal later. rolling stock leased to the Ministry of
to Rs4bn from notes maturing on March Syndication for the facility, which also Railways.
11 2021 at 7.9052%, according to a market came with an up to US$180m greenshoe, IRFC last signed a 10-year Samurai loan
source. was launched in early June. at ¥26.231bn (then US$232m) in September
The notes have a tenor of 554 days The facility pays a top-level all-in pricing 2018 after attracting three banks in general
and are rated AAA by Crisil. The housing of 118.2bp based on an interest margin of syndication. Mizuho, MUFG and SMBC were
finance company is eyeing Rs1bn, plus a 95bp over Libor and a remaining life of 2.67 the MLABs of the deal, which offered a top-
greenshoe amount of Rs3bn. years. level all-in pricing of 100bp based on an
Tata Capital Housing has asked The pricing on the latest loan is richer interest margin of 80bp over yen Libor and
investors to place bids on the NSE’s than IndusInd’s US$500m three-year loan a remaining life of 9.5 years.
electronic platform on September 3 completed in May last year, which offered The borrower is rated Baa2/BBB-/BBB-.
and the notes will be allotted on a top-level all-in of 105bp based on an For full allocations, see www.ifrasia.com.
September 4. interest margin of 80bp over Libor and a
The issuer is yet to make an official remaining life of 2.75 years.
announcement on the planned bond sale. Axis Bank, Barclays, Citigroup, FAB, EQUITY CAPITAL MARKETS
HSBC, Standard Chartered and State
› VW FINANCE BONDS RAISE RS3BN Bank of India were the MLABs on that › ALPHALOGIC COMPLETES START-UP IPO
deal, which attracted only three others in
VOLKSWAGEN FINANCE has raised Rs3bn from general syndication. ALPHALOGIC TECHSYS raised Rs62m (US$862,296)
two-part bonds, according to a filing on The private sector lender reported a 62% through India’s first start-up IPO.
National Securities Depository Limited. fall in fourth quarter net profit this May, The Pune-based mobile app developer
It printed Rs1.5bn from a 538-day due to higher provisions for bad loans. Net and data analystics company received
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bids for 872,000 shares as against 736,000 It will pay US$1,045 per US$1,000 in has announced indicative yield ranges
on offer at Rs84 a share, data on the BSE principal amount tendered, plus accrued of 6.50%–7.40% for a 370-day tranche,
Startups Platform indicate. interest, for bondholders who tender by 7.50%–8.40% for a three-year portion and
Last year the Securities and Exchange September 2. 7.75%–8.65% for a five-year piece.
Board of India allowed start-ups to sell The tender offer is subject to the Pefindo has assigned a AAA rating to the
shares through a dedicated board. Indonesian property developer raising bonds.
BSE Startups Platform requires that at least US$200m from a proposed new The books opened on August 27 and will
start-ups should be in the information issue. close on September 10.
technology, biotechnology, 3D printing, The company began investor meetings CGS-CIMB, Indo Premier, Mandiri, RHB and
space technology, e-commerce, drone, in Hong Kong, Singapore and London on Trimegah Sekuritas are the lead arrangers for
nano-technology, artificial intelligence, August 28, ahead of a proposed offering of the bond issue.
virtual reality, robotics or genetic new Reg S bonds expected to be rated Ba3/
engineering sectors. BB– (Moody’s/Fitch). › PLN EYES FIVE-PART BONDS, SUKUK
The company should have positive net Existing holders who want to subscribe
worth and have been in existence for two to notes in addition to tendering the 2021s Indonesian state utility PERUSAHAAN LISTRIK
years at the time of filing for the IPO. may be given priority in the new offering. NEGARA aims to raise up to Rp2trn from
It should have registered with the Citigroup, Credit Suisse, UBS and Mandiri are five-part Sustainable public bonds and
federal Department of Industrial Policy & joint bookrunners and dealer managers for a sukuk offering, according to the offer
Promotion or Ministry of Micro, Small & a proposed new bond issue and tender. document.
Medium Enterprises and should have a paid Bumi Serpong Damai is part of Sinarmas It is planning to sell Rp1.5trn of bonds
up capital of at least Rs10m. Land, which held around a 60% stake at the and Rp500bn of sukuk.
Finshore Management was the issue end of March. PLN has given indicative yields of 7.15%–
manager. 8.40%, 7.35%–9.00%, 7.65%–9.25%, 8.00%–
› ADIRA FINANCE PLANS THREE-TRANCHER 9.75% and 8.50%–10.15% for five, seven, 10,
› HDFC SELLS GRUH FINANCE BLOCK 15 and 20-year tenors for both portions.
ADIRA DINAMIKA MULTI FINANCE is planning to The books opened today and will close on
Housing Development Finance Corporation raise Rp1.2trn (US$84m) from three-part September 9.
has raised around Rs16.7bn through bonds, according to a term-sheet. Mandiri, Danareksa, Bahana, BNI, Indo
the sale of 67.4m GRUH FINANCE shares at The Indonesian consumer finance firm Premier, Trimegah and Maybank Sekuritas are
Rs247.10 per share.
The shares were marketed in a Rs243.00–
Rs249.60 range. The final price represents a
1% discount to the pre-deal close of Rs249.60.
The shares sold represent 9.2% of the
DMDT seeks payment delay
company’s outstanding share capital. Loans Duniatex group company also looks to defer December instalment
Books were well covered with demand
from international long-only investors and DELTA MERLIN DUNIA TEXTILE (DMDT), a unit of BNP Paribas and HSBC were the
domestic institutions. Indonesian textile group Duniatex, is seeking mandated lead arrangers and bookrunners
Goldman Sachs is the sole bookrunner. to delay payment of around US$5.4m in on DDST’s existing loan, which comprises a
In June HDFC sold Rs9bn of Gruh Finance principal due in September for a US$215m US$200m five-year tranche A and a US$60m
shares at Rs290 apiece, a 6% discount. five-year loan signed in July 2018. three-year tranche B. Eleven other lenders
HDFC is divesting shares to meet a DMDT has also asked lenders of that joined the deal in syndication.
regulatory requirement of not owning facility to defer an instalment due in For DMDT’s 2018 loan, the MLABs were
more than 9.9% of Bandhan Bank, which December with repayments starting in June BNP, ING Bank, Maybank and Standard
earlier this year announced a merger with 2020 and to lower the interest rate on the Chartered. The deal, which was reduced from
Gruh. Although HDFC was entitled to a loan, according to an S&P announcement on an original target size of US$250m, paid top-
15% stake after the merger, Reserve Bank August 22. level all-in pricing of 520.77bp (onshore) or
of India regulations do not allow it to own Meanwhile, offshore lenders of a US$260m 495.77bp (offshore) based on interest margins
more than 9.9%. syndicated loan for Duniatex’s spinning of 490bp (onshore) and 465bp (offshore) over
company, DELTA DUNIA SANDANG TEKSTIL (DDST), Libor. Nine banks joined in syndication.
are expected to appoint Borrelli Walsh as their S&P further downgraded its credit ratings
financial adviser for restructuring that loan, for DMDT and its US$300m senior unsecured
sources said. notes to CC on August 22, after having
INDONESIA Duniatex has appointed Aji Wijaya & Co downgraded both of them to CCC– from
as its onshore legal counsel and AJCapital BB– in mid-July. The rating agency says it
Advisory as its financial adviser for the continues to have a negative outlook and
DEBT CAPITAL MARKETS potential restructuring of the DDST deal. may lower DMDT’s rating to SD after the
DDST missed an interest payment due distressed exchange on the syndicated loan is
› BUMI SERPONG FUNDS TENDER in July for its US$260m term loan signed completed.
in November 2016, which sources said was Fitch also downgraded its ratings for DMDT
BUMI SERPONG DAMAI, rated Ba3/BB– (Moody’s/ due to significant deterioration in Duniatex’s and the company’s senior unsecured notes to
Fitch), has offered to buy any and all of its liquidity, amid weak domestic demand and CCC– on July 24, after lowering both ratings
US$300m 7.25% bonds due 2021, which oversupply resulting from US-China trade to B– from BB– on July 18.
were issued by wholly owned subsidiary tensions. APPLE LI
Global Prime Capital.

COUNTRY REPORT JAPAN
the lead arrangers. company, is owned by brokerage and bad compared to its yen level, but bankers
The bonds and sukuk are rated AAA by underwriter Kresna Graha Investama. away said their calculations suggested
Pefindo. Around 30% of the capital will be sold in the issuer was able to raise yen funds at
Separately, PLN has filed a securities the IPO. Both primary and secondary shares a negative rate by swapping the proceeds
registration statement in Japan for a four- are likely to be sold. back to yen.
tranche Samurai transaction. Macquarie, SooChow CSSD and Trimegah are “We think the bonds priced around
Mitsubishi UFJ Morgan Stanley, Mizuho, the banks on the transaction. -0.19% (equivalent in yen),” said one of
Nomura and SMBC Nikko have been hired as Shares of Kresna Graha are listed on IDX the bankers away. Another banker away
joint lead managers. and are down 22% year to date. said he saw the dollar bonds at a level
equivalent to around -0.21% as of Friday.
The issuer’s latest 10-year yen deal in
SYNDICATED LOANS April priced with a 0.095% coupon at 15.5bp
over JGBs.
› SIXTEEN JOIN EXIMBANK US$900M LOAN JAPAN Interestingly, Kobe’s US dollar bonds
priced well inside the recent five-year dollar
State-owned INDONESIA EXIMBANK has completed deal of Shizuoke Prefecture that priced at
a US$900m dual-tranche financing with 16 DEBT CAPITAL MARKETS 71bp over mid swaps.
lenders joining in general syndication.
ANZ, CTBC Bank, First Abu Dhabi Bank, › AOZORA BANK PRINTS DOLLARS
Mizuho Bank, MUFG, Standard Chartered, SYNDICATED LOANS
Sumitomo Mitsui Banking Corp and United AOZORA BANK last Thursday priced US$300m
Overseas Bank were the mandated lead 2.55% three-year bonds at 99.914 to yield › NSG TAPS LOANS FOR US, VIETNAM UNITS
arrangers and bookrunners of the financing, 2.58%.
which comprises a US$600m piece (tranche This was equivalent to Treasuries plus NIPPON SHEET GLASS is raising two loans
A) with a tenor of three years and one 115bp, inside initial price thoughts of totalling US$298m for its units in
month, and a US$300m portion (tranche B) Treasuries plus 135bp area. the US and Vietnam from Japan Bank
with a tenor of two years and one month. The Reg S bonds are expected to be rated for International Cooperation and three
The MLABs partially pre-funded the A– by S&P. commercial lenders, JBIC said in a
deal on May 23 after signing the facility Citigroup and Goldman Sachs were joint statement last Thursday.
agreement on May 15. bookrunners. Signing took place on the same day.
Tranches A and B pay top-level all-in JBIC is providing US$100m, while
pricing of 105bp and 93bp, respectively, › JFM PRINTS YANKEE Mizuho Bank, Sumitomo Mitsui Banking Corp
based on interest margins of 78bp and 68bp and Sumitomo Mitsui Trust Bank are funding
over Libor, and average lives of 2.83 and JAPAN FINANCE ORGANIZATION FOR MUNICIPALITIES, US$108m-equivalent to NSG Glass North
two years, respectively. rated A1/A+ (Moody’s/S&P), last Wednesday America, NSG’s US unit, to build a new
Proceeds will be used for refinancing and priced a US$1bn 1.75% five-year bond at plant in Ohio.
general corporate purposes. 99.89 to yield 1.773%, or Treasuries plus JBIC is also providing US$54m, while
The borrower’s last loan was a US$1.15bn 40.2bp. Mizuho, SMBC and SMTB are funding
multi-tranche financing in July last year, This was equivalent to mid-swaps plus US$36m-equivalent to NSG Vietnam
which was increased from a US$950m 47bp, inside initial guidance of 48bp area. Glass Industries, NSG’s Vietnam unit,
target after the deal attracted 30 lenders in Books were over US$1.3bn, with EMEA to renovate an existing plant in Ho Chi
general syndication. taking 45% of the 144A/Reg S bonds, Asia Minh City.
ANZ, FAB, Mizuho, MUFG, OCBC Bank, Pacific 44% and the Americas 11%. The plants manufacture glass sheets for
StanChart and UOB were the MLABs and By investor type, central banks and solar panels.
equal underwriters of the previous deal, official institutions booked 56%, banks and
which comprises a US$395m one-year private banks 22%, asset managers and › U-NEXT TO REFI USEN BUYOUT LOAN
tranche A, a US$335m three-year tranche hedge funds 9%, insurers and pension funds
B and a US$420m five-year tranche C. That 7%, and others 6%. USEN-NEXT HOLDINGS is raising a ¥73.5bn
facility paid top-level all-in pricing of 60bp, JP Morgan, Bank of America Merrill Lynch, (US$700m) seven-year loan to refinance
92bp and 108bp, respectively, based on Mizuho and Morgan Stanley were leads. a ¥80bn loan from 2017 that funded its
interest margins of 45bp, 75bp and 95bp The bonds will be listed in Luxembourg ¥62bn acquisition of cable broadcaster
over Libor for the one, three and five-year and on the Tokyo Pro-bond market. Usen, the Japanese video streaming
maturities. service provider said in a statement last
For full allocations, see www.ifrasia.com. › KOBE FINDS CHEAP FUNDING IN DOLLARS Friday.
Mizuho Bank was the mandated lead
seems to have found a cheap
CITY OF KOBE arranger of the deal, which has attracted
EQUITY CAPITAL MARKETS way to raise yen funds, by selling bonds in both existing and new lenders in
US dollars and swapping the proceeds back syndication.
› DIGITAL MEDIATAMA PLANS US$50M IPO into yen. Signing and funding are slated for
According to DealWatch, IFR’s sister September 25 and 30, respectively.
is planning a
DIGITAL MEDIATAMA MAXIMA publication in Japan, the city priced Usen-Next Holdings, formerly known as
US$40m–$50m Indonesia Stock Exchange US$80m of 1.985% 10-year bonds last U-Next, in February 2017 raised the ¥80bn
IPO in the fourth quarter, people with Wednesday via Goldman Sachs. seven-year non-recourse loan to back its
knowledge of the transaction said. DealWatch reported the issuer as saying acquisition of Usen. Mizuho was the MLA,
Digital Mediatama, a digital advertising the spread, 60bp over mid swaps, was not while U-Next SPC1 was the borrower of the

financing, which was split into a ¥28.14bn There is a 180-day lock-up period for about ¥320bn, and kept the coupon low at
amortising term loan tranche and a the company and each of the selling 0.53%, or the full cost of 0.63%.
¥51.86bn bullet term loan tranche. The loan shareholders. The Japanese government and JBIC are
was later syndicated to nine other banks. Bank of America Merrill Lynch, Goldman ready to help the sale as it would revitalise
Sachs, Morgan Stanley and Nomura are the the Samurai market.
› ONE REIT REFINANCES ¥13BN LOAN joint global coordinators. They are also
international joint bookrunners with Mizuho › KL KEPONG GOES LONG
ONE REITsigned a ¥13.2bn bullet term and SMBC Nikko in the international tranche.
loan last Thursday for refinancing, the Recruit shares fell 4.8% to ¥3,154 last KUALA LUMPUR KEPONG will offer long-dated
Tokyo Stock Exchange-listed real estate Thursday. Islamic bonds as early as this week to raise
investment trust said. up to M$2bn (US$480m).
Mizuho Bank and Mizuho Trust & Banking › TAKARA REIT FOLLOW-ON RAISES ¥13.7BN The sukuk, in tenors of 10 or 15
arranged the loan, which is split into ¥4bn years, or both, will be drawn from a
five-year and ¥9.2bn seven-year tranches TAKARA LEBEN REAL ESTATE INVESTMENT has raised newly established M$2bn Islamic MTN
with interest margins of 45bp and 65bp ¥13.7bn from a follow-on share offering programme under the wakalah bi al-
over one-month Tibor, respectively. after pricing the deal at ¥117,000. istithmar concept.
Bank of Fukuoka, Bank of Kyoto, Mie Bank, The base deal of 117,000 primary CIMB and Maybank are principal advisers,
Nippon Life Insurance, Nishi-Nippon City Bank, units was sold at a 2.5% discount to lead arrangers and managers for the
Resona Bank, Shinsei Bank and Sumitomo Mitsui last Monday’s close of ¥124,600, after programme and the notes, rated AA1 by RAM.
Banking Corp joined in syndication. deducting a scheduled ¥4,600 dividend, The issuer is Malaysia’s third largest
Drawdown is slated for September 9. compared with a marketed discount rubber and oil palm plantation company
The borrower invests in mid-sized office range of 2.5%–5.0% to the market close. and one of the world’s top 10 plantation
buildings. There is a greenshoe option of 5,850 companies.
secondary units.
About 80% of the deal was allocated › WCT PLANS PERPETUAL SUKUK
EQUITY CAPITAL MARKETS to domestic buyers and the rest to
international investors. WCT HOLDINGS is planning a sale of perpetual
› RECRUIT UNVEILS FOLLOW-ON Proceeds will be used for acquisitions Islamic bonds off a proposed M$1bn
and the remainder to repay borrowings. perpetual sukuk musharaka programme.
TSE-listed staffing services company RECRUIT SMBC Nikko and Mizuho are joint lead The offering is likely to launch around
HOLDINGS is to conduct an all-secondary managers and bookrunners. mid-September for a minimum of M$500m
global follow-on offering of up to ¥339bn with room to upsize.
(US$3.2bn) on behalf of 13 shareholders. AmInvestment Bank, CIMB, Maybank, OCBC
The base deal of 105.6m secondary shares and RHB are joint lead managers for the deal.
will be marketed at a 3%–5% discount to the Proceeds from the perpetual bonds will
market close on the pricing day. There is MALAYSIA be used to redeem M$800m of bonds ahead
an overallotment option of 15.8m shares or of the maturity date in 2020. An additional
15% of the base deal. M$300m of Islamic bonds due in 2021 and
The shares on offer, including the DEBT CAPITAL MARKETS 2022 are also likely to be redeemed with
overallotment option, represent about 7.2% internal cash.
of Recruit’s total shares outstanding. › MALAYSIA MAY COME BACK FOR MORE The property and construction
The deal will be allocated 70% to company is embarking on a liability
international investors and 30% to domestic MALAYSIA is considering a second Samurai management exercise to keep its
buyers. The split for the domestic retail and bond issue with a guarantee from Japan leverage low and defend its AA rating
institutional portions is 96%–4%. Bank for International Cooperation from Marc.
The selling shareholders are Toppan following an oversubscribed sale in March, The local rating agency put the issuer
Printing, Dai Nippon Printing, Mitsui said a staff member at the Japanese on negative watch in November last year
& Co, Dentsu, MUFG Bank, Sumitomo embassy in Malaysia, confirming a report in on the company’s slower-than-expected
Mitsui Banking Corporation, Mizuho Bank, the local press. progress on reducing its elevated leverage
Hakuhodo DY, Nomura Research Institute, Japanese ambassador to Malaysia Makio position. Its total borrowings had increased
NTT Data, Daio Paper, TIS and CAC Holdings. Miyagawa reportedly said the size could be to M$3.6bn at end-June 2018 from M$3.3bn
Concurrently, the company will similar to the previous issue and that Japan a year before.
implement a share repurchase programme is working hard to lower the interest rate. By redeeming the senior bonds with a
of up to ¥80bn or up to 30m shares from The size is being discussed by the perpetual bond that will have 50% equity
the day after completion of the follow-on Malaysian government and the coupon credit from Marc, WCT will lower group
until November 29. will ultimately depend on market debt to M$2.9bn with the gross debt-to-
Recruit said it wanted to “provide an conditions, the staff member said. equity ratio falling to 0.81 times from 1.13
opportunity for thirteen of its shareholders The timing has also not been decided. times during the first half of 2019. At the
to reduce their holdings in a coordinated Malaysia priced ¥200bn (US$1.9bn) of same time, it will also strengthen its capital
manner” and to further expand its 10-year Samurai bonds in March and used structure.
shareholder base globally. the funds to help restore a fiscal position As a result, the perpetual sukuk has
A global management roadshow will that had deteriorated during the previous earned a stable rating of A from Marc. WCT
run from August 29–September 6. Books administration. had apprised holders of the 2020s, 2021s
will open on September 4 and the deal will The JBIC guarantee helped draw demand and 2022s earlier this year of the early
price between September 10–12. from Japanese investors, with books reaching redemption plans.

COUNTRY REPORT PHILIPPINES
› DIGI DIALS IN SUKUK STRUCTURED FINANCE America Merill Lynch, Citigroup, Credit Suisse,
DBS, ING, Mizuho Securities, MUFG, SMBC Nikko,
DIGI TELECOMMUNICATIONS last Monday raised › ECLIPX MARKETS ABS Standard Chartered Bank and UBS as dealers
M$900m in a dual-tranche Islamic bond for the programme. BPI Capital is sole global
that priced inside revised guidance. ECLIPX GROUP,through its subsidiary Eclipx coordinator and lead arranger.
A M$450m seven-year sukuk will pay Fleet Holdings (ECX), has mandated ANZ The bank last week made a stock exchange
3.5% and a M$450m 10-year sukuk will pay and Westpac for a potential New Zealand announcement to clarify comments made by
3.6%. Initial price guidance was shown in the dollar ABS issue, under ECX’s FP Ignition its chief financial officer to local media. It said
respective ranges of 3.70%–3.85% and 4.09%– ABS Programme, following investor it “remains opportunistic in tapping the debt
4.14% but was tightened after orders started meetings in Wellington and Auckland on capital markets”.
to pour in to 3.55%–3.70% and 3.65%–3.80%. September 3 and 4. In August 2018 BPI sold US$600m five-
Final orders amounted to over M$3bn, Eclipx Group, a diversified Antipodean year Reg S bonds at Treasuries plus 160bp
reflecting a robust appetite for high-quality financial services company, previously in its offshore debut.
corporate paper amid falling benchmark rates. issued a NZ$224.4m (US$144m) auto loan
The final yields came with tight spreads trade through FP Ignition Series 2017-B › UBP AND AUB BONDS GET BOARD NOD
of about 25bp for the seven-year paper and Trust, in June 2017.
30bp for the 10-year notes over Malaysian and ASIA UNITED
UNION BANK OF THE PHILIPPINES
government securities. MGS yields have BANK have received board approval to raise
fallen since the start of August, with the up to Ps50bn (US$956m) from peso bonds,
10-year dropping about 35bp by August 26 according to filings on the Philippine Stock
when the deal was priced. PHILIPPINES Exchange.
The notes, rated AAA by RAM, will settle The board of UBP approved the issuance
on September 20 and will be drawn from a of up to Ps20bn unsecured Tier 2 bonds.
M$5bn Islamic CP/MTN programme. DEBT CAPITAL MARKETS The bank has filed an application with
AmInvestment Bank, CIMB and RHB were Bangko Sentral ng Pilipinas to issue the
joint lead managers. › BPI MAKES SWISS GREEN DEBUT subordinated notes.
The telecom company, which is owned The board of AUB approved a Ps30bn
by Digi.com, has the largest cellular BANK OF THE PHILIPPINE ISLANDS, rated Baa2/BBB+/ bond programme. The details and timing of
subscriber base in Malaysia, RAM said in BBB– (Moody’s/S&P/Fitch), raised SFr100m issuance will be set by the management.
a note, and counts Telenor as its ultimate (US$102m) from two-year debut Green Separately, UBP exercised the call option
majority shareholder with a 49% stake. bonds at a yield of -0.020%. on Ps7.2bn unsecured Tier 2 bonds, ahead
The Swiss franc-denominated notes, of the scheduled maturity in 2025.
which have a coupon of 0%, are the first On July 20, the also bank closed a
negative-yielding bonds to be issued out of US$150m three-year term loan after
the Philippines in the international capital attracting nine banks in general syndication.
NEW ZEALAND markets.
The senior unsecured bonds due
September 24 2021 were fully subscribed SYNDICATED LOANS
DEBT CAPITAL MARKETS by Swiss investors. By investor type,
70.3% of the notes were allocated to asset › MANILA WATER OBTAINS €250M FACILITY
› TRANSPOWER GENERATES NZ$150M managers, 15.7% to private bank clients
and retail investors, 13% to institutional MANILA WATER, a unit of Philippine
TRANSPOWER NEW ZEALAND, rated Aa3/AA– investors and 1% to provident funds. conglomerate Ayala, has signed a €250m
(Moody’s/S&P), raised the maximum Credit Suisse, UBS and BPI Capital were the (US$277.8m) seven-year term loan facility
NZ$150m (US$96m) it was seeking from lead managers. for capital investment.
a six-year retail note offer via sole lead In June, BPI established a green Bank of China (Hong Kong) and Bank of China
manager ANZ. finance framework to fund projects with Manila branch were the lenders of the loan.
The 1.735% September 4 2025s priced environmental benefits. The framework The major projects for the investment
at par, within the initial 72bp–77bp and is aligned with the International Capital include developing medium-term water
revised 72bp-75bp guidance ranges, at mid- Market Association’s Green Bond Principles, sources, improving existing water distribution
swaps plus 73bp. the ASEAN Green Bond Standards, and systems, building new sewerage treatment
In March, the state-owned electricity the Loan Market Association Green Loan plants and expanding sewer networks.
supplier issued a NZ$150m 2.73% five-year Principles. In March, Manila Water raised a Bt5.3bn
note, priced at mid-swaps plus 75bp. Under the framework, BPI will finance (then US$168m) five-year term loan to take
renewable energy, energy efficiency, out a bridge that backed its purchase of a
› TOYOTA READIES FIVE-YEAR SALE sustainable water and waste water 18.7% stake in Thailand’s Eastern Water
management, pollution prevention and Resources Development & Management.
TOYOTA FINANCE NEW ZEALAND, rated Aa3/AA– control, and green building projects. Mizuho Bank and Bank of Ayudhya were
(Moody’s/S&P), has mandated ANZ as lead Separately, BPI is planning to raise the lenders of the financing, while Manila
manager and MUFG as co-manager for a another tranche of offshore bonds subject Water (Thailand) was the borrower.
proposed five-year wholesale fixed-rate New to market conditions. Listed on the Philippine Stock Exchange,
Zealand dollar note issue. It has updated its MTN programme to Manila Water is the exclusive water
In April, Toyota Finance New Zealand US$2bn or its equivalent in other currencies. supplier and provider of wastewater
priced a capped 2.71% NZ$100m five-year The bank has appointed BPI Capital, treatment services to more than six million
note at mid-swaps plus 88bp. Deutsche Bank, HSBC, JP Morgan, ANZ, Bank of people in the east zone of metro Manila

and Rizal province, according to its website.
Manila Water is expected to spend Ps79.4bn
(US$1.52bn) on projects from 2018 to 2022. UBS makes AT1 savings
Bonds Falling yields make Singapore dollars more attractive for foreign banks
EQUITY CAPITAL MARKETS
UBS GROUP priced a S$750m (US$540m) Chartered have already raised AT1s in
› AXELUM TO OPEN IPO IN MID-SEPTEMBER perpetual non-call five Additional Tier 1 bond at Singapore dollars so far this year.
par to yield 4.85%, one of the lowest coupons for UBS’s AT1s are expected to be rated BBB–
Coconut products manufacturer AXELUM a foreign AT1 in Singapore dollars, and made a by Fitch, below the bank’s senior ratings of
RESOURCES is likely to open books for a substantial saving over its US dollar funding cost. A–/A+ (S&P/Fitch).
Ps7.7bn (US$147m) IPO in mid-September. Books were over S$3.2bn from around The last foreign bank issue to price at a
The company said in a stock exchange 120 accounts, after tightening from initial lower yield was HSBC’s AT1, rated Baa3/BBB
disclosure the retail offer will be open for guidance of 5% area. (Moody’s/Fitch), sold in 2017 at a yield of 4.7%.
subscription between September 24 and The pricing represented more than a 100bp The British bank issued another Singapore
September 30 but did not provide details saving on the Swiss bank’s last Singapore dollar dollar bond last year, an AT1 callable in 2023,
on the timing of the institutional offer. The AT1, sold in November last year at 5.875%, which provided a pricing reference for UBS’s
shares will start trading on the Philippine equivalent to the Singapore swap offer rate plus new deal and was seen at 4.3%.
Stock Exchange on October 7. 360.5bp. That perp has traded up nearly five Singapore took 71% of the UBS notes, the
The offering will comprise 700m primary points since then and was quoted at a yield of rest of Asia 25%, and Europe 4%.
shares and 430m secondary shares at a 4.6% at the start of bookbuilding. By investor type, private banks and
maximum price of Ps6.81 each. Singapore SOR has come down corporates booked 65%, fund managers and
BPI Capital and First Metro Investment are dramatically this year, but the new deal also insurers 33%, and banks 2%.
the bookrunners. paid a tighter spread of 337.2bp over SOR. UBS was sole global coordinator and joint
Proceeds will be used for future acquisitions The new issue printed around 100bp lead manager with DBS, Standard Chartered
and new manufacturing facilities. Axelum inside UBS’s US dollar AT1 secondary curve, and UOB.
makes products such as coconut water, so the Singapore dollar market is expected The bonds were seen at 100.0/100.2 last
coconut milk, desiccated coconut and coconut to attract more European banks to top up Thursday afternoon after active trading in the
oil for industrial and consumer use. their capital, said a source close to the deal. morning.
Societe Generale, Credit Suisse and Standard DANIEL STANTON
› STA LUCIA PLANS PS7.6BN FOLLOW-ON
Property developer STA LUCIA LAND is planning
a Ps7.6bn follow-on offering in November. › ARA TAKES TO PERPETUAL from a prepayment acceleration of all
In a filing with the SEC, the company said outstanding debt due on September 26.
up to 2.7bn shares will be sold in a Ps2.26– ARA ASSET MANAGEMENT last Thursday raised The US$31m instalment was originally
Ps2.80 range. There is an overallotment option S$350m (US$252m) from perpetual non- due on June 27, but MMI only managed to
of up to 300m shares. The offer, including call seven securities priced at 5.6%, flat to service the interest payment and US$17m
overallotment, represents 27% of the capital. final guidance and 20bp tighter than initial of the principal.
The funds will be used to acquire land guidance of 5.8% area. In early August, a lender proposed terms
and develop new projects. No distribution data were released. for a refinancing of the existing facility.
China Bank Capital is the bookrunner. The unrated bonds will reset to the However, MMI did not agree to the terms
original spread of 406bp over Singapore and has not made counterproposals.
dollar SOR and step up by 300bp if not Separately, sponsor KKR & Co, which
called at the end of year seven. bought MMI in 2007, has resumed
Settlement is on September 4 with talks with a Chinese consortium led by
SINGAPORE proceeds to be used for general corporate use, Beijing HBH Innovation Industry Fund
including debt refinancing, general working Management for a potential sale of MMI
capital and capital expenditure needs. that hit a roadblock last year.
DEBT CAPITAL MARKETS Credit Suisse, DBS, OCBC and UOB were KKR signed a sale-and-purchase
joint lead managers. agreement in July last year to sell its 100%
› ST ENGINEERING READIES CPS Property fund management company stake in MMI to the Chinese investor group
ARA is one of the largest REIT managers in for around US$700m.
ST Engineering North America has set up Asia Pacific. However, the sale was not completed
a US$1.5bn commercial paper programme because the Chinese consortium failed
guaranteed by parent company SINGAPORE to win approvals from China’s State
TECHNOLOGIES ENGINEERING. SYNDICATED LOANS Administration of Foreign Exchange to
Under the programme, it may issue transfer money from its onshore to offshore
short-term unsecured promissory notes at › MMI PAYS AS KKR REVIVES SALE PROCESS accounts for the equity contribution of the
tenors up to 397 days. Proceeds will be used proposed transaction, according to sources
for general corporate purposes. KKR-backed MMI HOLDINGS has settled the familiar with the matter.
State investment holding company remaining US$14m of a US$31m instalment ANZ, Bank of America Merrill Lynch, Cathay
Temasek Holdings owns a 51% stake in due in June for its US$580m loan signed in United Bank, CTBC Bank, DBS Bank, Maybank,
ST Engineering, which is a technology, 2015. Mega International Commercial Bank, Standard
defence and engineering group. As a result, MMI is temporarily relieved Chartered, Sumitomo Mitsui Banking Corp and

COUNTRY REPORT SOUTH KOREA
UOB were the mandated lead arrangers and into by both parties, pending resolution on EQUITY CAPITAL MARKETS
bookrunners of the US$580m deal, which certain final outstanding issues in the draft
comprises a US$520m five-year amortising definitive agreement”. › LENDLEASE PLANS TO PRE-MARKET IPO
term loan and a US$60m revolving credit On Thursday, Utico released a statement
facility. suggesting that the Hyflux board had Australia’s LENDLEASE GROUP plans to start
The loan’s repayment is in 11 unequal differences of opinion over certain issues, pre-marketing for a Singapore Exchange
quarterly instalments that started in including advisory fees. The UAE electric real estate investment trust IPO of up to
September 2017: 2.5% (1–7), 6% (8–10) and utility said it had capped the fees at S$25m. S$750m (US$540m) in the week starting
50% (11). While it did not contradict Hyflux’s September 2, people with knowledge of the
MMI produces more than 26 million statement, Utico said the Singapore transaction said.
high-precision parts for computer hard disk company had to resolve its differences The REIT will contain retail assets.
drives weekly, according to its website. The quickly to avoid a further erosion of its Lendlease has retail properties in
company has design centres and plants in value. Australia and Singapore, where it owns the
China, Malaysia, Singapore and Thailand. Reuters had reported that 70% of Hyflux’s Parkway Parade, 313@Somerset and Jem
senior creditors as well as the majority of retail malls.
investors holding Hyflux perpetual and Citigroup and DBS are the banks on the
RESTRUCTURING preference shares were in favour of Utico’s transaction.
restructuring agreement. Utico had set
› HYFLUX DENIES SIGNING AGREEMENT Hyflux a deadline of August 26 to sign a
final agreement, after pushing it back from
United Arab Emirates-based Utico said August 16.
last Thursday it obtained approval from Utico plans to invest S$400m in Hyflux, SOUTH KOREA
the creditors of cash-strapped HYFLUX on a split into S$300m in equity and a S$100m
restructuring agreement, capping a week shareholder loan, which would give it an
in which both companies made conflicting 88% stake. It is not clear whether these DEBT CAPITAL MARKETS
claims on the status of the agreement. terms still apply.
Hyflux said last Wednesday it had Hyflux has debts of S$3bn, including › KOREAN AIR TAKES OFF WITH KDB
not signed a definitive agreement with S$900m of perpetual bonds and preference
Utico on the S$400m (US$288m) rescue shares (PNP) as well as S$271m in senior KOREAN AIR LINES last Wednesday priced
package. The embattled Singaporean water unsecured bonds held by institutional and US$300m three-year 2% senior unsecured
treatment company said it was in very high-net-worth investors. notes guaranteed by KOREA DEVELOPMENT BANK
advanced stages of discussions, but “the Hyflux has a moratorium in place that at 99.641 to yield 2.124%, equivalent to
definitive agreement has not been entered will expire on September 30. Treasuries plus 70bp.
Louis Dreyfus wraps up sustainability deal

Loans Pricing to reduce every year if LDC meets sustainability targets
Netherlands-headquartered merchant drawings of under a third, 20bp for drawings That financing, which replaced an existing
and processor of agricultural goods LOUIS of 33%–66%, and 40bp for drawings of over US$750m three-year RCF that was due
DREYFUS has completed a US$650m revolving two thirds. to mature in 2020, was arranged by BNP
credit facility in Asia with a margin based The financing, which was launched at Paribas, Bank of America Merrill Lynch,
on a sustainability-linked mechanism after US$500m, was led by ABN AMRO, DBS, ICBC, ING Bank, MUFG, Societe Generale
attracting 26 lenders in general syndication. HSBC, OCBC Bank and UOB as joint lead and SunTrust as joint lead arrangers and
The financing, which is for Louis Dreyfus arrangers and bookrunners. bookrunners.
Co Asia, renews LDC’s previous three-year ABN AMRO and DBS acted as ING Bank was sustainability structuring
US$534m Asia RCF that was used for sustainability coordinators. agent while BNP Paribas was sustainability
investments, refinancing, capital expenditure, “Supported by a significant global asset coordinator.
working capital and general corporate purposes. portfolio, LDC is committed to producing, LDC said previously that it intends to
For the first time, margins on the Asia processing and supplying food for a growing incorporate similar sustainability-linked
RCF are linked to LDC’s performance in world population, while minimizing our targets on its other RCFs as they come up for
meeting reduction targets in four areas: environmental impact,” Andrea Maserati, renewal.
CO2 emissions, electricity and energy LDC’s chief operating officer, said. The company has six RCFs through three
consumption, water usage, and solid waste “As our teams continue to pursue the of its regional hubs in the US, Switzerland
sent to landfill. realisation of our ambitious environmental and Singapore. The facilities totalled
LDC will benefit from an interest rate protection targets, we appreciate the US$3.3bn in December 2018. Refinancing
margin reduction for every year in which it opportunity to translate them into greater risk is limited by both geographical
improves its sustainability performance, as financial savings for the company,” he added. diversification and staggered maturity dates
validated by an independent auditor. In May, LDC said it had renewed its as each regional hub refinances one of its
The facility pays an initial margin of 90bp US$750m North America RCF incorporating RCFs each year.
over Libor, plus utilisation fees of 10bp for the same pricing mechanism. ALASDAIR REILLY, CHIEN MI WONG

This was at the tight end of final Bangkok Bank, Kasikornbank, Krungthai Bank
guidance of Treasuries plus 70bp–75bp, and and Phatra Securities are joint lead managers.
inside initial guidance of 95bp area. THAILAND
Books were over US$1.1bn from more › PTT GLOBAL GOES TRIPLE
than 70 accounts at final pricing, and the
issue size was capped at US$300m. Asia took DEBT CAPITAL MARKETS PTT GLOBAL CHEMICAL last Tuesday priced a
74% of the Reg S bonds and Europe 26%. Bt10bn triple-tranche bond within price
By investor type, fund managers booked › INDORAMA VENTURES HITS ROAD guidance.
51%, life insurers and corporates 26%, banks A five-year tranche was set at par to yield
19%, and private banks 4%. INDORAMA VENTURES, an intermediate 2.20%, a seven-year tranche at 2.43% and a
The Reg S notes have expected ratings of petrochemicals producer based in Thailand, 10-year piece at 2.75%. Price guidance was
Aa2/AA (Moody’s/S&P). has mandated Standard Chartered as sole shown at 2.20%–2.42%, 2.33%–2.55% and
Credit Suisse, KDB Asia and UBS were joint global coordinator and joint bookrunner 2.61%–2.87%, respectively.
bookrunners. with ANZ, Bank of America Merrill Lynch and Subscription will be held on September
Proceeds will be used for general HSBC to arrange investor meetings in Hong 3-4, when the final tranche sizes will be
corporate purposes, including repaying debt. Kong, Singapore and London, which began determined. The deal is being offered only
on August 28. to institutional investors and comes after
› SK HYNIX HIRES FOR MEETINGS A US dollar Reg S senior fixed-rate bond the Thai petrochemical company, locally
offering may follow, subject to market rated AA+ by Fitch, sold Bt10bn of 2.9% five-
Semiconductor manufacturer SK HYNIX, rated conditions. year bonds in a public offering to retail and
Baa2/BBB– (Moody’s/S&P), has mandated Subsidiary Indorama Ventures Global institutional investors in mid-August.
BNP Paribas, Citigroup and Credit Suisse to Services will issue the proposed bonds with Bangkok Bank, Bank of Ayudhya,
arrange investor meetings in Asia and a guarantee from the parent. Kasikornbank, Krungthai Bank, Siam Commercial
Europe from September 2. On August 7, Indorama Ventures agreed Bank and Standard Chartered Bank Thai are
A US dollar Reg S bond offering with a to acquire the oxides and derivative joint lead managers.
short to intermediate maturity may follow, business of US chemicals group Huntsman
subject to market conditions. for around US$2bn. The transaction is
SK Telecom owns a 20% stake in SK expected to be completed by the end of the EQUITY CAPITAL MARKETS
Hynix, which is one of the world’s three year, subject to regulatory approvals.
largest makers of memory chips, according Indorama said the transaction would › ASSET WORLD PRE-MARKETING IPO
to S&P. be funded by internal cashflows and debt
financing. Property developer ASSET WORLD has started
pre-marketing a US$1bn–$1.5bn IPO, with
EQUITY CAPITAL MARKETS › BERLI JUCKER SHOPS FOR BONDS books likely to open in the middle of
September, people with knowledge of the
› HANWHA SYSTEMS PREPARES KRX IPO BERLI JUCKERwill open subscription to a five- transaction said.
tranche bond in early September to raise The company plans to sell up to 22.5% of
HANWHA SYSTEMS, the defence electronics up to Bt22bn (US$719m). its share capital.
developer of South Korean conglomerate A four-year tranche of up to Bt4bn will Bank of America Merrill Lynch, Bualuang
Hanwha Group, has filed to the KRX to go pay 3.00%, a five-year tranche of up to Securities, Kasikorn Securities, Morgan Stanley,
public, a person close to the matter said. Bt7bn pays 2.65%, a six-year tranche of up Phatra Securities, Siam Commercial Bank and
The IPO could value the company at to Bt3bn pays 2.86%, an eight-year tranche UBS are the banks on the transaction.
W2trn (US$1.6bn), according to press for up to Bt1bn pays 2.99% and a 10-year AWC owns and develops retail, office
reports, but people on the deal did not non-call five tranche of up to Bt7bn pays and hospitality properties. It is part of
confirm the fundraising size or timeline. 3.32%. Thailand's TCC Group, which has interests
Citigroup, Korea Investment & Securities and Pricing on the four-year tranche was set in beverages, retail and property. Thai
NH Investment & Securities are working on the earlier and at a higher yield as it is the only Beverage, Berli Jucker and Frasers Property
deal. tranche being offered to the public. are the other companies in the group.
Hanwha Aerospace, another unit of The other four tranches were priced on
Hanwha Group, is the largest shareholder August 22 during a bookbuilding session › S HOTELS PLANS IPO OF UP TO US$250M
in Hanwha Systems with a 52.9% stake, and will be offered to institutional and
followed by H-Solutions Corp with 26.1%. high-net-worth investors. Price guidance is planning a US$200m–
S HOTELS AND RESORTS
Formerly known as Samsung Thales, the for the five, six, eight and 10-year non-call $250m Stock Exchange of Thailand IPO
unit changed its name to Hanwha Thales five tranches were shown at 2.65%–2.85%, towards the end of the year.
when Hanwha Group bought Samsung’s 2.72%–2.92%, 2.89%–3.05% and 3.32%–3.48%, The company said in a preliminary filing
stake in the company in 2015. Hanwha respectively. around 1.44bn shares, or 40% of the capital,
increased control the following year after Subscription will be held on September will be offered.
taking over the remaining stake from 5, when the final tranche sizes will be Parent Singha Estates will be selling up to
French defence company Thales Group and fixed. 165m shares and the rest will be primary.
renamed the firm Hanwha Systems. The Thai consumer products maker, Singha Estates’ stake will be reduced to
Hanwha Systems merged with the rated A+ by Tris, will use the proceeds to 58.76% after the IPO.
group’s information technology solutions refinance a Bt22bn bond that will mature S Hotels runs 39 hotels in Thailand, the
unit Hanwha S&C in May. in September. Berli Jucker has another Maldives, Mauritius, Fiji and the UK.
Hanwha Systems did not respond to an Bt30bn of bonds that mature in March and CIMB Thai Bank, Credit Suisse and Krungthai
email seeking comment. June. Bank are the banks on the transaction.

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IFRASIA

INTERNATIONAL FINANCING REVIEW ASIA

AUGUST 31 2019 ISSUE 1104 www.ifrasia.com

Japanese investors flock to Triple B

Lotte REIT banks on renowned brand

AI unicorn files for Hong Kong listing

BONDS BONDS LOANS PEOPLE & MARKETS

A new IFR website is coming, featuring more content,

When you’re looking for clarity on the global capital markets,

International Financing Review Asia August 31 2019 1

INDEX Delta Dunia Sandang Tekstil 26 LIC Housing Finance 24 SK Hynix 32

EDITOR SENIOR REPORTER: SYDNEY EDITOR, IFR HEAD OF GLOBAL ADVERTISING

HONG KONG, HEAD OFFICE TOKYO SINGAPORE LONDON NEW YORK

2 International Financing Review Asia August 31 2019

COVER STORIES COUNTRY REPORT

International Financing Review Asia August 31 2019 3

Japan welcomes BBB rated credits

4 International Financing Review Asia August 31 2019

Little impact from LPR 08 Macquarie’s A$1bn surprise 09

Samurai bonds on record.

International Financing Review Asia August 31 2019 5

6 International Financing Review Asia August 31 2019

tipped to be the next big AI

International Financing Review Asia August 31 2019 7

China rate reforms may fall short margin compression.

8 International Financing Review Asia August 31 2019

Macquarie surprises with A$1bn placement

International Financing Review Asia August 31 2019 9

India resuscitates capital markets

Who’s moving where...

10 International Financing Review Asia August 31 2019

– MAZAGON DOCK SHIPBUILDERS ûINDIAN RAILWAY

Please contact us if you have information about job moves: [email protected]

International Financing Review Asia August 31 2019 11

appoints China PRELIMINARYûAPPROVALûFROMû#HINASû

JV directors OWNEDû*6û)Nû ûTHEûBANKûWALKEDû

12 International Financing Review Asia August 31 2019

BNP Paribas 2EUTERSûREPORTEDûLASTûMONTHûTHATû

eyes Deutsche's CAPITALûTHATûCOULDûHAVEûGENERATEDûINCOMEû

derivatives book REPORTEDûTHEûBANKûHASûSETûASIDEûOVERûõBNû

International Financing Review Asia August 31 2019 13

REACH THE PEOPLE WHO MATTER

14 International Financing Review Asia August 31 2019

First State bets on Aussie loans

!USTRALIANû INû!USTRALIA FARûAREûSENIORûSECURED

International Financing Review Asia August 31 2019 15

3.25-year FRN that priced inside 103bp area STRUCTURED FINANCE

16 International Financing Review Asia August 31 2019

International Financing Review Asia August 31 2019 17

BoCom Leasing goes tighter concerns.

18 International Financing Review Asia August 31 2019

International Financing Review Asia August 31 2019 19

20 International Financing Review Asia August 31 2019

International Financing Review Asia August 31 2019 21

22 International Financing Review Asia August 31 2019

International Financing Review Asia August 31 2019 23

S&P warns SME’s funding vulnerable

24 International Financing Review Asia August 31 2019

ARE YOUR COLLEAGUES AS

– MAZAGON DOCK SHIPBUILDERSûINDIAN RAILWAY

appoints China PRELIMINARYûAPPROVALûFROMû#HINASû

JV directors OWNEDû*6û)NûûTHEûBANKûWALKEDû

derivatives book REPORTEDûTHEûBANKûHASûSETûASIDEûOVERûõBNû

!USTRALIANû INû!USTRALIA FARûAREûSENIORûSECURED