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INTERNATIONAL FINANCING REVIEW ASIA

AUGUST 15 2020 ISSUE 1151 www.ifre.com

Mixed signals: US lures more China IPOs as regulators urge delistings by January 2022

WeChat ban turns small Tencent loan into big question mark for lenders

Aussie RMBS shrugs off lockdowns as Pepper Group upsizes latest deal

BONDS BONDS BONDS PEOPLE & MARKETS Vedanta faces test Thailand debuts MTR Corp prints US sanctions in challenging sustainability Asia’s largest raise stakes for Indian high-yield bond to fund corporate green big banks in market Covid response bond Asia Pacific 06 07 07 12

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Uncertainty benefits elsewhere. US shareholders would likely be forced to tender their stock at a discount, or take up overseas shares with he US administration's rising hostility towards less protection and less transparency than they have today Chinese companies appears to be having some – both points the US working group acknowledged, but left T unintended consequences. As uncertainty builds unaddressed. around future access to the US capital markets, the pace of Until the uncertainty is resolved, China's growing overseas Chinese listings is also increasing. companies can be forgiven for taking as much money off The President's Working Group on Financial Markets has the table as they can. recommended delisting all Chinese companies from the US, if American regulators are unable to inspect their audits by January 2022. Patient capital Such a move is far from a done deal – especially with a US election looming large on the horizon. And President ondholders can be an accommodating bunch. Three Trump suggested last week that the US's tough new stance months after delisting its Hong Kong stock, sourcing towards Hong Kong would in fact be good for US exchanges, B group Li & Fung was welcomed back to the bond although it wasn't exactly clear how he came to that market last week. conclusion. The loss of a stock market listing ought to be bad news 4HISûUNCERTAINTYûISûDOINGûWONDERSûFORûEQUITYûlNANCINGû for bondholders, since the reduced disclosure gives them The threat of a ban is spurring Chinese IPO hopefuls to list less transparency over a company's credit quality. In some in the booming US market as soon as possible, while those cases, however, delisting will give management time to work on transformation strategies without being subject to volatile share prices and demanding shareholders. Limiting access to the world’s In Li & Fung's case, investors were clearly more worried biggest capital market will about it losing its investment-grade rating than its stock market listing. hurt US shareholders – The issuer agreed to a step-up in coupon payments if it DOESûBECOMEûAûFALLENûANGEL ûANDûWASûABLEûTOûRAISEûlVE not the Chinese issuers. year debt at 4.5%, well inside guidance and tighter than the ûREOFFERûYIELDûONûAûlVE YEARûBONDûATûAûMUCHûNARROWERû that are already traded there are rushing out secondary spread) last September. listings in Hong Kong as a contingency measure. Bond investors have never worried too much about the The New York IPO of Beike's parent, KE Holdings, mY BY NIGHTûEQUITYûMARKETS ûANDûTHISûDEALûSUGGESTSûTHEYû showed US investors are clearly unfazed by the potential are willing to provide patient capital for issuers looking to ban. China's biggest US listing since 2018 priced above its transform their business away from the glare of the public marketed range, and gained 87% on its debut. markets. So far, so good. Fast-growing companies are raising money That theory is about to be put to the test this week, when with ease. Investment banks are riding the wave, and stock Indian oil-to-aluminium group Vedanta Resources attempts EXCHANGESûONûBOTHûSIDESûOFûTHEû0ACIlCûAREûBENElTINGûFROMû to raise money to fund the buyout of its main listed the current boom in listing activity. The New York Stock subsidiary. Exchange and Nasdaq are each enjoying a rise in Chinese Vedanta's outstanding debt has rallied by 40 cents on the IPOs, just as secondary listings from the likes of Alibaba and dollar since it unveiled the delisting in May, suggesting that JD.com have boosted revenues at Hong Kong Exchanges and creditors will again support a turnaround behind closed Clearing. doors. The stakes, however, are different: Vedanta is a But limiting access to the world's biggest capital market Single B rated issuer operating in a country hit hard by the will hurt in the end, and it will be US shareholders – not the Covid-19 pandemic, and is offering a yield in the double Chinese issuers – that feel the most pain. digits. If the US and China cannot resolve their differences, Going private will not work in every case, but a successful Chinese companies will simply move their listings lNANCINGûFORû6EDANTAûCOULDûCONVINCEûOTHERSûTOûFOLLOWûSUITû

International Financing Review Asia August 15 2020 1

B8SIURQWLQGG  INTERNATIONAL FINANCING REVIEW ASIA

COMPANY INDEX dtac TriNet 39 Kinetic Holding 35 Quanta Computer 38 Aadhar Housing Finance 31 ECL Finance 31 Kingdom of Thailand 8 Queensland Treasury Corp 19 AGIF 21 Edelweiss Housing Finance 31 KrisEnergy 37 Redco Properties Group 25 Agung Podomoro Land 33 E-House (China) Enterprise Holdings 22 KT Corp 38 Republic of the Philippines 36 AMVIG Holdings 29 Export-Import Bank of Korea 38 Lei Shing Hong Credit 29 SBI Cards and Payment Services 32 Anta Sports Products 25 Fantasia Holdings Group 22 Leyou Technologies Holdings 4 Sembcorp Industries 37 Sembcorp Marine 37 AREIT 9 Fineos Corporation Holdings 21 Li & Fung 10 Shandong Guohui Investment 24 Arohan Financial Services 31 Formosa Chemicals Livzon Pharmaceutical Group 28 SheIn 4 Australian Gas Infrastructure Group 21 Industries (Ningbo) 26 Lufax 4, 26 Sinar Menara Deli 33 Australian Gas Networks 21 Gascoyne Resources 22 Mahindra & Mahindra Sky Network Television 36 Axiata Group 34 GDS 5 Financial Services 32 Small Industries Development GGG Holdings 26 Mahindra Rural Housing Finance 31 Axis Bank 31 Bank of India 32 GNT Resources 22 Malaysian Resources 35 Bandhan Bank 31 Soechi Lines 33 Bank Kerjasama Rakyat Malaysia 34 Goodman Australia Partnership 19 Manulife Financial 38 Sogou 5 Bank of China, Sydney branch 19 Gulf Energy Development 39 Mayora Indah 32 SpeedCast International 20 Baozun 5 Guosen Securities 27 Medikaloka Hermina 32 Sydney Airport Holdings 21 Beijing Capital Land 22 Guotai Leasing 23 Miniso 4 TAL Education 5 Beijing Properties (Holdings) 22 Hangzhou Qiantang New Area Mitsubishi Estate Logistics Tencent Holdings 4 Berry Genomics 26 Construction and Investment Group 24 REIT Investment 34 Tianneng Power International 25 Bilibili 5 Harmony Group 25 MTR Corp 8 Toyota Motor Credit Corp 33 Bio-Thera Solutions 26 Heilongjiang ZBD Pharmaceutical 27 Multinet Gas Networks 21 Treasury Corp of Victoria 19 Borneo Oil 35 Henderson Land Development 29 Muthoot Fincorp 31 Universal Scientific Century Sunshine Group Holdings 29 Hindustan Zinc 7 New Hope Liuhe 28 Industrial (Shanghai) 29 China Education Group 27 HKR International 29 New Oriental Education & Technology 5 Vedanta Limited 6 China Evergrande Group 27 Hongkong Electric 29 New South Wales Treasury Corp 19 Vedanta Resources 6 China Great Wall AMC Housing Development Finance Corp 31 Ningbo Joyson Electronic 27 Vipshop 5, 28 Wisdom Education 27 (International) Holdings 23 Huazhu Group 5, 27 Nongfu Spring 28 WuXi AppTec 28 China Steel 11 ICBC Financial Leasing 24 NQ Minerals 20 XPeng 4, 28 CIFI Holdings (Group) 25 ICICI Bank 31 Olam International 37 Yanlord Land Group 26 Clevo 38 Imtiaz Sukuk II 35 OneConnect Financial Technology 28 Yuexiu Transport Infrastructure 25 CNH Industrial Capital Australia 20 Indiabulls Housing Finance 31 Pegadaian 32 Yukiguni Maitake 34 Copenhagen Infrastructure Partners 11 Indostar Capital Finance 31 People’s Bank of China 25 Yum China 5 CP Merchandising 39 Inmyshow Digital Technology Group 27 Pepper Group 6, 19 Yunda Holding 23 CPF Thailand 39 InterGlobe Aviation 31, 32 Pepper PS27 19 Yunnan Provincial Energy Dampier Bunbury Pipeline 21 Investore Property 35 Phoenix Mills 31 Investment Group 24 Dawning Information Industry 27 iQiyi 5 Piramal Capital & Housing Finance 31 Yuzhou Group Holdings 25 DD Meridian Park REIT 9 JB Chemicals & Pharmaceuticals 32 Poly Australia 21 Zhenro Properties 25 Del Monte Pacific 36 KE Holdings 4 Polytama Propindo 33 Zhenro Properties Group 26 Del Monte Philippines 36 Keong Hong Holdings 36 Power Finance Corp 31 Zhuhai Livzon Diagnostics 28 Depo Auto Parts Industrial 38 Keppel 37 QBE Insurance Group 19 ZTO Express 5

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B,QGH[LQGG  INTERNATIONAL FINANCING REVIEW ASIA Contents AUGUST 15 2020 ISSUE 1151

COVER STORIES COUNTRY REPORT

EQUITIES 04 China listing rush gathers pace 19 AUSTRALIA 36 PHILIPPINES Chinese companies are rushing to list overseas as the Bank of China, Sydney branch Del Monte Philippines is was the only bank to access the targeting up to Ps7.5bn US prepares new measures that could shut them out of senior market last week with from a maiden bond offering the world’s most liquid capital market in just 16 months. a A$600m sale of three-year consisting of three and/or five- floating-rate notes. year maturities. LOANS 04 WeChat ban hangs over Tencent 22 CHINA 36 SINGAPORE A US ban on transactions with Tencent related to Property developer Beijing Keong Hong Holdings priced Capital Land priced US$200m three-year notes at par to yield WeChat has given lenders pause on an otherwise 363-day 4.5% notes at par, 6.25%, flat to the minimum routine acquisition loan for the Chinese tech giant. issued under a US$3bn MTN level targeted by the issuer and and perp programme. sole lead manager HSBC. STRUCTURED FINANCE 06 Aussie RMBS shrugs off virus 29 HONG KONG 38 SOUTH KOREA Pepper Group underlined the resilience of Australia’s Hongkong Electric has set up Kexim has sent a request for a US$5bn medium-term note proposal to banks for a potential RMBS market with an upsized A$1bn deal that played programme with HSBC as offshore bond offering. The down the impact of an ongoing lockdown in Victoria. arranger. Hongkong Electric issue size and currency are not Finance is the issuer. decided yet.

NEWS 31 INDIA 38 TAIWAN Housing Development Finance Canadian insurer and asset 06 Vedanta seeks bond comeback Corp has raised Rs36.93bn manager Manulife Financial last Indian conglomerate Vedanta Resources’ plan to from three-year bonds at Thursday priced US$1.155bn simplify its structure faces the test of the challenging 5.4%. It was targeting Rs20bn 3.05% 40-year Formosa bonds Asian HY bond market as it tries to finance a buyout. plus a greenshoe of Rs50bn. in Taiwan at par.

08 Thailand joins social bond push Thailand raised Bt30bn from an 32 INDONESIA 39 THAILAND inaugural sustainability bond that helps fund its response to Covid-19. Food and beverage company CPF Thailand, rated A+ by 08 MTR sets Asia green bond record MTRC printed the largest single- Mayora Indah is planning Tris, has fixed final pricing on a tranche corporate green bond in APAC and repriced its curve in the process. to raise Rp500bn from a jumbo bond offering in tenors 09 Restrictions spoil AREIT debut The Philippines waited a decade for its four-tranche bond issue with of 4.5 to 15 years to raise a first REIT IPO, but a licence is required to participate in the new market. interest to be paid quarterly. targeted Bt20bn.

33 JAPAN PEOPLE & MARKETS Toyota Motor Credit Corp priced a US$2.75bn three-tranche 12 Banks left reeling over Hong Kong sanctions global offering inside its curve. A triple whammy of US restrictions against Chinese Combined books reached over companies and individuals has left global banks US$5.4bn. scrambling to understand the risks they now face. 34 MALAYSIA 17 13 ABN AMRO shrinks outside Europe ABN AMRO is to quit trading and State-owned Islamic commodities and wind down corporate banking outside Europe. cooperative Bank Kerjasama 14 Blockchain bond exchange debuts Fintech start-up BondEvalue went Rakyat Malaysia has set up an live with what it claims is the world’s first blockchain-based bond exchange. Islamic MTN programme for up 12 Who’s moving where Deutsche Bank has named Mayooran Elalingam to M$10bn. head of investment banking coverage and advisory for Asia Pacific. 16 In brief Commonwealth Bank of Australia said that it would pay out a 35 NEW ZEALAND final dividend even as its annual cash profit fell 11% to A$7.3bn. Investore Property mandated Westpac as arranger for a New Zealand dollar seven-year ASIA DATA senior secured fixed-rate retail note offer. 40 This week’s figures

International Financing Review Asia August 15 2020 3

B&RQWHQWVLQGG  News Resilient RMBS 06 Vedanta’s return 06 Thailand joins social club 08 China listing rush gathers pace „Equities Largest deal since 2018 comes amid renewed calls to ban Chinese stocks

BY FIONA LAU maker, started pre-marketing retailer SHEIN is also looking at budget store chain MINISO will last Monday a NYSE IPO of at a US IPO of at least US$700m come at the end of the year Chinese companies are least US$700m. Online apparel this year and there is a chance with an up to US$1bn float. stepping up the pace of overseas listings as the US prepares new measures that could shut them out of the world’s most liquid capital market in just 16 months. Property listing service KE HOLDINGS, backed by Tencent Holdings and SoftBank, last week priced an NYSE IPO above range to raise US$2.1bn in the biggest China-to-US listing since 2018. The deal came just two weeks after Chinese electric vehicle maker Li Auto raised US$1.09bn from a Nasdaq IPO. Bigger Chinese listings are on the way. Online wealth management company LUFAX has filed confidentially for a US IPO which could raise around US$2bn–$3bn later this year, while XPENG, another EV

US-based Athlon Games and WeChat ban hangs over Tencent Canada-based Digital Extremes, the studio behind Warframe, „Loans Lenders forced to assess implications of US order Leyou’s most popular game with 60 million registered BY EVELYNN LIN companies. overseas game developers in users. Leyou is also working Leyou granted Tencent a the US and Canada. with Amazon on an online A US ban on transactions with three-month exclusivity on July Bank of America, the financial game based on the JRR Tolkien TENCENT HOLDINGS related to 10 and said on August 7 that adviser to Tencent, may classic “The Lord of the Rings”. messaging service WeChat has Tencent had commenced due also find itself entangled in Market participants are also given lenders pause for thought diligence on a takeover and geopolitics if Trump’s ban concerned that Trump could on an otherwise routine delisting of the company. forces US banks to choose sides. follow up with more bans that acquisition loan for the Chinese That announcement came a And the entity acquiring Leyou may impact Tencent’s video tech giant. day after US President Donald is Tencent Mobility, which was game companies. Tencent, WeChat’s parent Trump signed executive orders established in 2012 and known “So far we haven’t seen any company, is in talks with banks banning US transactions as Tencent WeChat until it immediate impact on Tencent’s to borrow around US$400m involving WeChat and changed its name in 2014. video game business. But will to fund its proposed US$1.3bn ByteDance, the owner of video “The acquisition is pending it be Trump’s next target? Who takeover of Hong Kong-listed app TikTok, from September approvals from the relevant knows?” said another Hong video-game developer LEYOU 20, citing national security authorities in the US and Kong-based loan banker. TECHNOLOGIES HOLDINGS. threats. Canada, and the timing is not Tencent itself has played Though the financing is While the full extent of the good as it may face potential down the significance of the small fry for a company the size WeChat restrictions are not regulatory obstacles. Any winds US move. On Wednesday, chief of Tencent – it earned US$400m yet clear, several relationship of change would blow the financial officer John Lo said every 7.5 days in the second lenders are nonetheless business opportunity away,” during an analyst call that the quarter – it comes as the US concerned that Tencent’s said a Hong Kong-based loans order was focused on WeChat administration is ramping up investment in Leyou could be at banker. in the US and he did not believe pressure on Chinese technology risk as the latter owns multiple Leyou’s subsidiaries include its other businesses there

4 International Financing Review Asia August 15 2020

B1HZVLQGG  For daily news stories visit www.ifre.com MTR sets green record 08 Taiwan seeks second wind 10 Li & Fung 10

The acceleration in “Why should I worry about company BAOZUN are planning by the President’s Working fundraisings comes as rising something that will only to bring respective US$2bn, Group is a recommendation. US-China tensions threaten happen in 16 months when I US$1bn and US$300m–$400m The president and the White to create a rift in the global may not even hold the stock share sales to the market before House actually have not come capital markets. In the latest for a day?” said a hedge fund the end of September. out with an official executive twist, US President Donald manager who participated in NYSE-listed VIPSHOP is talking order as of yet as to what to do Trump’s Working Group on the KE IPO. “US IPOs have been to banks for a potential with that recommendation. So Financial Markets has urged doing well lately and that’s secondary listing while NEW we do think it is premature to the president to delist Chinese what matters.” ORIENTAL EDUCATION & TECHNOLOGY speculate on how that would companies that trade on US Shares in KE rocketed 87% has picked Bank of America, evolve,” said Yip Cheuk-tung, exchanges and fail to meet on debut last Thursday, closing Credit Suisse and UBS to arrange chief strategy officer at Tencent its auditing requirements by at US$37.44. It sold 106m a US$1bn Hong Kong share Music Entertainment Group on January 2022. American depositary shares at sale. Others that are planning an analyst call. “Some of these issuers have US$20 each, above the US$17– secondary listings include “I want to stress that been working on their IPO $19 marketed range. Goldman data centre operator GDS, TAL delisting is not the only option plans for quite some time and Sachs, Morgan Stanley, China EDUCATION, logistics company ZTO because if you look at the can’t wait to come out when Renaissance, JP Morgan and CICC EXPRESS, video-streaming sites recommendation paper, it does the market window is open. were the joint bookrunners. BILIBILI and IQIYI. outline alternative options, for Of course they are concerned “The attitude of US-listed example, co-audit between a about the potential delisting OPPOSITE DIRECTION issuers towards secondary US auditor and a Chinese-based but raising funds for survival While the China-to-US listings listings has changed a lot since auditor. We are evaluating all or expansion is definitely more continue, more and more US- the beginning of the year. In options,” Yip said. important at the moment,” said listed Chinese companies are the past few months, there’s The Public Company an ECM banker who focuses on seeking secondary listings in clearly a sense of urgency for Accounting Oversight Board, China-to-US listings. Hong Kong. them to do something to hedge the US auditing watchdog, has Investors, meanwhile, have NYSE-listed YUM CHINA, which the potential risk of being long complained of its inability shrugged off the risks. The KE operates the KFC, Pizza Hut delisted,” said another ECM to monitor the audits of US- deal attracted strong demand and Taco Bell franchises in banker. listed Chinese companies, from over 600 investors with China, Nasdaq-listed hotel Some issuers, however, are since China does not allow the books more than 25 times chain operator HUAZHU GROUP playing down the risks. such information to be shared covered. and Nasdaq-listed e-commerce “The recommendation outside its borders. „

would be affected. Yuk and other selling holders at home and abroad in recent acquisition loan at a reduced The US accounts for less than since late last year, sought years. In late July, Nasdaq- size of €900m (US$985m) to 2% of Tencent’s revenues. a US$400m loan backing listed SOGOU announced that back its purchase of a 10% stake the proposed takeover of shareholder Tencent had made in US music entertainment THIRD TIME LUCKY? Leyou. However, the deal was a preliminary offer to buy the company Universal Music Loan bankers are also mindful cancelled after the potential rest of the web search firm it Group. Bank of America, Bank that Tencent is the third buyers failed to renegotiate the did not already control, in a of China, HSBC, Industrial and company trying to acquire Commercial Bank of China Leyou. The previous two (Asia) and Morgan Stanley were unsuccessful attempts were the lenders and decided not to from Shenzhen-listed online “So far we haven’t seen any immediate impact launch the deal into general games developer Zhejiang on Tencent’s video game business. But will it be syndication due to market Century Huatong Group, which volatility stemming from Covid- counts a unit of Tencent among Trump’s next target? Who knows?” 19. its shareholders, and another On Wednesday, Tencent Tencent-backed Chinese game posted a higher-than-expected firm, iDreamSky Technology 37% year-on-year jump in net Holdings. acquisition price. deal that values the target at profit to Rmb33.1bn (US$4.8bn) Last month, Zhejiang “Different suitors have about US$3.5bn. in the second quarter, thanks Century Huatong scrapped its actually approached different Tencent’s offer, if successful, to higher demand for its online proposed takeover of Leyou groups of relationship banks would take Sogou private and platforms during the pandemic due to a strategy change. A for their own loans. It has delist the company from the – especially video games. US$300m–$400m loan backing been a long time, and we are New York stock exchange. Leyou, on the other hand, the proposed takeover was also also a bit concerned about the is expected to record a loss of cancelled. uncertainty along the way,” said PANDEMIC EFFECTS about US$3m–$7m for the first In April, iDreamSky, which the second loan banker. Lenders are also sitting on six months ended June 30 due had been in talks with Leyou’s Tencent has been a lot of Tencent exposure. to fewer releases of content controlling shareholder Charles aggressively expanding both In April, Tencent closed an updates for Warframe. „

International Financing Review Asia August 15 2020 5

B1HZVLQGG  News Aussie RMBS shrugs off virus „Structured Finance Regional exposure in focus as Melbourne crisis deepens

BY JOHN WEAVERS buy new Pepper bonds. under threat from an alarming local economy. The measures, Appetite from investors, outbreak in Melbourne, which include an 8pm to 5am PEPPER GROUP underlined the especially overseas buyers, Australia’s second-largest city. curfew, will last at least until resilience of Australia’s RMBS has been underpinned by The Victoria state capital September 13. market amid the Covid-19 the country’s enviable record has been under stage four With the rest of Australia crisis with an upsized A$1bn in handling the Covid-19 lockdown restrictions since remaining open, Melbourne (US$712m) deal that played pandemic, but that success is August 2, at a huge cost to the and Victoria, the country’s down the impact of an ongoing lockdown in Melbourne and regional Victoria. Pepper’s latest non- conforming RMBS offering, PS27, which has a 30% allocation to mortgages in Victoria, doubled its original target and priced at tighter spreads than the non-bank lender’s previous RMBS issue on June 10. Like all RMBS sales since June 18, Pepper did not require any direct help from the Australian Office of Financial Management’s A$15bn Structured Finance Support Fund introduced in March, though the AOFM’s secondary market purchases have given existing investors more room to

For the deal to be successful, Vedanta seeks bond comeback however, Vedanta Resources will need to reprice its curve „Bonds Resources company needs around US$3bn to buy out its Indian unit and convince investors that its reorganisation will improve its BY KRISHNA MERCHANT, on the current share price yield in the range of 11%–13%, credit profile. DANIEL STANTON of Rs124.45. It is eyeing up according to people close to The group’s existing dollar to US$1.25bn from US dollar the plans, although some bonds have rallied more than Indian conglomerate VEDANTA bonds and the remainder from bankers away from the deal 40 points since it announced RESOURCES’ plans to simplify syndicated loans. think it could be higher. plans to delist the Indian its organisational structure The company began investor A new issue would be a rare unit on May 13, according to are about to face a significant calls last Tuesday via joint Single B offering from South Refinitiv data, but are still test in the challenging Asian global coordinators, lead Asia, giving yield-seeking quoted at double-digit yields. high-yield bond market as managers and bookrunners investors some diversification Its July 2022 bonds were bid the oil-to-aluminium group Barclays, Credit Suisse, Deutsche beyond the Chinese market. at a cash price of 83 to yield prepares to finance a buyout. Bank, JP Morgan and Standard This year, just US$1.4bn of 16.9% and its May 2023s were Chairman Anil Agarwal Chartered for a proposed US Single B rated bonds have been bid at 77.5 to yield 17.7%. It wants to take Indian-listed dollar offering of three-year sold by Asian issuers outside has over US$4bn of US dollar subsidiary VEDANTA LIMITED amortising bonds, expected in Greater China, according to bonds outstanding, and was private, and his company may the week of August 17. IFR data. The highest yield paid hit especially hard when have to pay one of the region’s The issuer plans to have in the region so far this year global markets slumped in highest yields this year to do the secured notes amortise in is a yield-to-put of 15.21% for March. so. equal instalments at 24, 30 Jiayuan International Group’s “Prior to the delisting Vedanta Resources, which and 36 months for a weighted tap of its 2023s in February. announcement, Vedanta Agarwal delisted from London average life of 30 months. The A bookrunner said that Resources had lost funding in 2018, needs around US$3bn 144A/Reg S notes are expected the “landmark” offering is access given the scale of sell- to buy out the remaining 49.9% to be rated B3/B by Moody’s/ expected to draw attention off in the company’s bonds of the domestic unit, based S&P, and are likely to pay a from event-driven investors. and potential discomfort

6 International Financing Review Asia August 15 2020

B1HZVLQGG  For daily news stories visit www.ifre.com

second-most populous state, This is well above the average with their finances due Non-conforming RMBS face a weaker GDP outlook, Victoria prime weighting of to Covid-19 to pause their arrears are inevitably far more higher unemployment, 24.8%, according to S&P’s latest mortgage repayments for six commonplace than prime rising mortgage arrears and, quarterly update. months. This has recently been levels, coming in around 4.5% potentially, more defaults. In contrast the Bank of extended until January 2021 nationally at the end of Q1 This raises the possibility Queensland 2019-1 REDS RMBS for those who need continuing 2020, according to Moody’s, that RMBS with higher has only a 18.6% weighting support. versus less than 2% for prime mortgage pool weightings in in Victoria, far lower than its Another supportive factor mortgages. the impacted region could 37.8% Queensland allocation is Australia’s widespread use But senior non-conforming eventually require a premium, and 29.2% for neighbouring of lenders mortgage insurance RMBS tranches come with particularly among riskier New South Wales. (LMI) which protects the much larger credit support subordinated tranches. In the non-conforming lender from financial loss if levels, typically of 30% or more. segment, the average Victoria the borrower fails to meet “Non-conforming RMBS and REGIONAL BIAS allocation was 35.4% as of repayments. junior notes pose higher risk The four major banks all have March 31 2020, whereas There have been regional than prime deals and senior similarly diverse portfolios of Melbourne-based non-bank stresses in Australia before, notes,” Moody’s said in an in- mortgages across Australia, lender La Trobe has an including the catastrophic depth report on June 22. The even though two – ANZ average 45.2% weighting in flooding in Queensland in 2011. agency, nevertheless, is relaxed and National Australia the struggling state, including This led to an uptick in prime about future performance. Bank – are headquartered 49.7% for La Trobe 2019-2 Trust. and non-conforming mortgage “Australian RMBS have in Melbourne and the other Sydney-based Pepper’s arrears of greater than 30 days liquidity reserves or facilities two – Commonwealth Bank existing non-conforming RMBS which reached a peak of 2.17% and principal-to-pay-interest of Australia and Westpac – in have a below-average 30.7% in May that year, according to mechanisms, which materially Sydney. Victoria allocation. S&P data. reduce risks from coronavirus- Regional banks and non-bank One syndication manager More recently, the end of the related loan payment lenders are a different matter, believes it is far too early to mining investment boom led deferrals,” the report said. however, since many have suggest regional premiums to a spike in arrears in Western “Australian RMBS narrower footprints. will soon be on the agenda, Australia, with 3.10% of also benefit from credit For example, Bendigo and however. mortgages overdue by at least enhancements in the form Adelaide Bank’s Torrens prime In particular, he points 30 days in April 2019. of excess spread and note RMBS programme has an to the government scheme But both levels are well subordination, which protect average 41.9% allocation to introduced in March, which below the minimum 8% credit notes from losses if loan Victoria, including 57.1% for allows Australians who lost enhancement required for Class defaults increase because of the Torrens series 2019-2 Trust. their jobs or are struggling A notes in prime RMBS. coronavirus disruptions.” „

among banks to lend,” said subsidiary, HINDUSTAN ZINC, yet to be announced on the enable Vedanta Resources Neel Gopalakrishnan, director is targeting up to Rs50bn electronic bidding platform, to better access future cash and lead analyst at S&P in a (US$668m) from a debut the company has already lined surpluses, as well as cash webinar on August 12. offering of three-year rupee up investors for a substantial of around US$1.7bn held The oil-to-aluminium bonds as it builds up its cash portion of the issue size, said at Vedanta Limited and its conglomerate is issuing buffers ahead of the buyout. the same source. wholly owned subsidiary, dollar bonds from an indirect “Vedanta needs a lot of Agarwal said in May that Cairn India Holdings,” said offshore subsidiary, Vedanta cash and raising bonds from the impact of the coronavirus Moody’s in a note on August Holdings Mauritius II, so the domestic market is much outbreak had caused the 11. does not have to comply to cheaper compared to raising company to accelerate plans to If the buyout does not go the Libor-plus-450bp pricing dollar bonds,” a person close to streamline operations to allow through, there is a potential cap on external commercial the plans said. it to deleverage and invest in for an immediate downgrade borrowings set by the Reserve Hindustan Zinc will be able the growth of the business. due to uncertainty over Bank of India. to sell three-year paper in the Analysts view the buyout of refinancing, according to S&P, The collateral for the bonds rupee market at close to 6%, Vedanta Ltd as credit positive with a US$414m loan due includes a pledge of the 100% while Vedanta’s dollar bonds because it will simplify the in December and US$670m stakes in Vedanta Holdings will come in the high teens complex structure at Vedanta bond maturity in June 2021. Mauritius and Vedanta in rupee terms, the person Resources, whose less than Investors in the proposed Holdings Mauritius II, the added. 100% ownership in operating dollar bond will be refunded entities that would collectively Vedanta Ltd owns 64.9% of subsidiaries hindered its credit at 101% of their principal plus own up to 49.9% of Vedanta Hindustan Zinc, the Indian profile historically. accrued interest if the buyout Ltd acquired from minority government 29.5%, and public While delisting will increase fails. shareholders, according to shareholders the remainder. short-term debt, in the long- Any surplus proceeds from S&P. In June, Crisil assigned an term it will improve Vedanta the bonds will be used to AAA stable rating to Hindustan Resources’ liquidity and ability fund a tender offer at par for CREDIT POSITIVE Zinc’s bonds, covering up to to allocate assets and liabilities Vedanta Resources’ dollar Separately, in the domestic Rs85bn of non-convertible across the group. bonds maturing in 2021 or to market, another Vedanta debentures. While the deal is “The privatisation will repay them at maturity. „

International Financing Review Asia August 15 2020 7

B1HZVLQGG  News Thailand joins social bond push

„Bonds Sovereign bond funds MRT project and Covid-19 stimulus package

BY KIT YIN BOEY will become the new 15- during the roadshows. fund the government’s year benchmark in the Thai Demand was healthy with Covid-19 economic stimulus The KINGDOM OF THAILAND last government bond yield curve,” books reaching Bt60bn. programme. Both tranches fall Thursday raised Bt30bn said a government official close Foreign investors, including under Thailand’s sustainable (US$966.7m) from an inaugural to the deal. foreign banks, made up 20% financing framework, which sustainability bond that builds The new bond priced slightly of final allocations, said the covers both green and social on growing demand for the projects. asset class and helps fund its Bangkok Bank, Bank of Ayudhya response to the Covid-19 crisis. and Standard Chartered Bank The long 15-year bonds, due Thai were joint sustainability December 17 2035, priced at “We made it very clear to the investors that the structuring advisers and joint par to yield 1.585% in a deal bond will become the new 15-year benchmark in lead managers. managed by the Ministry the Thai government bond yield curve.” The transaction initially took of Finance’s Public Debt shape as a green bond to help Management Office (PDMO). refinance capital expenditure This will be the first on the Bt113.3bn Bangkok issuance in the government’s MRT orange line. The electric overall plan to sell Bt100bn inside the current 15-year TGB government source. trains will reduce the city’s of green and social bonds benchmark, which was quoted The offering was split into infamous traffic snarls and over the next two years to at 1.59% on Thursday. two tranches. The proceeds reduce road pollution – both ensure sufficient liquidity and As part of its goal to diversify from a Bt10bn tranche will environmentally friendly deepen awareness among local and expand its investor base, be on-lent to a government- features. investors. the Thai government reached owned mass rapid transit The outbreak of the “We made it very clear to out to global investors in project, while the other coronavirus, however, forced the investors that the bond addition to local investors Bt20bn tranche will partially the government to take

that MTR’s new issue priced MTR sets Asia green bond record 17bp inside it despite the longer tenor, due partly to the „Bonds Metro operator prices inside curve, despite impact of protests, coronavirus old bond’s illiquidity. The Hong Kong government owns around BY DANIEL STANTON including US$385m from the screening for ESG factors today a 75% stake in MTR, helping leads. than in 2016, said one of the it to price around 15bp–20bp Hong Kong metro operator and This was MTR’s first offshore leads, and this helped draw inside the city’s privately property developer MTR CORP deal since 2016, when it printed demand. Asian accounts took owned utilities like Hongkong has printed the largest single- a US$600m 10-year green bond, 85% of the Reg S bonds and Electric and CLP Power, and tranche corporate green bond close to some Singapore in Asia Pacific and repriced its corporates such as Singtel. curve in the process. Proceeds will be used to fund MTR, rated Aa3/AA+ or refinance investments under (Moody’s/S&P), on Wednesday “Hong Kong has quickly become one of the MTR’s sustainable finance priced US$1.2bn 1.625% 10-year region’s most active and diverse green bond framework. bonds at 98.695 to yield 1.768% markets, across both the issuer and investor MTR lowered electricity or Treasuries plus 108bp. communities.” consumption in its rail network This was at the tight end of by 12% per passenger kilometre final guidance of Treasuries in 2019 compared with 2008. plus 110bp area, plus or minus It has also reduced electricity 2bp, and inside initial guidance usage in its investment of 150bp area. and it had been expected to Europe 15%. Banks booked 43%, properties portfolio by 12% Books had built to over aim for a similar size this time. fund managers 41%, insurers from 2013 levels, hitting a US$6bn by the time of final Back then it was rated Aa1/AAA 10%, sovereign wealth funds target it originally hoped to guidance, allowing the issuer (Moody’s/S&P) and printed at and pension funds 5%, and meet by 2023. to increase the issue size. Final a yield of 2.537% and Treasury private banks 1%. This was the first green US books were over US$3.75bn spread of 80bp. The 2026 bond was trading at dollar bond sold by a Hong from 180 accounts at reoffer, Far more bond investors are Treasuries plus 125bp, meaning Kong issuer this year, with the

8 International Financing Review Asia August 15 2020

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action. Ministers announced a PDMO is also issuing savings Bt1.9trn stimulus package in bonds, benchmark long-term Restrictions spoil May to support an economy bonds, promissory notes and that has been badly hit by term loans, among other AREIT debut the coronavirus outbreak, products, to raise the financing especially from the collapse needed to support the stimulus „Equities Some brokers unaware they need special licence of the tourism industry. It programme. Another idea being to trade in REITs estimated it needed to raise explored is a US dollar bond, Bt1trn to fund the stimulus but this is more costly than a BY S ANURADHA (US$250m) from the IPO at a package and this gave rise to baht-denominated one under yield of 5.9%. the idea of packaging the green current market conditions. The Philippines waited a and social elements into the PDMO told IFR that the plan decade for its first real estate DOUBLE DRAGON WAITING sustainability bond. was still on the table and it investment trust IPO, but AREIT’s performance will Funds from the second would wait for more conducive brokers discovered last week be watched closely by tranche under the social conditions. that they may need more time DoubleDragon Properties, category will be used to The Thai government is the before they can actually trade which is planning an up to partly finance or refinance latest issuer to take advantage the securities. Ps17bn REIT IPO in October expenditure in public of growing appetite among When shares of AREIT, in a 5.5%–6.5% yield range. DD health-related spending, local investors for green and previously known as AyalaLand MERIDIAN PARK REIT will comprise financial support and cash sustainable instruments. REIT, started changing hands seven buildings with a total handouts to SMEs and people State-owned oil and gas on Thursday, some brokers area of 248,349 square metres affected by the pandemic, company PTT sold its debut found that they could not in Metro Manila and an as well as the restoration of green bond at end-June, pricing buy and sell the securities on estimated asset value of Ps51bn. economic activities and public the Bt2bn three-year note at behalf of clients, unaware a CIMB, Credit Suisse, DBS, infrastructure facilities. 2.25%. The company followed special licence was required to Maybank Kim Eng, Macquarie, A second-party opinion for in the footsteps of other issuers, participate in the new market. Nomura, Asia United Bank, PNB the sustainable bonds was including TMB Bank in June The lack of retail orders as Capital and Rizal Commercial obtained from independent 2018, Kasikornbank in October a result of the licence snafu Banking Corp are on the IPO. ESG and corporate governance 2018 and Energy Absolute in contributed to a 7.8% fall in the AREIT’s portfolio comprises provider Sustainalytics. October last year. „ shares on their debut. three commercial buildings in “A positive listing is crucial Makati city, Manila’s central to get retail support for business district, including the subsequent REIT IPOs,” said an newly constructed Ayala North ECM banker on the IPO. “It’s a Exchange. It also intends to pity that this technical glitch purchase an office building in last such deal coming from the by the police response to the happened.” Cebu. Hong Kong government in May protests. Shares closed at Ps24.90 The Philippines first 2019, according to IFR data. Its weekday passenger on Thursday against the Ps27 published REIT regulations “Hong Kong has quickly volumes in Hong Kong fell issue price, underperforming in 2009 but cumbersome become one of the region’s 11.4% year on year in the the benchmark PSEi Index, restrictions prevented any most active and diverse second half of 2019, while it which rose 1.7%. After initially public offering before the green bond markets, across also needed to hire additional rebounding as much as 11% AREIT deal. AREIT filed its draft both the issuer and investor staff and conduct repairs. in early trade, the stock fell prospectus with the Securities communities,” said Sean Service hours were shortened further to Ps24.10 on Friday. and Exchange Commission McNelis, global co-head of debt at the height of the protests While obtaining the on February 7 after regulators capital markets at HSBC. and on October 5 it shut down necessary licence is expected eased tax and ownership rules HSBC and Goldman Sachs were the entire network for the first to be a formality, the Covid-19 in an effort to encourage REIT joint global coordinators. They time in its 40 years of service. pandemic has complicated the listings by property developers. were also joint bookrunners Average weekday patronage process. Ayala Land is a unit of with Bank of China (Hong Kong), fell by 36.1% year on year in the “It’s hard to complete the conglomerate Ayala, which Credit Agricole, Mizuho and first half of 2020, as coronavirus paperwork when not all has interests in retail, power, Standard Chartered. HSBC was restrictions forced many people the staff is in the office,” a telecoms, banking, healthcare sole sustainability adviser. to work from home. Philippines-based ECM banker and utilities. MTR operates railway The performance of its said. “However, there is going BPI Capital, UBS, PNB Capital businesses in mainland China, property development business to be no massive delay.” and SB Capital were the banks Sweden and Australia, as has helped offset the losses AREIT raised Ps12bn on the AREIT IPO. „ well as London’s Crossrail from public transport. A new concession, but has been shopping centre called The through a lot in its home Lohas is due to open in Hong market recently. Its net profit Kong in the second half of Follow IFR Asia dropped 25.5% in 2019, as its this year, and around 20,000 Hong Kong transport network residential property units are @IFRAsia was disrupted by protests due to be delivered in the next against the government and seven years. „

International Financing Review Asia August 15 2020 9

B1HZVLQGG  News Taiwan gives wind farms a lift „Loans Government fund aims to boost domestic investment in fast-growing sector

BY AILEEN CHUANG “Without enough security or that have largely stayed away the sector and single-borrower guarantees, it is hard for us to so far. limits. Taiwan is setting up a credit take exposure to the offshore Of the six wind farm PF deals “We do have concerns about guarantee fund with an eye wind farm financings,” said a completed in Taiwan since May concentration in a single sector on spurring greater domestic or a single borrower as we involvement in offshore wind “We do have concerns about concentration participate in many offshore projects, a sector that has wind projects in Taiwan,” already recorded NT$284bn in a single sector or a single borrower as we said another banker at an (US$9.66bn) of loans. participate in many offshore wind projects in international lender. “If the The state-backed fund will Taiwan. If the Taiwanese state-owned banks put Taiwanese state-owned banks provide credit enhancements their liquidity in, the sector will become healthier put their liquidity in, the sector to project financings for and more sustainable.” will become healthier and more offshore wind farms, which sustainable.” should broaden the universe of domestic lenders keen to senior loan banker at a state- 2016, only one has attracted DOMESTIC ECA SUBSTITUTE participate in the loans. It owned Taiwanese bank. “We domestic state-owned banks – a While details of the state- is also expected to attract would be conservative given NT$25bn five-year corporate owned fund’s lending and domestic companies to invest the non-recourse nature of the loan signed in May 2019 for the guarantee strategy are still in the offshore wind farm PF deals.” construction of offshore wind being worked out, its role projects. Taiwan’s offshore wind farms in Changhua for Danish mirrors that of an export A group of domestic banks, farm sector has produced wind energy developer Orsted. credit agency that supports along with the government, several large borrowings since Fifteen lenders joined the deal, a country’s corporations will provide NT$10bn initially May 2016 with support from including eight state-owned investing overseas. for the fund, which will privately owned Taiwanese, domestic banks. Its first test is likely to guarantee a portion of the wind Asian and international lenders. Greater participation from come through a NT$40bn farm project financings. The Market participants believe state-owned banks will help loan backing the construction size of the fund is expected to the credit fund will help attract address fatigue among lenders of the 300MW Zhongneng be increased later. state-owned Taiwanese banks concerned about exposure to Offshore Wind Farm, a 51:49

BBB– with a negative outlook, Li & Fung pays for rating risk according to a research note from asset manager Legg Mason „Bonds Supply chain manager sells first offshore bond since delisting on July 27. Moody’s recorded just five fallen angels in Asia BY DANIEL STANTON with some protection against floor at the initial rate. Pacific between July 1 2019 and future downgrades. This downgrade protection June 30 2020. Supply chain manager LI & FUNG The interest rate will increase will drop away if Li & Fung is The downgrade protection provided downgrade protection by 25bp for each notch the ever upgraded to Baa1/BBB+ structure is common in the US in its latest US dollar bond bonds are downgraded below (Moody’s/S&P), each with a bond market, but it is relatively offering to compensate for the new to Asia. risk of becoming a fallen angel, Sands China’s US$1.5bn in a structure rarely seen in “Asia has been on an uptrend in recent times with dual-tranche Yankee offering Asia. lots of sovereigns being consistently upgraded, in June, rated Baa2/BBB–/ The Hong Kong- so it’s more rare for investment-grade issuers to BBB– at time of pricing, also headquartered company, which be downgraded to sub-IG. In the US there are a offered investors an additional connects suppliers and vendors 25bp for each one-notch with retailers, on Tuesday sold lot more mature issuers that have been through downgrade below investment US$300m five-year bonds at challenging business cycles.” grade, capped at 200bp. As a par to yield 4.5%, inside initial Macau casino credit, that deal guidance of 4.9% area. was driven in large part by The Reg S benchmark senior investment grade, capped at a stable or positive outlook. US investors who have a deep unsecured bonds have expected total of 100bp if the bonds are Globally, downgrades from familiarity with the gaming ratings of Baa3/BBB (Moody’s/ cut to Single B or below. If the investment-grade to junk have sector. S&P), in line with the issuer. rating agencies subsequently affected some US$154bn of “Asia has been on an uptrend Both Moody’s and S&P have upgrade them again, the bonds already this year and in recent times with lots of negative outlooks on their interest rate will decrease by there is another US$466bn sovereigns being consistently ratings, so the new issue comes 25bp per notch, subject to a outstanding from issuers rated upgraded, so it’s more rare for

10 International Financing Review Asia August 15 2020

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joint venture between the Denmark’s EKF, German-owned liquidity for the sector, some For instance, the margins country’s largest steelmaker Euler Hermes, Atradius of the lenders are concerned that of the ECA tranches on CIP’s CHINA STEEL and Danish wind Netherlands, and South Korea’s it could push down pricing NT$90bn loan range from energy developer COPENHAGEN K-Sure, among others. without reflecting the high 75bp to 105bp during the life INFRASTRUCTURE PARTNERS. The Bankers believe domestic risks of the PF deals. of the loan, compared with loan will be the first offshore developers are unlikely to draw Banks acknowledge that the 210bp to 240bp offered in the wind project in Taiwan with support from international interest margins on the ECA commercial tranches. a domestic developer as the ECAs, which is where the tranches are much lower than Some also described the majority shareholder. Taiwan state-owned fund could the uncovered commercial fund as being small to cover CTBC Bank is the financial the sector’s debt financing adviser of the deal, the exact “A NT$10bn fund sounds like a small number for requirements, especially as it is size and terms of which are yet expected to grow further. to be determined. State-owned jumbo offshore wind farm PF, and if the default President Tsai Ing-wen won banks are keen to participate ratio of a large loan or several large loans were to re-election in a landslide in in the loan given the likely increase, the fund could soon run out. Of course, January and has since upped involvement of the credit the government can always raise more money the targets for offshore wind guarantee fund and a domestic for the loans it is guaranteeing. That will be an energy. Taiwan now plans developer as the majority entirely different process, however.” to have overall wind energy shareholder, according to two capacity of 15.5GW in 2035, up sources. from the earlier goal of 5.5GW The previous PF deals play a role. tranches, but they feel that the under development by 2025. have largely come through “There is a need for a margins reflect the abilities “A NT$10bn fund sounds international developers government guarantee fund of the agencies to manage the like a small number for jumbo including CIP, Orsted and for future projects involving risks. offshore wind farm PF, and if Wpd from Europe, as well as domestic developers because “ECA agencies in a way have the default ratio of a large loan Australia’s Macquarie Group the ECA support doesn’t cover acted as gatekeepers for banks or several large loans were to and Japan’s JERA. International Taiwanese companies,” said the on risk management,” said a increase, the fund could soon ECAs have also provided first banker at the Taiwanese third senior loan banker at a run out,” said the third banker. support. state-owned lender. Taiwanese state-owned bank. “Of course, the government In February, CIP completed “We are not sure the new can always raise more money a NT$90bn 18-year financing, RISKY OUTLOOK government credit guarantee for the loans it is guaranteeing. which has insurance cover from While the credit guarantee fund has the capability or That will be an entirely a host of agencies including fund would help ensure knowledge to do so.” different process, however.” „

investment-grade issuers to be rather illiquid, were yielding were not released. time of the buyout in March, downgraded to sub-IG,” said a 4.31% on Tuesday morning, but Citigroup and Goldman Sachs having dropped 17 points since banker on the Li & Fung deal. rallied to 4.24% when guidance were joint global coordinators. they were sold six months “In the US there are a lot more was announced. They were also joint earlier. mature issuers that have been Accounting for the curve bookrunners with DBS, Mizuho, The company had been through challenging business extension to five years, fair MUFG and Standard Chartered. facing challenges even before cycles.” value was seen at 4.35%–4.4%. Adding to the factors for the coronavirus pandemic Some Asian issuers are The new bonds were seen at investors to study, this was the struck. Core operating profit reluctant to pay for downside 100.00/100.25 in secondary first bond offering since Li & decreased by 22.9% to US$228m protection, the lead added. He trading on Wednesday Fung was delisted in May, after in 2019, as store closures said that the 100bp cap offered morning. 28 years on the Hong Kong and retailer bankruptcies in the Li & Fung issue struck Although the deal was stock exchange. outweighed gains in market a middle ground between marketed on a yield basis, the The Fung family continues share. This year could be even investor demands and the Treasury spread of 423.4bp to control Li & Fung, with 60% tougher, as the economic issuer’s interests. looked attractive to investors of the voting shares, while slowdown related to the Covid- “I hope issuers with some compared with Asian crossover Singapore-headquartered 19 crisis reduces demand from pressure on ratings will start credits like Country Garden logistics group GLP holds retailers. to consider this structure in Holdings, Shimao Group 40% of the voting shares and “The coronavirus pandemic future,” he said. Holdings and Zhejiang Geely 100% of the non-voting shares has increased Li & Fung’s Holding Group which trade as following the transaction. already heightened business PUBLIC TO PRIVATE much as 100bp tighter. GLP itself is owned by risks and will significantly Investors had shown interest The risk of a downgrade shareholders including Vanke reduce its earnings and at yields as far apart as 4.25% deterred some investors like Real Estate, Hillhouse Capital cashflow this year, and we and 5%, but the final pricing of insurers, but books peaked at and Hopu Logistics Investment expect only a gradual recovery 4.5% left a modest new issue over US$1.7bn, with demand Management, following a in 2021,” wrote Gloria Tsuen, concession of 10bp–15bp. from Europe, Asia and some buyout in 2017. a Moody’s vice president and Li & Fung’s outstanding interest from offshore US Li & Fung’s 2024 bonds were senior credit officer, on August October 2024 bonds, which are accounts. Official book statistics yielding around 9.2% at the 7. „

International Financing Review Asia August 15 2020 11

B1HZVLQGG  People &Markets

TOP STORY US-CHINA TENSIONS Banks left reeling over HK sanctions US also bars use of WeChat and floats China listing ban

A triple whammy of US restrictions against SANCTIONED ûITSûONLYûûINDIVIDUALSûSOûITSû an example of illegal collusion with foreign Chinese companies and individuals has left certainly manageable.” forces. global banks scrambling to understand the “The concern would be if this were to Most lawyers believe this will only apply to risks facing their operations in Hong Kong escalate and, in the context of sanctions, banks in exceptional circumstances, such as and mainland China. the list were extended to the management if they were to actively lobby for sanctions to The US Treasury Department on August of major Chinese companies. The risk of BEûIMPLEMENTED ûBUTûBANKSûFEARûAû(OBSONSû ûANNOUNCEDûSANCTIONSûONûûOFlCIALSû that happening at the moment might seem choice of either adhering to US sanctions and including Hong Kong Chief Executive Carrie theoretical but US-China relations are so breaching the NSL or vice versa. Lam and Luo Huining, director of the Hong VOLATILEûNOW ûITSûIMPOSSIBLEûTOûRULEûOUTv In an August 8 circular, the Hong Kong +ONGû,IAISONû/FlCEûANDû#HINASûTOPûOFlCIALû -ONETARYû!UTHORITY ûTHEûCITYSûDEûFACTOû in the city, over their involvement in the HOBSON’S CHOICE central bank, said unilateral sanctions from passage of the new national security law. The sanctions freeze any US assets held foreign governmens had no legal standing The announcement came only a day by the 11 individuals and generally bar in Hong Kong and called for banks to treat after President Donald Trump issued US companies and individuals from doing all customers “fairly”. two executive orders banning all US business with them. This dilemma will be particularly tricky transactions related to WeChat and According to lawyers, global banks for HSBC and STANDARD CHARTERED, both of Bytedance, the owner of video app TikTok. would be able to get around the sanctions whom publicly – and controversially – Messaging service WeChat is seen as as long as they do not help the individuals supported the NSL and rely on Hong Kong essential for anyone seeking to do business named to do business in the US and any FORûAûSIGNIlCANTûPORTIONûOFûGROUPûEARNINGS in China, and the ban could have big transactions are carried out by their non-US HSBC and StanChart declined to comment. IMPLICATIONSûFORû53ûBANKSûABILITYûTOûDEALû entities, although most expect banks to with Chinese clients, particularly for their err on the side of caution by severing ties UNWORKABLE SOLUTION? traders and salespeople. ALTOGETHERûWITHûTHEûûOFlCIALS The details of the US ban on WeChat are Also on August 6, a working group that “Both European and US banks are taking not yet clear, and any restrictions will not includes Treasury Secretary Steve Mnuchin a fairly conservative view, mainly because take effect until September 20, but the and Jay Clayton, chairman of the Securities they have global policies that require them move has prompted at least one US bank and Exchange Commission, recommended TOûADHEREûTOû/&!#û;/FlCEûOFû&OREIGNû!SSETSû to remind its employees not to use social the delisting of Chinese companies from Control] sanctions,” said Nick Turner, media apps when dealing with clients. US exchanges if US regulators are unable a Hong Kong-based lawyer at Steptoe & (ONGû+ONGSû3ECURITIESûANDû&UTURESû to access their audit documents by January Johnson specialising in economic sanctions. Commission updated its guidance two years 2022. /NEûBANKERûTOLDû)&2ûHISûlRMûHADû ago to allow the use of instant messaging The policy announcements have caused suspended the accounts of individuals apps subject to certain caveats, such as anxiety among global banks. sanctioned by the US. properly maintaining records of client orders. “The risk at the moment of this having Adhering to the US sanctions throws up Most global banks do not allow a major impact on who banks can do a particular problem for banks in Hong their staff to use WeChat for business business with is low,” said one banker. “If Kong, as the new national security law lists communications, but bankers and traders you take the individuals who have been sanctions against China or Hong Kong as say that it is informally acknowledged

Who’s moving where...

„ DEUTSCHE BANK has Haitham Ghattas, „ JP MORGAN has after Jeremy Larkin’s named Mayooran who was promoted hired Duncan Mann departure last year. Elalingam head of to head of capital from Credit Suisse Mann was with investment banking markets for APAC last as head of financial Credit Suisse for coverage and advisory year. sponsors and co- just over 18 months, for Asia Pacific. The changes are the head of industrials serving as head of Elalingam, who has first major shake-up coverage for Australia financial sponsors run the bank’s M&A to the investment and Zealand. and responsible for advisory business banking leadership Mann will co-head industrials coverage in APAC since 2013, in the region since industrials coverage for Australia and will have oversight Alexander von zur alongside Seth New Zealand. He of origination and Muehlen took over Schwartz, who took previously worked advisory efforts in as APAC CEO last over as head of at Deutsche Bank as the region alongside month. industrials coverage well as UBS.

12 International Financing Review Asia August 15 2020

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that maintaining a relationship with Chinese clients without WeChat is almost ABN AMRO shrinks outside Europe impossible. Lawyers do not expect the US to enforce ABN AMRO is quitting trade and commodity banking, commercial banking, CIB and a ban that would prevent American bankers lNANCEûACTIVITIESûANDûWILLûWINDûDOWNû treasury. in Hong Kong or China from using WeChat, corporate banking in the US, Asia, Australia ABN said about 80% of the CIB non-core or block US banks from dealing with and Brazil under a plan to shrink its portfolio will mature by 2023 through Tencent Holdings, its parent company. A investment bank. About 800 jobs will go. natural run-off. It said it will consider move against Tencent – however unlikely – The Dutch bank said on Wednesday the options to accelerate the wind-down. would come as a big blow to US investment focus of its slimmed-down corporate and Its loan impairment allowance for the BANKS ûGIVENûTHEûEXTENTûOFûTHEûTECHûGIANTSû institutional banking division will be on non-core portfolio is €1.4bn and it expects portfolio: just last week, Goldman Sachs, clients in northwestern Europe and clearing. additional impairments. It also expects to JP Morgan and Morgan Stanley all worked It is setting up a non-core unit for book a provision of about €200m for staff- on the US$2.1bn New York listing of KE CIB, which will include about €14bn related costs. Holdings, which counts Tencent among its (US$16.53bn) of risk-weighted assets, or 35% ABN has made several attempts to major shareholders. (See News.) OFû#)"SûTOTALû4HEûNON COREûARMûWILLûHAVEû INCREASEûPROlTABILITYûANDûREDUCEûRISKSûINû A ban on China-to-US listings would about €18bn in client loans, equivalent to CIB after losses in the energy sector, but it be far more painful for US banks and 45% in CIB. SAIDûTHEûATTEMPTSûHADûBEENûINSUFlCIENT investors, but may become reality by It said about 800 employees are currently Swaak said the core Amsterdam-based January 1 2022 if Beijing continues to block dedicated to non-core activities and the CIB business will target markets where it US oversight of Chinese audits. wind-down of the businesses is expected HASûSCALEûANDûCANûBEûSUFlCIENTLYûPROlTABLEû Market participants stress the SEC must to take three to four years and be capital ANDûTRYûTOûBUILDûONûITSûPROlTABLEûDOMESTICû launch a public consultation before making accretive. franchise and footprint with links to the any such change. The recommendations “We have concluded that to be Netherlands. also suggest that Chinese companies SUCCESSFUL û#)"SûACTIVITIESûNEEDûMOREû That is likely to focus on mid-sized clients may appoint a co-auditor to satisfy the focus and scale,” said CEO Robert Swaak. INûSECTORSûSUCHûASûlNANCIALûINSTITUTIONS û Public Company Accounting Oversight “Furthermore, CIB will need to reduce risk shipping, technology, media and telecoms, Board, which oversees the audits of listed TOûADHEREûTOûAûMODERATEûRISKûPROlLEûANDû and real estate, and on products including companies, hinting at a workaround. WILLûALIGNûTOûTHEûBANKSûOVERALLûSTRATEGYûANDû LENDING ûPAYMENTSûANDûASSET BASEDûlNANCE û Lawyers, however, are doubtful about lNANCIALûANDûNON lNANCIALûAMBITIONSv as well as the markets products. that solution. Its only non-European corporate banking It is sticking with clearing because h)ûDONTûSEEûHOWûTHATûWOULDûWORK vûSAIDû activities will be clearing, where the it has strong roots in the Netherlands, Alan Seem, a US-based partner at Jones Day. bank said it had taken several de-risking OFFERSûDIVERSIlCATIONûOFûINCOMEûANDûISû “The offshore auditor would need access measures in recent months after incurring countercyclical, the bank said. to company information in China, which a large loss. ABN said it wants the core CIB business would then become part of their offshore ABN has already cut its markets activities to produce a return on equity of 10% in the work papers, which would then be subject in recent years, including equities, rates, LONGûTERMû4HEûCOREûBUSINESSSûPROûFORMAû to audit by the PCAOB.” credit, currencies, equity capital markets RoE was 9% in 2019 but negative 12% in the “There needs to be some agreement and debt capital markets. The markets lRSTûHALFûOFûTHISûYEARû between the US and China about what the business largely serves clients in private STEVE SLATER PCAOB wants to be able to see. Once that is sorted out, it should not matter where the company auditor is located.” Follow IFR Asia @IFRAsia THOMAS BLOTT

Please contact us if you have information about job moves: people.markets@refinitiv.com

„ BARCLAYS has the region. „ HSBC has promoted Hong Kong-based appointed Atul Jhavar continues in Christophe Oleron employees rumoured Jhavar to run its his current role as to the role of global to be quitting HSBC green, social and head of South-East head of trading for last month following sustainability debt Asia DCM. He will index arbitrage, news that global financing business continue to report to Delta One and stock equities boss Hossein for investment grade Avinash Thakur, head borrowing and Zaimi was leaving the clients in Asia Pacific. of debt origination lending. bank. Jhavar will work with for APAC, and now Oleron, who formerly Oleron will remain the DCM and fixed also reports to served as head of in Hong Kong and income syndicate Susan Barron, global prime finance trading report to Loic Lebrun, teams to originate, head of green and for the Asia Pacific HSBC’s global head structure and execute sustainable capital region, was one of of prime finance. ESG debt products in markets. a number of senior

International Financing Review Asia August 15 2020 13

B3HRSOHDQG0DUNHWVLQGG  People &Markets

or more,” he said. Blockchain bond exchange debuts “By breaking bonds into blocks, we allow OTHERSûTOûHAVEûAûDIVERSIlEDûlXEDûINCOMEû 3INGAPORE BASEDûlNTECHûSTART UPûBONDEVALUE all of them liquid. But I can certainly try, portfolio. Someone coined the term HENRY, went live on Wednesday on what it claims along with our partners, to make the top 100 meaning high earnings, not rich yet. The ISûTHEûWORLDSûlRSTûBLOCKCHAIN BASEDûBONDû bonds trade like equities,” Banerjee told IFR. AIMûISûESSENTIALLYûTOûSERVICEûTHEûlNANCIALû exchange. “Think of it like the Dow Jones Industrial needs of these people.” BondEvalue said in a statement that the Average; it has the 30 biggest stocks. We Banerjee also said that the fact that the lRSTûBONDûTRADEDûONûTHEû"ONDBLO8û"ONDû want to list the most popular hundred blockchain technology allows settlement to %XCHANGEû""8 ûWASûFOODûANDûAGRI BUSINESSû bonds.” take place on a T+0 basis, as opposed to the /LAMû)NTERNATIONALSûû53ûDOLLARûBONDû According to Banerjee, bonds traded on typical T+2 settlement for over-the-counter maturing 2023 at a price of 100.25. the platform will include Singapore dollar bonds, thereby reducing the counterparty The US$8,000 trade took place between and US dollar-denominated bonds, typically SETTLEMENTûRISK ûWOULDûALSOûMAKEû""8û a Singaporean citizen and a Singaporean in the Triple B to Double B range, due to attractive to investors. permanent resident. Northern Trust was the high demand among investors for these Banerjee is unperturbed by the fact that the custodian. types of assets in their search for yield. most bonds are traded OTC, primarily 5/"û+AYû(IANûANDûMULTI FAMILYûOFlCEû /NEûNOVELTYûABOUTû""8ûISûTHATûITûALLOWSû because of the size of the bond markets Taurus Wealth Advisors both joined as investors to trade bonds that have been and the fact that secondary trading in most members of the exchange. converted into fractionalised assets of bonds is illiquid, as well as the fact that "OND%VALUESûFOUNDERûANDû#%/û2AHULû US$1,000, much like depositary receipts in efforts to date by a number of established Banerjee said that the company, which the equity markets. bourses to develop the exchange-traded launched in 2016 and is best known for Banerjee said this would allow bonds to bond markets have been limited. providing bond prices and news for investors, be traded among a wider group of retail h4HERESûNOûDOUBTûINûMYûMINDû would be onboarding more members in the investors. that investors want ease of trading, months to come and would start by facilitating “If you have less than US$5m dollars, transparency in bond prices and frankly to trading in 100 of the most liquid bonds. ITSûVERYûHARDûFORûYOUûTOûBUILDûAûDIVERSIlEDû have smaller bid-offer spreads. To me, that “My aspiration is limited. I think there are bond portfolio if only because bonds are is not in doubt at all,” he said. EIGHTûMILLIONûBONDSûINûTHEûWORLDû)ûCANTûMAKEû usually traded in unit sizes of US$200,000 THOMAS BLOTT

of the strong rally, which they think is more The retail blitz, while so far contained, is China stock rally technical than fundamental-driven,” he said. where risks might lie. That frenzy is reminiscent of 2015 when The amount investors borrowed from invites 2015 the Communist Party tried to compensate for brokerages for stock purchases has jumped weak economic growth by spurring the stock BYûAûlFTHûTOûOVERû2MBTRNû53BN ûINû parallels market to a seven-year high. Then the lack of JUSTûTWOûMONTHSûANDûSOMEûCASHûISûmOWINGû macro backing and excessive retail leverage into structured products that previously A state-endorsed rally in Chinese stocks has triggered a 45% collapse. caused speculative bubbles. DRIVENûPRICESûTOûlVE YEARûHIGHS ûSPURREDûAû Those arguing this time is different Mutual funds have had to suspend retail investor splurge and raised concern POINTûTOû#HINASûSPEEDYûRECOVERYûFROMûTHEû investments in new funds after a deluge of among some market participants about a coronavirus pandemic, apparent in rebounds subscriptions. Advertisements for margin REPEATûOFûSûSTOCKûMARKETûTURBULENCE INûMANUFACTURINGûACTIVITY ûINDUSTRIALûPROlTSû lNANCINGûOUTSIDEûTHEûBROKERAGEûSYSTEM û Yet, despite signs of froth in some stocks, and retail sales. which are banned, have also exploded on analysts reckon it will be a while before While some shares, particularly those on social media. valuations or leverage weigh on the market. 3HANGHAISûTECH HEAVYû3TARûMARKET ûSEEMû h)TSûAûBITûLIKEûINû
vûSAIDûONEûUSERûONû Blue-chip Chinese stocks have been rising bubbly, Chinese blue chips are trading 7EIBO û#HINASûVERSIONûOFû4WITTERûh4HEû to their highest levels since June 2015, while around 14 times earnings, which is cheap difference now is that we dare not readily the renminbi is threatening to strengthen both by historical and global comparisons. put money into business and property whose past the closely watched seven-dollar mark. The main Shanghai stock index is around prices are not rising, so we can only put extra Surging volumes and a deluge of foreign 3,350, half the levels seen at the 2015 peak. money into the stock market.” money triggered the run-up in share Tai Hui, Asia chief market strategist at JP prices. It gained pace on August 3 after the RETAIL BLITZ Morgan Asset Management, said regulators China Securities Journal, which is seen as a Much of the 2015 rally was driven by would not be overly concerned yet. government mouthpiece, called for a healthy UNREGULATEDûMARGINûLENDINGûTHATûINmATEDûTHEû “If, for example, we start to see people BULLûMARKETûINûSTOCKSûTOûSTRENGTHENû#HINASû shares of low-quality technology start-ups, take out leverage to bet on stock markets, the diplomatic hand. WHILEû"EIJINGSûTIGHTûGRIPûONûlNANCIALûMARKETSû age-old indicator of broker accounts, if that Long Aihua, who works at a branch of kept foreigners out. starts to spike again, then yeah, I think (the) Guoyuan Securities, has seen a frenetic rush This time, investors are focused on sectors regulator might want to come out and cool among retail investors to open new stock- ATûTHEûFOREFRONTûOFûTHEûGOVERNMENTSûPUSHû things down a bit,” Hui told a media event in trading accounts or activate dormant ones. FORûSELF SUFlCIENCY ûSUCHûASûSEMICONDUCTORû Hong Kong. “Heady new investors are rushing into the ANDûARTIlCIALûINTELLIGENCEûlRMS ûANDûFOREIGNû “But I think we are still early in that rally.” market, but many seasoned clients are wary money is adding resilience, brokers say. STANLEY WHITE, SAMUEL SHEN

14 International Financing Review Asia August 15 2020

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Another former Goldman banker, Roger 1MDB wipes out Goldman earnings Ng, has pleaded not guilty to charges of conspiring to launder money and bribe GOLDMAN SACHS has revised its quarterly in investment banking revenues. GOVERNMENTûOFlCIALSûINû-ALAYSIAûANDû!BUû earnings downwards following its US$3.9bn On July 24, Goldman reached a US$3.9bn Dhabi through the bond offerings that settlement with the Malaysian government settlement with the Malaysian government Goldman handled. over its involvement in the 1MDB scandal. over its involvement with 1MDB in which it US and Malaysian authorities estimate 4HEû53ûINVESTMENTûBANKûSAIDûINûAûlLINGû agreed to pay US$2.5bn in cash in addition US$4.5bn was stolen from the fund with the US Securities and Exchange to an unusual guarantee that Malaysia between 2009 and 2014. Goldman has Commission on August 7 that it had upped recovers at least US$1.4bn in assets that consistently said it was misled by Leissner its provisions for litigation and regulatory have been seized by governments around and that certain members of the former proceedings to US$2.96bn from US$945m the world. Malaysian government and 1MDB lied to previously. Goldman has been dogged by questions it about how proceeds from the bond sales 4HISûWIPEDûOUTûALMOSTûITSûENTIREûPROlTû over its involvement with 1MDB ever since were used. for the second quarter, which now stands it netted close to US$600m from raising The US bank is still in talks with at US$197m compared with the previously US$6.5bn for the fund in three private regulatory agencies in the US led by the stated total of US$2.25bn. placements between 2012 and 2013. Department of Justice over a settlement, Goldman had previously outstripped 4IMû,EISSNER ûWHOûASû'OLDMANSûFORMERû with most analysts expecting that Goldman earnings expectations for the second South-East Asia chairman was responsible WILLûPAYûAûlNEûOFûAROUNDû53BNnBN quarter after recording its best FORûMANAGINGûTHEûBANKSûRELATIONSHIPûWITHû The negotiations are understood to hinge PERFORMANCEûINûlXEDûINCOME ûCURRENCIESû the sovereign wealth fund, has pleaded on whether Goldman will be forced to and commodities trading in nine years, guilty to charges in the US of conspiracy to plead guilty to federal criminal charges, up 149% year on year, in addition to a 46% launder money and conspiracy to violate WHICHûWOULDûBEûAûlRSTûFORûTHEûBANKû increase in equities trading and a 36% gain the Foreign Corrupt Practices Act. THOMAS BLOTT

we will ever get,” said ING. with the biggest driver a 9% rise in thermal Asia missing APAC is the largest carbon emitter by power generation and in cement output. region, accounting for 47% of total global “China has also approved plans for new green opportunity emissions compared to 15% for the US and coal power plant capacity at the fastest rate 9% for the European Union. since 2015,” said ING. – ING Perhaps more worryingly, while the “In short, it looks as if the government US and EU have reduced their carbon FOUNDûITûDIFlCULTûTOûIGNOREûTHEûQUICKû 4OOûMANYû!SIA 0ACIlCûCOUNTRIESûAREûMISSINGû emissions since 2000 by 10% and 18%, ECONOMICûBENElTSûOFûPRODUCINGûMOREû THEûOPPORTUNITYûTOûUSEûTHEIRûlSCALûRESPONSESû RESPECTIVELY û!0!#SûEMISSIONSûHAVEûGROWNû electrical power from coal and more to the Covid-19 pandemic as a way to reset by 125%. cement for construction to get the economy environmental policies in a region that Even using a very lax measure of green moving again, in spite of its greener ACCOUNTSûFORûALMOSTûHALFûTHEûWORLDSûCARBONû spending, ING found that only New Zealand ambitions.” emissions, according to research from ING. and Singapore intend to spend over 10% of "YûWAYûOFûCOMPARISON ûTHEû%5SûõTRNûû Reduced movement and the sudden TOTALû#OVID ûSTIMULUSûONûAREASûTHATûlTûTHISû (US$2.15trn) response earmarks 30% of the economic slowdown have delivered a criterion. package for climate protection and says all big drop in pollution levels, with smog The percentages to be spent from China spending must contribute to EU emissions- DISAPPEARINGûFROMûCITIES ûANDûlSHûANDûOTHERû (1.7%), Australia (0.14%) and Japan (0.02%) cutting goals. aquatic life returning as rivers clear. are modest at best. The bloc plans to issue roughly a third of “With most of our economies likely to There does not seem to be any clear the €750bn recovery fund as green bonds, LOOKûVERYûDIFFERENTûWHENûWEûlNALLYûEMERGEû reasons why countries in APAC have not which would make the EU the biggest from social distancing, this is being seen taken a greener route to Covid-19 stimulus, issuer globally and nearly double the size of by some countries and regions as a once- with ING pointing out that research the market in time. in-a-lifetime opportunity to lock in these suggests in many cases green stimuli can In addition, the EU has proposed environmental gains,” said ING in a report. deliver a stronger boost to the economy. raising revenue against borrowing via 4HEûFAILUREûTOûUTILISEûTHEûLARGE SCALEûlSCALû environmentally friendly means, with measures brought by governments in the CHINA FALLS BEHIND a carbon border adjustment, emissions region to reposition their economies on 3INCEû û#HINASûCARBONûEMISSIONSûHAVEû trading system and a plastic packaging to a greener and more sustainable footing roughly doubled and presently account for waste tax. represents a wasted opportunity, with most more than a quarter of the global total. While the EU is clear in its ambitions, choosing to follow traditional stimulus The lockdown in response to the it is perhaps too soon for the APAC region measures. PANDEMICûCAUSEDûAûSIGNIlCANTûREDUCTIONû to be able to immediately replicate the h4HEûlSCALûRULEûBOOKSûHAVEûBEENûRIPPEDû in air pollution in China as major cities approach given the structural differences up, and cost can no longer be cited as an ground to a halt, but the recovery has seen in their economies and the relatively EXCUSEûFORûINACTIONû4HISûISNTûQUITEûAûCLEANû it make a swift return. less attractive nature of green policies at slate for a total rethink of our economies, CO2 emissions rose by 4%–5% year on year present due to low fossil fuel prices. but it is probably the closest thing to that in May 2020, according to carbonbrief.org, DAVID CHEETHAM

International Financing Review Asia August 15 2020 15

B3HRSOHDQG0DUNHWVLQGG  People &Markets

additional capital. India to delay bad debt recognition “Private investors, for example, may be more reluctant to participate in sales )NDIASûNEWLYûANNOUNCEDûLOANûRESTRUCTURINGû and weak monitoring,” Fitch said. of stakes in state-owned lenders until the scheme will prolong the uncertainty over This time around, an expert committee impact of the pandemic on their balance ASSETûQUALITYûINûTHEûCOUNTRYSûBANKINGû led by veteran banker KV Kamath will be set sheets is clear,” the rating agency added. system, Fitch warned last week. up to rule on the details and examine any To be eligible for the one-time The Reserve Bank of India on August resolution where the aggregate exposure restructuring scheme, the borrower must 6 announced a one-off window allowing is more than Rs15bn (US$200m). However, not have been in default for more than banks to restructure loans hit by the Covid- the new policy does not address the issue of 30 days as of March 1 2020. Lenders must 19 pandemic without recognising them as oversight for loans to individuals and small set aside additional provisions of 10% on bad debts, in a move designed to head off a businesses, which account for a substantial the post-resolution debt, rising to 20% if longer-term spike in non-performing assets. portion of the future asset-quality stress the lenders do not sign an intercreditor While the restructuring window will linked to the pandemic. agreement at the time of the restructuring. allow banks to preserve and build their “There is also a risk that the The scheme is designed to give state-owned capital buffers, the scheme is reminiscent restructuring policy could undermine banks more time to raise capital, since the of the strategy that delayed the recognition the insolvency and bankruptcy code, #OVID ûCRISISûHASûERASEDûTHEûBENElTSûOFû of bad loans in the early 2010s, the rating established in 2016, by sidelining the legal recent capital raisings. Fitch has warned agency said in a note. process that it set up,” Fitch added. that state-owned banks would struggle to h)NDIASû ûEXPERIENCEûWITHû The new policy will also reduce maintain a 6.125% common equity Tier 1 permitting broad-based debt restructuring transparency over asset quality, which ratio under a high-stress scenario. was characterised by poor implementation could make it harder for banks to access KRISHNA MERCHANT

IN BRIEF Australia and hired Robbie Vanderzeil, who retired in March after 25 years at UBS, most Commonwealth Bank of Australia was partly offset by a strong performance in recently as chairman of investment banking in Final dividend announced markets on increased volatility. Australasia, as Australia CEO. International financial services, New Zealand, He was joined by fellow UBS alumni Dane COMMONWEALTH BANK OF AUSTRALIA said that it and business and private banking also saw FitzGibbon, formerly co-head of equity capital would pay out a final dividend even as its annual their cash profit decline by 48%, 23% and 9% markets in Australia and New Zealand, and John cash profit fell 11% to A$7.3bn (US$5.2bn), respectively, while cash profit for retail banking Spencer, who ran ECM syndicate Down Under. primarily on the back of an increase in bad loan services edged up 2%. Sarah Rennie, who recently stepped down from provisions due to the Covid-19 pandemic. The bank’s common equity Tier 1 ratio came in Goldman Sachs, where she was head of ECM in CBA announced on Wednesday a final dividend at 11.6%, up 90bp year on year, primarily due to Australia and New Zealand, also joined the firm. of A$0.98 per share, down from A$2.31 last year. the lower dividend payout. The calibre of Jarden’s hires sent shockwaves The dividend plans of Australia’s number one through Australia’s investment banking lender were being closely watched, coming Jarden community, which is no stranger to seeing only two weeks after the country’s prudential Partnership with Credit Suisse ends boutique firms launching Down Under. regulator gave the green light for banks to Jarden has since then been adding to its ranks resume distributions to shareholders. CBA Kiwi upstart boutique JARDEN has ended its including most notably Aidan Allen, who operates on a different financial calendar to the strategic alliance with CREDIT SUISSE, bringing to previously served as UBS’s co-head of Australia other major banks in Australia. a close a 30-year partnership between the two and New Zealand investment banking. The Australian Prudential Regulation Authority firms. It also landed its first Australian client, advising was the first major regulator globally to lift Jarden and Credit Suisse agreed to sever ties Home Consortium on its A$140m (US$100.1m) restrictions on capital distributions introduced in only a few months after Jarden announced it institutional share placement last month response to Covid-19, although it said that banks was expanding into Australia, prising away alongside Goldman Sachs. would need to carry out regular stress tests and some of the country’s top bankers in the process. Credit Suisse had advised on the property that they should retain at least half their earnings. Jarden, which was bought out by the firm’s owner’s A$300m IPO alongside Goldman Sachs CBA said today that cash profit for the full year management from Credit Suisse in 2002, and JP Morgan the year before. to June 30 came in at A$7.3bn against A$8.22bn previously had an agreement with Credit Suisse last year. This was primarily as a result of whereby it would cut the Swiss lender in on First Capital an increase in loan impairment expenses by deals in New Zealand by Australian issuers and Merger with Capital Securities planned A$1.32bn year on year to A$2.52bn. vice versa. The bank’s total operating income edged up “Credit Suisse Australia and Jarden jointly China plans to merge domestic broker FIRST 1% to A$23.76bn as growth in home lending announced today that both organisations have CAPITAL SECURITIES with smaller rival CAPITAL and deposits offset a 2bp slide in the bank’s net agreed to exit our formal strategic alliance, SECURITIES, three sources said. interest margin to 2.07%, primarily due to lower given the evolving strategic priorities of both China wants to level the playing field as it interest rates. firms. There will be an orderly transition over opens up its financial markets to foreign players Institutional banking and markets recorded a the coming months,” Credit Suisse said in a including Goldman Sachs and Morgan Stanley, 41% drop in cash profit to A$655m, in part due statement on Friday. said two of the sources with knowledge of the to an 8% decline in net interest income, which Jarden announced plans in May to expand into matter.

16 International Financing Review Asia August 15 2020

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The merger strategy is being encouraged by The Kuala Lumpur-based rating agency covers Mongolia, and Hong Kong-listed Huishang the China Securities Regulatory Commission, corporates and financial institutions and is best Bank, to take over Baoshang’s operations. the top securities regulator, the state-run China known for its expertise in infrastructure and Last month, regulators also announced that Securities Journal reported last month. project finance. they had taken over for one year the brokerages, Shenzhen-listed First Capital, with a market value Malaysia has the largest domestic corporate trust companies and insurers linked to of US$6.2bn, plans to issue new shares to privately bond market in South-East Asia and is a major Tomorrow Holdings. owned Capital Securities in a deal valuing the global hub for Islamic finance as the world’s Tomorrow Holdings is the Beijing-based smaller firm at about US$1.4bn, said one source. largest sukuk market. conglomerate owned by billionaire Xiao Jianhua, The merger of the two firms could be finalised as Moody’s did not disclose the stake’s size or the who is reportedly facing corruption charges in early as this year, the source added. acquisition price. mainland China. Shares in First Capital surged by the maximum 10% on the news on Thursday to their highest Baoshang Bank Bank SinoPac level since August 6. PBoC gives nod to bankruptcy Singapore branch planned The Beijing municipal government owns 23% of First Capital and 91.5% of Capital Securities China’s central bank said it would allow BANK SINOPAC has received permission from via several companies, the corporate registry BAOSHANG BANK to file for bankruptcy and Taiwan’s Financial Supervisory Commission to showed. liquidate its remaining assets. open a branch in Singapore, the government Capital Securities had been preparing for a The decision by the People’s Bank of China agency said on Tuesday. domestic listing for months but had slowed marks a rare departure from China’s usual policy Regulators in Singapore are yet to approve down the process to prioritise the potential of propping up ailing banks out of concern for the proposal and the opening date is yet to be merger, said another source. the social cost of any bank failure. confirmed. First Capital said in a filing on Thursday night The equity of Baoshang’s original shareholders The privately owned lender has overseas that media reports on its merger with Capital and unprotected creditors’ rights will be branches in Ho Chi Minh City, Hong Kong, Los Securities are untrue and it is not planning such liquidated, according to media reports. Angeles and Macau, as well as a representative a merger for at least three months. The PBoC took the decision having examined office in Hanoi. Capital Securities, the Beijing government and Baoshang’s assets and liabilities and Twelve other Taiwanese banks have branches in the Beijing office of the state asset regulator did determined that the Inner Mongolia-based Singapore. not respond to requests for comment. lender was insolvent, those reports said. The potential tie-up comes as China’s largest In May last year, regulators seized control of Securities Commission of Malaysia broker, Citic Securities, is in the process of Baoshang, which was once 89% owned by REIT gearing ceiling lifted merging with smaller peer China Securities, Tomorrow Holdings, citing severe credit risks. said the other two sources. Both companies The PBoC subsequently said that a small group Malaysia’s Securities Commission has raised the have previously dismissed media reports on the of creditors, representing about 0.02% of the gearing ratio for Malaysian REITs (M-REITs) to merger. bank’s overall creditors, would face haircuts on 60% from 50% until the end of 2022. their outstanding debt. The temporary measure is aimed at increasing Moody’s According to analysts, this was the first cashflow flexibility for property trusts and to Stake in Malaysian rating agency government takeover of a bank since 2001 when alleviate any financing difficulties during the Shantou Commercial Bank was brought under Covid-19 pandemic. MOODY’S has acquired a minority stake in Beijing’s control following a corruption scandal. The SC said last week that the higher gearing MALAYSIAN RATING CORPORATION (Marc), both This was also the first time that creditors faced ratio would help M-REITs manage their debt companies announced. any losses from a failing Chinese bank since the and capital structures more efficiently. It said Marc said the investment by the US rating collapse of Hainan Development Bank in 1998. it expected the REIT managers to take into agency would strengthen its leading position in Regulators have since approved Mengshang account the REITs’ sustainability levels before the sukuk market, which it has rated since 2001. Bank, a newly created bank based in Inner adding on more debt.

International Financing Review Asia August 15 2020 17

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www.loanpricing.com [email protected] COUNTRY REPORT Australia 19 China 22 Hong Kong 29 India 31 Indonesia 32 Japan 33 Malaysia 34 New Zealand 35 Philippines 36 Singapore 36 South Korea 38 Taiwan 38 Thailand 39

notes with Asia taking 15.5% and EMEA mandated ANZ and NAB to arrange investor 0.3%. Banks were allotted 69.8%, asset update calls beginning August 17 for a AUSTRALIA managers 21.8%, middle market 4.2% and potential seven-year or longer fixed-rate others 4.2%. Australian dollar MTN offering. Bank of China, Macquarie, NAB and Westpac GAP invests in logistics and business DEBT CAPITAL MARKETS were joint lead managers. park assets within the eastern seaboard of Australia. › BOC SYDNEY REAPS SCARCITY REWARDS › QBE MARKETS TIER 2 NOTE

Regular issuer BANK OF CHINA, SYDNEY BRANCH QBE INSURANCE GROUP (A3/A–/A–) held an STRUCTURED FINANCE (A1/A/A) was the only bank to access investor update call last week for a the senior market last week and took potential Australian dollar 16-year non- › PEPPER SECURES TIGHTER MARGINS advantage with a A$600m (US$427m) sale call six-year Tier 2 floating-rate note, rated of three-year floating-rate notes. Baa1/BBB (Moody’s/S&P). PEPPER GROUP priced an upsized A$1bn On a final order book in excess of ANZ and Citigroup have been mandated (US$712m) non-conforming RMBS last A$1.23bn the August 18 2023s priced last as joint arrangers and joint lead managers Wednesday, PEPPER PS27, at spreads well Wednesday well inside 87bp area guidance with Barclays, CBA, HSBC and NAB. inside the originator’s previous RMBS sale at three-month BBSW plus 80bp. This two months earlier. compares with the current Australian › GOODMAN MARKETS MTN SALE CBA was arranger and joint lead manager major bank clearing rate of 40bp–45bp, with Macquarie, NAB and Westpac for the according to Sydney syndication desks. GTA Finance, the financing arm of GOODMAN offering which had an indicative issue size Australian investors bought 84.2% of the AUSTRALIA PARTNERSHIP, rated BBB (S&P), has of A$500m.

Aussie states extend supply spree

„ Bonds Plenty more to come after three biggest semi-sovereign issuers raise A$2.4bn

Australia’s three most populous states and 128bp wide of the May 2041 ACGB and approximately A$5bn, around one-quarter of extended their bond issuance sprees last EFP. the state’s expected funding requirement for week to help meet ballooning Covid-19 On Friday lead manager NAB helped 2020–2021 of A$19bn–$22bn.In a research spending needs and shrunken revenue TCorp price a A$112m 2.45% August 24 2050 note last Thursday, ANZ reported that state streams. bond at par, 58.5bp and 149.5bp pver the authorities had issued more than A$18bn of Hard-hit Victoria, whose capital Melbourne June 2051 ACGB and EFP. semi-government bonds since the beginning has been in stage four lockdown since August By far the biggest trade of the week was of June and that it expects outstanding semis 2, faces a A$7.5bn (US$5.38bn) budget from QUEENSLAND TREASURY CORP (Aa1/AA+/ to be around A$65bn higher than current deficit in the current fiscal year, according to AA), which tapped its 1.75% August 21 2031s levels by 30 June 2021 at A$387bn. state treasurer Tim Pallas, who a few months for A$1.5bn last Wednesday, increasing the “Demand for semi-government bonds are ago had projected a small surplus. size of the line to A$4.55bn. benefiting from the support of Reserve Bank On Wednesday, TREASURY CORP OF VICTORIA, This addition via joint leads ANZ, CBA and policy measures, which have suppressed rated Aaa/AAA (Moody’s/S&P), raised UBS priced at 101.507 to yield 1.60%, within interest rates across the entire Australian A$500m from two long-dated sales. 64bp–67bp guidance at EFP plus 66bp, rates market,” ANZ noted. A A$300m issue of new 2.0% November equivalent to 61bp over the June 2031 ACGB. “Without discretionary policy action, 20 2037 bonds, via sole lead manager In contrast to the smaller TCV and TCorp economic conditions across the states and Nomura, priced at 99.999 for a yield of 2%, issues, which likely targeted one or two territories would have been worse, so we 107.5bp over EFP (10-year futures) and Japanese insurance companies in search of support the policy action, which we also believe 63.5bp wide of the April 2037 ACGB. long-dated, high-quality Australian dollar is likely to be extended and result in even larger TCV also tapped its 2.40% August 18 2050 assets, Queensland’s large deal attracted a deficits than we can currently forecast.” line for A$200m, increasing the size of the broad range of investors. ANZ estimates total gross bond issuance bond to A$360m. UBS led the reopening, Australian accounts bought 83%, with Asia from Victoria, New South Wales and which priced at 99.047 to yield 2.445%, allotted 11%, EMEA 4% and the Americas 2%. Queensland in 2020-21 will be approximately 151bp wide of EFP and 73bp over the March Asset managers and insurance companies A$27bn, A$25bn and A$20bn, respectively. 2047 ACGB. took 39%, bank balance sheets 37%, trading For Western Australia, South Australia, The following day, NEW SOUTH WALES desks 11%, official institutions 7% and hedge Tasmania, Northern Territory and ACT, ANZ TREASURY CORP, rated Aaa/AAA (Moody’s/ funds 7% to the nearest percentage point. anticipates rounded gross supply of A$7bn, S&P), priced a A$300m 2.25% November 20 The reopening took QTC’s total long- A$6bn, A$3bn, A$2bn and A$1bn. 2040 bond at 101.620 to yield 2.185%, 61bp term debt raised since July 1 2020 to JOHN WEAVERS

International Financing Review Asia August 15 2020 19

B&RXQWU\LQGG  Centerbridge commits to Speedcast

„ Loans Investment firm providing US$615m in loan and equity funding

Private investment manager Centerbridge 11 process, and to ensure the company can Speedcast Communications’ super-priority Partners has committed debtor-in- continue to meet its financial commitments DIP term loans totalling US$180m. possession financing of up to US$220m while it works toward confirmation of the A US$90m first-out piece of the DIP as well as US$395m in equity funding to reorganisation. loan was rated BB, while another US$90m SPEEDCAST INTERNATIONAL for its Chapter 11 Holders of secured claims will receive cash second-out facility was rated BB−. recapitalisation. payments under the plan, the filing said. The first-out piece is a new-money loan, The equity commitment from Unsecured creditors generally will share while the second-out facility refinanced an Centerbridge, one of the largest lenders in recoveries from a litigation trust, noting identical amount of Speedcast’s pre-petition with its affiliates, would support a plan to there is no certainty that any action would be first-lien debt. reorganise Speedcast, the communications undertaken or payment made from this trust. The assigned ratings primarily reflect satellite company said in a filing to the The plan does not contemplate any S&P’s view of credit risk borne by the DIP Australian Securities Exchange last Thursday. recovery for existing shareholders, and lenders and are not indicative of any ratings The equity investment provides existing shareholders would no longer the firm may assign to exit facilities or the Speedcast’s existing secured lenders the have an equity interest in the reorganised reorganised firm after bankruptcy, the rating opportunity to participate on a fully pro-rata Speedcast Group. firm said at the time. basis to support the company’s emergence Completion of the equity investment is Credit Suisse is the DIP agent for that from its reorganisation under Chapter 11 of subject to confirmation of the reorganisation facility. Speedcast, which does significant the US Bankruptcy Code. plan and a number of other conditions, business with the stricken cruise line industry, Centerbridge’s DIP financing, if drawn, including various regulatory approvals and filed for Chapter 11 bankruptcy protection on would be used to refinance Speedcast’s waivers. April 23. existing DIP financing, to fund the Chapter In June, S&P assigned Double B ratings to MARIKO ISHIKAWA

The A$297.1m Class A1s and A$402.9m Class equivalent non-conforming RMBS, Pepper issued 11 securitisations, the last being in A1a notes with respective WALs of 0.6 and 2.3 PRS25 in October last year, which included August 2018 via the upsized A$450m ABS, years, both with 30% credit support, priced a US dollar and green euro tranche. CNH Series 2018-1. 95bp and 165bp wide of one-month BBSW. The A$161.4m Class A1a notes, with a The A$115m Class A1 and A$286.85m The A$155m Class A2 notes, A$55m shorter 2.3 year WAL, priced at one-month Class A2 notes, with respective 0.5-year and Class B, A$30m Class C, A$22m Class D and BBSW plus 128bp. 2.3-year WALs, priced at three-month BBSW A$13m Class E notes, with respective WALs The PRS25 Class A2, B, C and D notes, all plus 73bp and 108bp. of 3.2, 3.9, 3.9, 3.8 and 3.4 years, priced with 4.0 year WALs, priced at margins of at one-month BBSW plus 190bp, 290bp, 160bp, 190bp, 280bp and 380bp. 390bp, 515bp and 800bp. SYNDICATED LOANS The transaction was completed by › CNH PRINTS 12TH ABS A$9.1m Class F, A$7.95m Class G1 and › NQ MINERALS TAPS FOR GOLD MINE LBO A$7.95m Class G2 notes. CNH INDUSTRIAL CAPITAL AUSTRALIA issued Respective credit support for the Class A2 to a A$435m ABS last Wednesday, CNH Base and precious metals producer NQ F notes is 14.5%, 9%, 6%, 3.8%, 2.5% and 1.6%. Industrial Capital Australia Receivables MINERALS has signed a US$55m loan to The non-bank lender previously issued Trust Series 2020-1, backed against refinance project debt for the Hellyer gold a A$700m no-grow, non-conforming RMBS agricultural equipment loans. mine in Tasmania. offering, Pepper PRS26, on June 10. ANZ was arranger and sole lead manager The facility from ING Bank is expected For that trade the Class A1s and A1a for the transaction. to provide about US$3.4m of interest notes priced 105bp and 180bp wide of one- The A$189.325m of Class A1 and A$200m savings per annum, NQ Minerals said in an month BBSW, or 10bp and 15bp wider than of Class A2 notes, with respective 0.7 and 2.6- exchange filing last Monday. the latest equivalent tranches. year WALs and 10.5% credit support pried at The agreed commitment letter includes The PR26 Class A2 to D notes priced at one- three-month BBSW plus 95bp and 110bp. a hedging strategy in respect to base metal month BBSW plus 240bp, 310bp, 410bp and The transaction was completed by revenues that allows the Hellyer gold mine 535bp or 50bp, 20bp, 20bp and 20bp more A$10.875m of Class B, A$8.7m of Class B to take advantage of improving market than the comparable notes this time around. and A$26.1m of seller notes. conditions and reduce the market risk of Pre-Covid 19, Pepper sold the A$750m The consumer lender has previously future operations.

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20 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT AUSTRALIA

AGIG entities to consolidate debt

„ Loans Parent creating common financing vehicle

AUSTRALIAN GAS INFRASTRUCTURE GROUP is looking AGN has bonds of A$325m, A$300m, which drew four other Japanese lenders in to create a common financing vehicle for A$220m and A$300m maturing in syndication. three of its portfolio companies - AUSTRALIAN December 2021, July 2024, August 2025 and AGIG’s shareholders are Hong Kong’s GAS NETWORKS, DAMPIER BUNBURY PIPELINE and July 2026, respectively, according to Refinitiv Cheung Kong Group subsidiaries including MULTINET GAS NETWORKS. data. CK Asset Holdings, CK Infrastructure AGIF, the new financing vehicle, and all In May 2019, DBNGP Finance, the Holdings, Power Assets Holdings and CK three operating companies will act as co- financing vehicle for the Dampier to Bunbury Hutchison Holdings. borrowers with cross-guarantees on existing National Gas Pipeline, closed a A$300m AGN distributes natural gas to 1.3 million debt facilities. dual-tranche facility following commitments residential, commercial and industrial While the pricing and maturities of existing from 10 banks. customers across Victoria, South Australia, facilities remain unchanged, the calculations Sumitomo Mitsui Banking Corp was the Queensland, New South Wales and the on applicable financial covenants and mandated lead arranger and bookrunner of Northern Territory. guarantees would be affected. the financing comprising a A$100m five-year DBP is a transmission pipeline stretching AGIF would have an indicative credit rating piece (tranche A) and a A$200m seven-year almost 1,600kms that transports gas of A3 from Moody’s. portion (tranche B). to mining, industrial, commercial and Goldman Sachs is advising on the Tranche A offered an opening interest residential customers across Western amendments and lenders are required to margin of 120bp over BBSY, while tranche B Australia. provide consent by late August. paid 140bp over BBSY. The top-level fees are MGN distributes natural gas to over AGIG had net debt of A$6.4bn 50bp and 70bp, respectively. 687,000 residential, commercial and (US$4.56bn) in 2019 of which AGN In May 2018, Energy Partnership (Gas), industrial customers throughout Melbourne’s accounted for A$2.82bn, DBP and DBP MGN’s funding vehicle, obtained a A$300m inner and outer east, the Yarra ranges and Development Group A$2.44bn and MGN term loan due December 2023, according South Gippsland in Victoria state. A$1.14bn, according to its annual report. to Refinitiv LPC data. MUFG led the loan, MARIKO ISHIKAWA

“The prime purpose of this facility is to › POLY SEEKS A$150M FOR SYDNEY TOWER The deal received strong interest from retire the 2020 maturity debt book, which both existing institutional shareholders and totals just over US$30m,” said NQ Minerals POLY AUSTRALIA is seeking a A$150m new investors. chairman David Lenigas. “Now that the (US$108m) one-year loan for an office Fineos is also raising up to A$5m through ultimate size of the ING facility has been building in Sydney’s central business district. a share purchase plan. determined by both the bank and NQ, Bank of China is the sole mandated lead The Ireland-incorporated, ASX-listed negotiations with each of the 2020 maturity arranger and bookrunner for the facility, provider of enterprise software to life, debt providers can hopefully be concluded which is currently in syndication. accident and health insurers is acquiring in the coming weeks to the satisfaction of In late February, Poly Australia Limelight Health for US$75m. The all parties.” announced it had agreed to purchase 59 acquisition is expected to be completed in On July 16, NQ Minerals announced Goulburn Street in Sydney from Singapore- August. that ING had committed to a US$41m based investment manager SC Capital Macquarie and Moelis are the underwriters. loan to assist with the restructuring of Partners for A$270m. the corporate debt that was put in place The acquisition is the first for Poly Global › SYDNEY AIRPORT EXTENDS RUNWAY during 2017 and 2018 to start the mining Capital, a subsidiary of Poly Global, the operations at the Hellyer mine. international division of China-based Poly SYDNEY AIRPORT HOLDINGS has completed the The six-year loan has an interest rate of Developments and Holdings Group. institutional portion of a A$2bn entitlement 6.5% over one-month Libor and includes Located near Sydney’s Central Station, offer, after it reported a half-year loss due an accordion option to increase it to up the 26-storey tower has a net lettable area to the impact of the Covid-19 pandemic and to US$55m, subject to further conditions, of 19,470 square metres. related travel restrictions. including credit committee approval for the It raised A$1.3bn from the issue of 287m further amount, NQ Minerals said at the time. new shares at A$4.56 each, or a 15.4% Traxys, a physical trader and merchant EQUITY CAPITAL MARKETS discount to the pre-deal close of A$5.39. in metals and natural resources with an There was a 93% take-up rate and the exclusive offtake agreement to buy all › FINEOS COMPLETES A$85M PLACEMENT institutional shortfall bookbuild was of Hellyer’s production, introduced and supported by existing and new institutional supported the facility. FINEOS CORPORATION HOLDINGS has completed an investors. The shortfall was cleared at A$5.30 The new loan also extends Traxys’s A$85m (US$61m) institutional placement per share, A$0.74 above the offer price. offtake agreement from 2024 to the end of to acquire US software-as-a-service provider The 1-for-5.15 rights offer comprises the mine’s life. Limelight Health. 438.8m shares. The A$700m retail portion NQ Minerals is listed on London’s Aquis It issued 20m new shares, or 7% of will run from August 18-20. Stock Exchange and has operations in outstanding, at A$4.26 each, or a 7.2% discount Proceeds will be used for debt and Australia. to the pre-deal close of A$4.59 on August 10. general corporate purposes.

International Financing Review Asia August 15 2020 21

B&RXQWU\LQGG  Following the equity raising, Sydney Airport’s pro forma net debt as at June 30 will decline from A$9.1bn to A$7.1bn and Gascoyne seeks A$40m refi its net debt to 2019 Ebitda from 6.8 times to 5.3 times. „ Loans Gold miner also raising A$85m in equity Combined with cash on hand and undrawn debt facilities, the entitlement Gold miner GASCOYNE RESOURCES is raising expected on September 24, the company said. offer will provide pro forma adjusted about A$125m (US$89m) from a new loan Following its recapitalisation and liquidity of A$4.6bn. and equity to refinance its existing debt. reinstatement, Gascoyne will have a pro- UBS is the sole lead manager. The fundraising comprises a A$40m three- forma cash position of approximately Sydney Airport Holdings posted total year amortising loan signed with Investec A$30.3m, according to the filing. revenue of A$511m for the half year, a Bank and an equity raising of around A$85m. In June, Gascoyne announced a deed of decrease of 35.9% compared to the same The loan offers an interest margin of 5.25% company agreement, which it said will see period last year, and a net loss of A$53.6m. over BBSY, Gascoyne said in a filing to the the company’s shares return to trading on Passenger volumes declined 56.6% to 9.4 Australian Securities Exchange last Thursday. the ASX and provide a potential return to million. The drawdown of the new senior secured unsecured creditors of up to 100 cents on the Its credit rating stands at BBB+/Baa1 (S&P/ loan is subject to conditions precedent dollar in respect to their pre-appointment Moody’s) with a negative outlook. including raising at least A$50m from equity, claims. hedging agreements and refinancing with In March 2019, Gascoyne obtained waivers existing senior lenders, the filing said. and revised the repayment schedule on The drawn amount will be repaid in A$72m in loans. quarterly instalments with the first repayment The amended borrowing included a CHINA due on December 31. A$60m 4.5-year term loan signed with The loan may be restructured or cancelled Commonwealth Bank of Australia and with the outstanding balance, together with National Australia Bank in December 2017 DEBT CAPITAL MARKETS all accrued interest due and payable within and a A$12m working capital facility with 90 days, if a review event occurs. NRW Holdings signed in December 2018. › BEIJING CAPITAL LAND PRINTS On and from financial close, if a person GNT RESOURCES, a wholly owned subsidiary of acquires voting rights in excess of 35% in Gascoyne, is the borrower on the loan, which Property developer BEIJING CAPITAL LAND, rated Gascoyne or if the company fails to meet was part of the overall funding to develop the Ba3/BB+/BB, priced US$200m 363-day 4.5% certain minimum performance targets, it will Dalgaranga gold project in Western Australia. notes at par on August 6, according to a lead to a review event. Gascoyne also amended its repayment terms stock exchange filing. The A$125m funding package will facilitate on the A$12m working capital facility with NRW The Reg S bonds will be issued Gascoyne’s recapitalisation and reinstatement that was fully drawn in January 2019. under a US$3bn MTN and perpetual of its shares for trading on the ASX, which is MARIKO ISHIKAWA securities programme with Central Plaza Development as the issuer and the Hong Kong-listed parent company as guarantor. Proceeds will be used for debt issued at par in February this year. BPHL in October last year. The Reg S notes are refinancing, working capital and general Capital Management is the issuer and the rated BB–/BB+ (S&P/Lianhe Global), on par corporate purposes. Hong Kong-listed parent company is the with the issuer. BNP Paribas was sole global coordinator guarantor. State-owned Beijing Enterprises BOC International, Citigroup, CRIC Securities as well as manager with China Everbright Group, the ultimate parent of the Hong and Valuable Capital were joint global Bank Hong Kong branch, China Securities Kong-listed guarantor, is the keepwell and coordinators on the reopening. They International, CMB International, Guotai Junan liquidity support deed provider. were also joint lead managers and joint International and HSBC. Beijing Properties has businesses in logistics bookrunners with AMTD, Central Wealth warehouses and property development. Securities Investment, CMBC Capital, CMB › BEIJING PROPERTIES TAPS 2023 NOTES International, Haitong International, Orient › E-HOUSE (CHINA) TAPS 2022 NOTES Securities (Hong Kong), Soochow Securities BEIJING PROPERTIES (HOLDINGS) on August 7 International and Vision Capital International. reopened its 5.95% guaranteed bonds due E-HOUSE (CHINA) ENTERPRISE HOLDINGS on August 7 Hong Kong-listed E-House provides February 27 2023 for a tap of US$150m, reopened its 7.625% senior unsecured bonds real estate agency, brokerage, data and bringing the total size to US$750m. due April 18 2022 for a tap of US$100m, consultancy services to some of the biggest The additional bonds were sold at 99.88 bringing the total outstanding to US$300m. property developers in China, including to yield 6%. Proceeds will be used for debt The bonds were sold at 100.99 to yield China Evergrande Group, China Vanke and refinancing. 6.98%, inside initial guidance of 7.25% area. Country Garden Holdings, which are also Guotai Junan International, Silk Road Final statistics were not available at the shareholders. International, Industrial Bank Hong Kong branch, time of writing but orders were said to be CCB International and BOSC International were in excess of US$550m when final guidance › FANTASIA REOPENS 2022 NOTES joint global coordinators on the reopening. was announced, including US$215m from They were also joint lead managers and the leads. Property company FANTASIA HOLDINGS GROUP joint bookrunners with China Citic Bank Proceeds will be used for general (B2/B/B+) has reopened its 7.95% senior International, CMB International and Shanghai corporate purposes and debt refinancing. bonds due July 5 2022 for a tap of US$200m, Pudong Development Bank Hong Kong branch. The original bonds, with a tenor of 2.5 bringing the total outstanding to US$500m. The three-year Reg S unrated notes were years, were issued at 98.339 to yield 8.375% The additional bonds were sold at 99.935

22 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT CHINA

Yunda delivers popular debut dollar bond

„ Bonds Rare investment-grade supply from China’s private sector proves attractive

YUNDA HOLDING, China’s second-biggest PRICE DISCOVERY The Reg S notes will be issued by wholly express delivery company, last Wednesday SF Holding, China’s top express delivery owned subsidiary Yunda Holding Investment priced a US$500m debut US dollar bond company, provided the closest comparable, and guaranteed by the Shenzhen-listed after strong demand left the deal 6.2 times and bookrunners also pointed to other parent company. covered. Chinese privately owned enterprises such Proceeds will be used for working capital, The 2.25% five-year senior unsecured as New Oriental Education & Technology, general corporate purposes and debt notes, rated Baa2 by Moody’s, priced at JD.com, Xiaomi, Weibo and China Mengniu refinancing. 99.864 to yield 2.279%, or Treasuries plus Dairy. ICBC International and Standard Chartered 197.5bp. Final pricing was at the tight end of SF’s 2.875% 2030s, rated A3/A–/A–, were Bank were joint global coordinators as well final guidance of 200bp area, plus or minus quoted at a G spread of 161bp ahead of the as joint bookrunners and joint lead managers 2.5bp, and inside initial guidance of 245bp release of IPG. JD’s 3.875% 2026s, rated with Bank of China, China International area. Baa2/BBB (Moody’s/S&P) were quoted a G Capital Corp, CLSA and BOSC International. Orders peaked at US$3.9bn when final spread of 143bp and Xiaomi’s 3.375% 2030s, Founded in 1999 and headquartered in guidance was announced, and the final rated Baa2/BBB–/BBB, at 222bp. Shanghai, Yunda completed a backdoor book was over US$3.1bn from 116 accounts, ANZ said in a note it saw fair value at listing on the Shenzhen Stock Exchange in including US$720m from the leads. 195bp, adding a 60bp premium to the SF 2017. It had a 16% share of China’s express A banker on the deal said demand was 4.125% 2023s to reflect a two-notch rating delivery market by volume in 2019, Moody’s helped by a lack of supply of investment- differential and two-year extension. said, citing industry data published by the grade issuance from China’s private sector, as “It was obvious that it did not give much State Post Bureau and the company’s annual well as Yunda’s strong market position and new issue premium as most of the feedback report. net cash position. from investors was at around 200bp,” said Yunda has generated free cashflow in the The bookrunners decided on a three-day the banker on the deal. past four years and maintained leverage execution to give investors time to study The newly priced bonds were hovering well below 1.0 times, according to Moody’s. the first-time issuer, rather than the more around reoffer last Thursday morning, their The rating agency expects the company’s common one or two-day window for many first day of trading. financial metrics to remain strong over the Chinese deals. Investors from Asia took 90% of the bonds next 12-18 months, supported by its solid “There was price-discovery element and and EMEA 10%. Fund managers and asset market position, continuous improvements feedback came with a wide range, from a managers received 54%, banks and financial in operating efficiency and prudent financial spread of less than 200bp to mid-200bp,” institutions 40%, and insurers, sovereign policy. said the banker. wealth funds and private banks 6%. CAROL CHAN

to yield 7.98%, inside initial guidance of The final pricing was also inside the Bank Hong Kong branch, Shanghai Pudong 8.375% area. Nomura trading desk’s fair value estimate of Development Bank, China Minsheng Banking Final statistics were not available at the 185bp and CreditSights’ estimate of 175bp. Corp, Dongxing Securities (Hong Kong), Guotai time of writing but orders were said to be Asian investors took 97% of the bonds and Junan International and Credit Agricole. over US$1.2bn when final guidance was Europe 3%. Asset managers, fund managers announced, including US$55m from the leads. and hedge funds were allocated 71%, banks › GUOTAI LEASING PRINTS The Reg S notes are rated B3/B (Moody’s/ 18%, lifers 7% and private banks 4%. S&P).Proceeds will be used to refinance The Reg S notes will be issued by GUOTAI LEASING last Wednesday priced offshore debt due within a year. wholly owned subsidiary China Great US$200m three-year bonds at par to yield Barclays, BNP Paribas, Deutsche Bank, UBS Wall International Holdings V Limited 4%, inside initial guidance of 4.35% area. and Haitong International were joint global and guaranteed by China Great Wall AMC The Reg S offering had initially been coordinators, joint lead managers and joint (International). indicated at benchmark size, before an bookrunners. The notes have expected ratings of update to investors said it would be no BBB+/A– (S&P/Fitch), on par with the more than US$250m. Final orders were › GREAT WALL AMC INTL BOND DEAL HOT guarantor. over US$800m from 45 accounts, including The offshore financing and operating US$340m from the leads. CHINA GREAT WALL AMC (INTERNATIONAL) HOLDINGS’ arm of China Great Wall Asset Management Asia Pacific took 99.8% and EMEA 0.2%. US$500m bond offering has attracted over plans to use the proceeds for refinancing. By investor type, banks and financial US$4.5bn of final orders from 135 accounts. Bank of Communications, ICBC, Agricultural institutions booked 76.8%, asset managers The 2.375% 10-year senior unsecured Bank of China, Bank of China, China Construction and fund managers 22.9%, and others 0.3%. notes were priced at 99.797 to yield 2.398%, Bank, Standard Chartered Bank and Morgan Wholly owned subsidiary Hanhui or Treasuries plus 172.5bp, the tight end of Stanley were joint global coordinators. International will issue the bonds with a final guidance of 172.5bp–175bp and well They were also joint lead managers and guarantee from Guotai Leasing. The bonds inside initial 215bp area guidance. joint bookrunners with China Merchants will also have a keepwell and liquidity A banker on the deal said the bonds were Bank, China Merchants Securities (HK), CLSA, support deed as well as a deed of equity priced about 10bp inside its curve. China Citic Bank International, China Everbright interest purchase undertaking from

International Financing Review Asia August 15 2020 23

B&RXQWU\LQGG  YPE prints first LGFV perp this year

„ Bonds Debut perpetual is the first from China’s south-west

YUNNAN PROVINCIAL ENERGY INVESTMENT GROUP has “Deleveraging was not the main purpose if not called on the first call date of August raised US$300m from a dual-tranche Reg as its leverage is not high but scoring a 20 2023. S bond offering, including the first offshore first from the south-west region will count Citigroup, HSBC and BOC International perpetual by a Chinese local government as an achievement for the company’s were joint global coordinators as well as financing vehicle this year. management,” said the banker. joint lead managers and joint bookrunners The state-owned company, rated BBB Yunnan Provincial Energy has a US$550m with China Minsheng Banking Corp Hong (stable) by Fitch, last Thursday priced a offshore debt issuance quota but low funding Kong branch, Shanghai Pudong Development US$150m 3.5% three-year senior unsecured needs and it therefore set a deal size of Bank Hong Kong branch, CLSA, Guotai Junan note at 99.774 to yield 3.58%, the tight end US$300m from the start. However, in order International, ABC International, Silk Road of final guidance of 3.58%–3.6% area and to compensate for the higher cost of perps International and Shenwan Hongyuan HK. inside initial guidance of 4.2% area. relative to senior bonds, it split that into two CNCB Capital, China Citic Bank It also priced US$150m 4.5% senior perpetual tranches, the banker said. International, CMB Wing Lung Bank and non-call three securities at 99.171 to yield 4.8%, Proceeds are to refinance offshore bonds Huatai International were listed as JBRs the wide end of final guidance of 4.75%–4.8% and for general corporate purposes. when marketing began but were not on the area and inside initial guidance of 5.2% area. Final statistics were not available at list when the deal was priced. Central state-owned enterprises the time of writing but combined orders Yunnan Provincial Energy Investment commonly issue perps as a way to deleverage were said to be over US$1.7bn, including Group is more than 90% indirectly owned but only a few LGFVs have done so. The US$985m from the leads, when final by Yunnan SASAC, with 83.1% held through previous one was Shandong Hi-Speed guidance was announced. Yunnan Provincial Investment Holdings Group’s US$900m 4.3% senior perpetual Both tranches will be issued by wholly Group. The group invests in the energy sector non-call five in July last year. owned British Virgin Islands subsidiary in Yunnan province and has also diversified Yunnan Energy Investment Overseas Finance in the past five years into financial services, EAGER TO INNOVATE and guaranteed by the parent company. industrial parks, energy technology and Yunnan Provincial Energy, which first tapped The senior notes have an expected BBB salt and chemical production. Fitch expects the offshore bond market in 2014, was eager rating and the perp an expected BBB– Yunnan SASAC to directly hold some of the to innovate and went for a debut perpetual, rating by Fitch. The perp coupon would group’s shares after injecting 15.1% of China the first from China’s south-west, a banker on reset at an initial spread of 461bp wide of Copper into it. the deal said. prevailing Treasuries plus a 300bp step-up CAROL CHAN

SHANDONG GUOHUI INVESTMENT, which is rated owned investments and property rights in China Minsheng Banking Corp, Hong Kong Baa2/BBB+ (Moody’s/Fitch). Shandong province. branch, GF Securities, Goldbridge Securities, The senior unsecured bonds have an CNCB Capital, Bank of China and Haitong expected BBB+ rating by Fitch. › HANGZHOU QIANTANG NEW AREA SELLS International. Bank of China and Central Wealth Securities The Hangzhou Qiantang New Area Investment were joint global coordinators. HANGZHOU QIANTANG NEW AREA CONSTRUCTION AND is a provincial-level industrial cluster They were also joint bookrunners with BOC INVESTMENT GROUP has raised US$300m from a in Hangzhou, Zhejiang province, with International, Huatai International, GF Securities, three-year Reg S bond offering. companies covering various high-tech CNCB Capital, Shanghai Pudong Development The unrated senior unsecured notes industries. Bank Hong Kong branch, Guoyuan Capital, Bank priced at par to yield 3.2%, inside initial of China (Hong Kong), Orient Securities (Hong price guidance of 3.9% area. › ICBC LEASING PLANS DOLLAR BOND Kong), SPDB International, CMBC Capital, China Final deal statistics were not available Minsheng Banking Corp Hong Kong branch and at the time of writing, but the bonds ICBC FINANCIAL LEASING, rated A1/A/A, has hired Everbright Sun Hung Kai. received orders of over US$1.2bn, including banks for a proposed Reg S offering of US Guoyuan and CMBC Capital were added US$580m from the leads, when final dollar senior unsecured notes. after bookbuilding began, while China guidance was announced at 3.2%. ICBC, ANZ, Bank of China, Bank of Industrial Securities International was in Proceeds will be used for general Communications, BNP Paribas, CCB the syndicate when initial guidance was corporate purposes. International, Goldman Sachs, HSBC, JP Morgan announced but was no longer there at final There is a change of control put option and Mizuho Securities are helping to arrange pricing. at 101. fixed income investor calls, which started Guotai Leasing provides financial and Hangzhou City is the ultimate parent on August 14. operating leasing services, and also has of the issuer and Hangzhou Dajiangdong The proposed notes, with expected engineering and trade businesses. Industry Cluster Management Committee is ratings of A2/A (Moody’s/S&P), will be issued The Shandong State-owned Assets the immediate parent. under an MTN programme established by Supervision and Administration Guosen Securities (HK), ABC International ICBCIL Finance. They will have a keepwell Commission owns and controls Shandong and BOSC International were joint global and liquidity support deed and a deed of Guohui Investment, which is the strategic coordinators as well as joint lead managers asset purchase undertaking provided by planning and operations vehicle for state- and joint bookrunners with CMBC Capital, ICBC Financial Leasing.

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B&RXQWU\LQGG  COUNTRY REPORT CHINA

› LACKLUSTRE RESULT FOR YUZHOU Proceeds will be used for debt Proceeds will be used for debt repayment refinancing. and working capital. YUZHOU GROUP HOLDINGS’ tender offer for CIFI in July last year issued Rmb1.6bn The Hong Kong-listed, Bermuda- its US$375m 6.375% notes due 2021 has 6.75% 2.75-year non-call two year Dim Sum incorporated issuer and the bonds are both received a lacklustre response. bonds. It has Rmb1bn of 7.75% Dim Sum rated AAA by China Chengxin. Only US$54.853m of the bonds in bonds maturing on September 20 this year. China Merchants Bank is lead underwriter principal amount were validly tendered, HSBC and Standard Chartered Bank were and bookrunner. ICBC is joint lead way below the US$300m cap set by the joint global coordinators on the transaction. underwriter. Chinese property developer, according to a They were also joint lead managers and stock exchange filing. joint bookrunners with China Industrial Yuzhou will buy back the bonds validly Securities International and CMBC Capital. SYNDICATED LOANS tendered for US$1,005 per US$1,000 in principal amount plus accrued and unpaid › PBOC ISSUES DIM SUM BILLS › YE CHIU METAL RETURNS FOR US$150M interest. The outstanding amount will be reduced The PEOPLE’S BANK OF CHINA last Thursday Shanghai-listed Ye Chiu Metal Recycling to US$320.147m after the repurchase bonds issued Rmb30bn of Dim Sum bills in Hong (China) has launched a US$150m three-year are cancelled. Kong, according to a statement posted loan, returning to the market after a 4-1/2- Yuzhou on August 5 priced US$300m six- on the Hong Kong Monetary Authority’s year hiatus. year non-call four senior green bonds at par website. Bank SinoPac and CTBC Bank are the to yield 7.85% to fund the tender offer. The central bank sold a Rmb20bn three- mandated lead arrangers and bookrunners month tranche and a Rmb10bn one-year of the latest bullet transaction, which offers › REDCO’S DEAL EIGHT TIMES COVERED tranche, both at 2.7%, through HKMA’s an interest margin of 235bp over Libor and bond tendering platform. has a two-year extension option. Chinese developer REDCO PROPERTIES GROUP, The two tranches received total MLAs joining with US$30m or above rated B/B (S&P/Fitch), has priced a US$300m subscriptions of Rmb62.34bn. receive a top-level all-in pricing of 256.67bp short-dated bond offering which drew over The yield was higher than the PBoC’s last via an upfront fee of 65bp, while managers US$2.4bn of final orders from 166 investors, Dim Sum bills tender on June 23, when it joining with US$20m–$29m earn an including US$185m from the leads. issued Rmb10bn six-month bills at 2.21%, all-in of 250bp via a 45bp fee. Participants The 8.50% 364-day notes were priced at reflecting a surge in yields on renminbi coming in for US$10m–$19m receive an 98.885 to yield 9.70%, inside initial guidance bonds in both the onshore and offshore all-in of 245bp via a 30bp fee. of 10.125% area. markets following a tightening of monetary The borrower is HARMONY GROUP, Ye Chiu’s Asian investors took 96% of the bonds policy in China. Samoa-incorporated subsidiary, while the and Europe 4%. Funds were allocated 71%, parent is the guarantor. private banks 26% and banks 3%. › ANTA READIES FOR PANDA BOND ISSUE Funds are to refinance a US$123m The Reg S notes have an expected B three-year loan raised in March 2016 and rating by Fitch. ANTA SPORTS PRODUCTS has received approval for working capital. Bank SinoPac, E.Sun Proceeds will be used to refinance debt. from the National Association of Financial Commercial Bank and Land Bank of Taiwan Credit Suisse, UBS, Barclays, BNP Market Institutional Investors to issue up were the MLABs on that deal, which offered Paribas, Standard Chartered and to Rmb12bn of Panda bonds in China’s a top level all-in pricing of 295bp based on Haitong International were joint global interbank market, according to a stock a margin of 275bp over Libor. coordinators. They were also joint exchange filing. bookrunners with Deutsche Bank, The quota, valid for two years, › TIANNENG POWER TAPS US$100M LOAN Heungkong Financial, Orient Securities (Hong comprises up to Rmb8bn of medium- Kong), CRIC Securities and Bank of East Asia. term notes of up to five years and up to Electric vehicle batteries maker TIANNENG Rmb4bn of commercial paper of up to POWER INTERNATIONAL is in the market for a › CIFI SELLS DIM SUM BONDS 270 days. US$100m three-year loan. Proceeds are intended for debt Standard Chartered Bank is the sole Chinese property developer CIFI HOLDINGS repayment and general working capital. mandated lead arranger and bookrunner (GROUP) last Wednesday priced Rmb1.2bn The Hong Kong-listed, Cayman Islands- of the transaction, which offers an interest (US$173m) three-year non-call two Dim incorporated issuer is rated AAA by margin of 150bp over Libor. Sum bonds at par to yield 5.85%, inside Shanghai Brilliance. Proceeds are for general corporate initial guidance of 6.25% area. purposes. The deal was the first public CNH deal › YUEXIU TRANSPORT MARKETS PANDA In May, short seller Cloudy Thunder from a high-yield issuer this year. A week Research accused Hong Kong-listed earlier, ZHENRO PROPERTIES, rated B1/B/B+, YUEXIU TRANSPORT INFRASTRUCTURE was Tianneng Power of “fabricating and priced Rmb1bn of 7.4% 363-day CNH notes marketing Rmb500m of three-year Panda overstating profits from 2017 to 2019”, in a private placement. bonds in China’s interbank market last which the company dismissed as false. Final statistics were not available at the week, according to public filings. On June 1, Tianneng Power issued a time of writing but orders were said to be Bookbuilding began on August 12. The positive profit alert to the Hong Kong over Rmb2.8bn when final guidance was pricing details had not been announced at stock exchange, stating it was expecting announced, including Rmb800m from the the time of writing. to record a year-on-year increase of not leads. The bonds will be issued under a less than 30% in its profit attributable to CIFI is rated Ba3/BB/BB/BB+ (Moody’s/S&P/ Rmb1.5bn quota the Chinese toll road equity shareholders for first half of 2020. Fitch/Lianhe Global) and the Reg S notes operator registered with financial The improvement reflects sales growth and have expected ratings of BB–/BB (S&P/Fitch). regulators in China. increased gross profit margins.

International Financing Review Asia August 15 2020 25

B&RXQWU\LQGG  On August 3, Tianneng Power said that For 2019, New Hope Dairy reported Kong in 2018, is working with Bank of its former auditor Deloitte had not received 14% year-on-year growth in operating America, Goldman Sachs, HSBC and UBS on the any notification about any material revenue to Rmb5.67bn and a 0.3% rise planned float. misstatement in the company’s financial in profit attributable to shareholders to Lufax declined to comment. statements in 2017 and 2018. Rmb244m. Lufax was valued at about US$38bn in its Current auditor Zhonghui Anda also Liu Yonghao, chairman and founder of previous fundraising round in 2018. confirmed that it had no intention to conglomerate New Hope Group, and his Since calling off the Hong Kong listing revoke or modify its opinion on the family control around 90% combined of in 2018, Lufax has exited its peer-to-peer financial statements for 2019. New Hope Dairy. lending business and transformed itself In March, New Hope Group closed a into a wealth management and retail › YANLORD LAND LIFTS LOAN TO US$1.1BN separate US$400m three-year loan with 13 lending company. lenders. Lufax’s customer assets under Chinese property developer YANLORD China Construction Bank (Asia) and HSBC management increased by 2.3% between LAND GROUP has increased a 3.5-year dual- were the MLABs of that transaction, which January 1 and March 31 of this year to currency loan to US$1.103bn-equivalent offered a top-level all-in pricing of 165bp Rmb354bn (US$50bn). Over the same from US$1bn after attracting 15 lenders in based on a margin of 125bp over Libor. period outstanding retail loans rose by 9.5% general syndication. The loan was increased from an original to Rmb506bn. CMB Wing Lung Bank, DBS Bank, Hang Seng US$300m target. Bank, HSBC, Shanghai Pudong Development › BERRY GENOMICS PLANS FOLLOW-ON Bank and Standard Chartered were the › FORMOSA CHEMICALS MANDATES LOAN mandated lead arrangers and bookrunners BERRY GENOMICS plans to raise Rmb2.14bn of the transaction, which offered a top-level FORMOSA CHEMICALS INDUSTRIES (NINGBO), a unit of from a proposed private share placement. all-in pricing of 419bp, based on an interest Taiwanese conglomerate Formosa Plastics The DNA sequencing company will sell margin of 335bp over Libor/Hibor. Group, has mandated Mega International up to 106m shares, equivalent to 30% of The facility now comprises an US$808m- Commercial Bank to arrange a Rmb2bn five- current shares, to up to 35 investors. equivalent term loan and a US$295m- year loan. Proceeds will be used to expand the equivalent revolving credit facility. The terms and details of the facility are production of DNA sequencing instruments Proceeds will be used for refinancing. yet to be determined. and kits, build a DNA sequencing centre in For full allocations, see www.ifre.com. Proceeds will be for capital expenditure. Fujian province, and for R&D and working The borrower raised two other facilities capital. › ZHENRO SIGNS US$141M-EQUIVALENT last year. The company completed a backdoor In October 2019, the company completed listing on the Shenzhen Stock Exchange in Hong Kong-listed property developer ZHENRO a Rmb1.1bn five-year term loan. CTBC 2016. Its A-shares have surged 140% in the PROPERTIES GROUP has signed a US$141m- Bank and First Commercial Bank were the past year. equivalent three-year loan with eight mandated lead arrangers and bookrunners The proposal still needs approval from lenders. on that deal, which offers an interest shareholders and regulators. Bank of China (Hong Kong) was the margin of 99.19% of the PBoC rate, mandated lead arranger and bookrunner according to Refinitiv LPC data. › CSRC TO REVIEW FIRST STAR-TO-HK IPO of the deal, which offered a top-level all-in In June 2019, the borrower raised a pricing of 520bp, based on an interest US$421m-equivalent five-year facility, The China Securities Regulatory margin of 410bp over Libor and an average which comprises a Rmb1.89bn tranche A Commission has agreed to review a H-share life of 2.5 years. and a US$140m tranche B. Tranche A pays listing application from BIO-THERA SOLUTIONS, The facility now comprises a HK$273m a margin of 90% of the PBoC rate, while the first H-share plan from a company tranche and a US$106m portion. tranche B offers 80bp over Libor. Bank of listed on the Star market. Proceeds will be for refinancing and Taiwan and CTBC led the borrowing. The drugs and biosimilars producer, general corporate purposes. Formosa Chemicals Industries (Ningbo) which was the second pre-revenue For full allocations, see www.ifre.com. is a unit of Formosa Chemicals & Fiber. It company to list on the Shanghai bourse, produces plastics products used in auto plans to offer 73m–138m H-shares, or › NEW HOPE DAIRY MILKS ANOTHER US$8M parts, electrical and electronics items, and 15%–25% of the enlarged capital. There is a consumer goods. 15% greenshoe. Milk producer New Hope Dairy has Based on the close of Rmb54.81 increased a three-year loan to US$110m (HK$61.12) on August 11, it may raise from US$102m after attracting three banks EQUITY CAPITAL MARKETS HK$4.5bn–$8.4bn (US$581m–$1.08bn) from in general syndication. the H-share listing. Standard Chartered Bank was the sole › LUFAX FILES FOR IPO Bio-Thera Solutions raised Rmb1.97bn mandated lead arranger and bookrunner from a Shanghai Star IPO in February. CICC of the amortising loan, which offered a Chinese online wealth management was the sponsor and bookrunner with GF top-level all-in pricing of 150bp based on an company LUFAX has filed confidentially for a Securities and Morgan Stanley Huaxin Securities. interest margin of 120bp over Libor and an US IPO which could raise around US$2bn– Its 2019 net loss widened to Rmb1.02bn 87.75bp fee. $3bn, according to people familiar with the from Rmb533m for 2018. The net loss in Q1 Proceeds will be used for refinancing and situation. 2020 was Rmb105m. working capital. The fintech unit of Ping An Insurance Its shares have risen 67% from the Shenzhen-listed New Hope Dairy is the Group is planning to wrap up the listing A-share issue price of Rmb32.76. guarantor of the deal, while its subsidiary this year, said the people. Ernst & Young has been hired as the GGG HOLDINGS is the borrower. Lufax, which had planned to list in Hong auditor for the H-share IPO.

26 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT CHINA

› DAWNING INFO FOLLOW-ON GETS OK Chan Hoi-wan, executive director of equivalent to 30% of current capital, to up Hong Kong-listed Chinese Estates Holdings to 35 investors. Shanghai-listed DAWNING INFORMATION and wife of Joseph Lau Luen-hung, led the Proceeds will be used for R&D, the INDUSTRY’s proposed Rmb4.78bn A-share investment with the purchase of a 5.4% production of raw materials and Chinese placement has cleared a hearing at the stake in the company for HK$4.5bn. herbal medicine in Heilongjiang, Anhui China Securities Regulatory Commission. Huatai International Greater Bay Area and Gansu provinces, and IT services and The company will sell up to 186m shares, Investment and Sequoia Capital bought working capital. or 20% of current shares, to up to 35 4.8% and 4.1% stakes respectively. The other The proposal still needs approval from investors, with an individual limit of 48m 11 investors include Tencent Holdings and shareholders and regulators. shares. the family of Cheng Kar-shun. Proceeds will be used to produce PC The investment will enhance the › HUAZHU MOVES CLOSER products for import substitution purposes, corporate profile and support the specifically chips, input/output modules growth and development of the property Nasdaq-listed HUAZHU GROUP aims to sell and built-in active control firmware, and to management business, according to an shares in Hong Kong in a secondary listing replenish working capital. announcement from Evergrande. of up to US$1bn as early as September, The follow-on still needs final written The property management unit posted according to people with knowledge of the approval from the CSRC. a profit after tax of Rmb923m for 2019, up matter. Citic Securities is the sponsor. almost four times from Rmb233m in 2018, The Chinese hotel chain operator has according to the announcement. filed confidentially for the Hong Kong float › EDUCATION COS BUILD WAR CHEST IFR reported at end-July that Evergrande with CMB International and Goldman Sachs is planning to list its property management leading the transaction, said the people. CHINA EDUCATION GROUP has raised HK$2bn services unit in a Hong Kong IPO which could The company is expected to seek listing from an upsized new share placement. raise about US$1bn–$2bn. The deal is expected approval as early as this month. The deal was increased to 130m primary to come late this year or early next year. The company has been hurt by the shares from a base size of 105m after an Huatai Financial, UBS, ABC International, CCB coronavirus crisis and said in July it upsize option of 25m shares was exercised. International, CLSA and Haitong International expected to record a 32%–34% drop in net The shares, representing 6.05% of are leading the transaction. revenues for the second quarter of 2020. the enlarged share capital, were sold at Huazhu, formerly called China Lodging HK$15.50 each compared to the HK$15.45– › GUOSEN FOLLOW-ON RAISES RMB15BN Group, operates, manages and franchises $15.95 range. more than 5,800 hotels under multiple The price represents a discount of 7.7% to Shenzhen-listed GUOSEN SECURITIES has raised brands, according to March 31 data. last Monday’s close of HK$16.80. Rmb15bn from a private share placement. There is a 90-day lock-up on the issuer. It sold 1.4bn shares at Rmb10.62 each to › INMYSHOW DIGITAL PASSES HEARING UBS was the sole bookrunner. 10 investors. The top three were Shenzhen The company plans to use the proceeds Investment Holdings, National Council Shanghai-listed INMYSHOW DIGITAL TECHNOLOGY for acquisitions, expansion and the for Social Security Fund and Yunnan Hehe GROUP has cleared a China Securities development of existing and new campuses. (Group), which bought a total Rmb12.4bn Regulatory Commission hearing for a Meanwhile WISDOM EDUCATION has of the offering. Meanwhile, peers CICC, proposed private placement of up to raised HK$551m from an upsized share China Securities, Vanho Securities Rmb2.12bn. placement. and Donghai Securities bought about It plans to offer 504m shares, or 30% of The Chinese K-12 education services Rmb400m, Rmb280m, Rmb210m, and outstanding, to up to 35 investors. provider sold 130m primary shares, up Rmb210m, respectively. Proceeds will be used for two new media from 115m at launch, at the bottom of the Proceeds will be used to replenish capital marketing projects and for working capital. indicative price range of HK$4.24–$4.46 and working capital and repay debt. Inmyshow, formerly known as Guangxi each, representing a discount of 9.8% to last Guosen Securities’ follow-on is the Fortune Technology, completed a backdoor Monday’s close of HK$4.70. fifth by a listed brokerage this year, after listing in February. It provides marketing The books were multiple times covered Haitong Securities (Rmb20bn), Southwest services leveraging big data. with about 30 investors participating. Securities (Rmb4.9bn), First Capital Securities The follow-on still needs final written Demand came mainly from hedge funds (Rmb4.2bn) and Central China Securities approval from the CSRC. but there was also participation from long- (Rmb3.6bn). Huatai United Securities is the sponsor. only funds. China Galaxy Securities was the sponsor The shares sold represent about 6% of the and joint bookrunner with Hongta Securities. › JOYSON ELECTRONIC CLEARS HEARING enlarged share capital. GF Securities was removed from the list There is a 90-day lock-up on the issuer. of bookrunners after it was stripped last NINGBO JOYSON ELECTRONIC has cleared a China Citigroup was the sole bookrunner. month of its sponsorship licence for six Securities Regulatory Commission hearing The company plans to use the proceeds months and its bond underwriting licence for a proposed Rmb2.5bn private share for new schools in the PRC and as general for a year in connection with a scandal at placement. working capital. drugmaker Kangmei Pharmaceutical. It will sell up to 371m shares, or 30% of outstanding, to up to 35 investors. › EVERGRANDE UNIT GETS PRE-IPO FUNDS › HEILONGJIANG ZBD PLANS FOLLOW-ON Proceeds will be used to expand capacity for smart electronic products used in new The property management services unit of HEILONGJIANG ZBD PHARMACEUTICAL plans to raise energy vehicles and for working capital. CHINA EVERGRANDE GROUP has raised HK$23.5bn Rmb2.08bn from a proposed private share The follow-on still needs final written from a pre-IPO investment which values it placement. approval from the CSRC. around US$10.8bn. The company will sell up to 255m shares, Haitong Securities is the sponsor.

International Financing Review Asia August 15 2020 27

B&RXQWU\LQGG  › LIVZON PHARMA TO SPIN OFF UNIT plans to offer up to 1.38bn shares in the › WUXI APPTEC GETS CSRC GREEN LIGHT float. Hong Kong and Shenzhen-listed LIVZON CICC and Morgan Stanley are the joint Hong Kong and Shanghai-listed WUXI APPTEC’s PHARMACEUTICAL GROUP plans to spin off sponsors. proposed Rmb6.53bn private A-share ZHUHAI LIVZON DIAGNOSTICS on an A-share It posted a net profit of Rmb4.95bn for placement has passed a hearing at the market. 2019, up 37% from 2018. China Securities Regulatory Commission. Livzon Diagnostics, in which Livzon The Chinese contract medical researcher Pharmaceutical holds a 39.43% stake, › ONECONNECT PRICES FOLLOW-ON plans to sell up to 105m A-shares to up produces diagnostic reagents and to 35 investors, up from the originally equipment. Ping An Insurance’s ONECONNECT FINANCIAL planned 75m A-shares. It posted a net profit attributable to TECHNOLOGY has raised US$324m from a It raised HK$7.37bn last month from shareholders of Rmb105m in 2019. follow-on offering of primary shares. a primary placement of 68.2m H-shares The proposal still needs approval from The company, which provides at HK$108 per share, which represented shareholders and regulators. technology services to small and about 2.9% of the company’s enlarged medium-sized financial institutions, H-share capital. Morgan Stanley, Huatai › NEW HOPE LIUHE PLACEMENT CLEARED sold 18m American depositary shares at Financial, Goldman Sachs and JP Morgan were US$18, representing a 1.9% discount to bookrunners. Shenzhen-listed NEW HOPE LIUHE has passed last Wednesday’s close of US$18.35. Wuxi AppTec said earlier it would offer a hearing for a proposed Rmb4bn private The deal was upsized from 16.4m ADSs up to 8% of its total capital in the A-share A-share placement at the China Securities at launch. There is a 15% greenshoe. and H-share private placements. Regulatory Commission. OneConnect raised US$347m from a It plans to use the proceeds of the It will sell up to 176m shares, or 4.2% of NYSE IPO in December last year at US$10 A-share follow-on to develop projects, existing shares, to New Hope Group and per share. upgrade R&D facilities and replenish related party Southern New Hope, which Goldman Sachs, Morgan Stanley and China PA working capital. have committed to buy 79.2m and 96.8m Securities are the bookrunners. The company posted a 2019 net profit of shares respectively. The company plans to use the proceeds Rmb1.9bn, up 18% from 2018. New Hope Group is the biggest to enhance its platform and technology The A-share follow-on still needs final shareholder in the company with a 54.1% capabilities, fund international expansion written approval from the CSRC. stake held directly and indirectly. and strategic investments, and for general Huatai United Securities is the sponsor. The proceeds will be used for 14 pig corporate purposes. breeding projects and working capital. › XPENG DRIVES AHEAD New Hope Liuhe completed a Rmb4bn › VIPSHOP WEIGHS HK LISTING six-year convertible bond offering in Chinese electric vehicle manufacturer January to fund eight pig breeding NYSE-listed VIPSHOP is considering a XPENG has started pre-marketing a NYSE projects. potential secondary listing in Hong Kong, IPO which could raise at least US$700m, It posted a 2019 net profit of Rmb5.04bn, joining the queue of US-listed Chinese according to people close to the deal. a 196% increase year on year, on revenue of companies seeking to list closer to home The deal comes after fellow Chinese EV Rmb82.1bn. amid rising US-China tensions. maker Li Auto raised US$1.09bn from a The company estimated in its annual The Chinese online discount retailer is Nasdaq IPO last month. report that pork prices will continue to rise in early discussion with financial advisers Credit Suisse, JP Morgan and Bank of America in 2020 as supply will be tighter. for a possible share sale in Hong Kong, are joint bookrunners on the XPeng float. China Merchants Securities is the sponsor. said people familiar with the matters, Just ahead of the IPO filing on August 7, adding that no decision has yet been XPeng on August 6 wrapped up a US$900m › NONGFU SPRING PRE-MARKETS IPO made. pre-IPO financing from investors including One of the people said the deal could Xiaomi, Hillhouse Capital, Sequoia Capital, NONGFU SPRING is planning to start pre- happen as early as this year. Qatar Investment Authority, Alibaba marketing on Monday for a Hong Kong IPO As of last Wednesday, shares in Vipshop Group and Abu Dhabi state fund Mubadala of about US$1bn, according to people close are up 62% this year at US$22.94, valuing it Investment. to the deal. at US$15bn. The round is said to have valued the The company, one of China’s biggest Vipshop did not reply to requests for company at nearly US$4bn. bottled water and beverage companies, comment. For the first half of 2020, Xpeng posted

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28 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT HONG KONG

a loss of Rmb796m compared to a loss of International Bank and Yuanta Commercial Bank phase development of a major waterfront Rmb1.9bn in the first half of 2019. It lost joined in the senior phase with the same title. residential project at the Yau Tong Bay Rmb4.6bn for the whole of 2019. The deal now comprises a HK$12.79bn Comprehensive Development Area. Founded in 2014, the Guangzhou-based (US$165m) tranche A and a US$165m The first two phases of the project company delivered its first Xpeng G3 tranche B. It offers an interest margin of will provide around 6,200 homes in 30 vehicle to customers in December 2018 and 160bp over Libor or Hibor and has a 2.85- residential towers, according to local media launched a second model in April this year. year average life. reports. The borrower will pay any excess interest › UNIVERSAL SCIENTIFIC PLANS CB rate beyond a 50bp difference between › AMVIG’S HK$1.35BN REFI ATTRACTS SIX TAIFX and Libor. Shanghai-listed UNIVERSAL SCIENTIFIC INDUSTRIAL The guarantor is parent Lei Shing Hong Kong-listed cigarette packaging (SHANGHAI) plans to raise Rmb3.45bn from a Hong. Funds are for working capital and maker AMVIG HOLDINGS has closed a six-year convertible bond. refinancing. HK$1.35bn three-year loan with six lenders Proceeds will be used for research The borrower last tapped the loan joining. and development of headphone chip market for a US$310m-equivalent ANZ was the mandated lead arranger modules, to produce electronic products borrowing in December 2018. and bookrunner of the bullet facility, in Guangdong province, wearable device Far Eastern International Bank also led while Bank Sinopac Hong Kong branch, Chong products in Vietnam, and replenish that deal, which offered a top-level all-in Hing Bank, CTBC Bank, Fubon Bank (Hong working capital. pricing of 180bp via a margin of 160bp over Kong), MUFG, Taipei Fubon Commercial Bank The proposal still needs approval from Libor or Hibor and a 57bp fee. and United Overseas Bank joined in general shareholders and regulators. For full allocations, see www.ifre.com. syndication. Signing is taking place by circulation. › HKR INTERNATIONAL SIGNS CLUB LOAN Lenders were offered a top-level all-in pricing of 180bp via an interest margin of Hong Kong-listed property developer HKR 150bp over Hibor. HONG KONG INTERNATIONAL has obtained a HK$3.35bn five- The borrower’s subsidiaries AMVIG year loan from five banks. Investment and AMVIG Group are the Bank of China (Hong Kong), Bank of guarantors. DEBT CAPITAL MARKETS Communications Hong Kong branch, Industrial Funds are for refinancing purposes. and Commercial Bank (Asia), Shanghai Pudong In December last year, the borrower › HONGKONG ELECTRIC SETS UP MTN Development Bank Hong Kong branch and raised a HK$1.15bn one-year loan. ANZ was Hang Seng Bank signed the club deal on also the MLAB on that deal, which paid an HONGKONG ELECTRIC, rated A– by S&P, has August 4. all-in pricing of 170bp based on a margin set up a US$5bn medium-term note The facility comprises a HK$2.01bn of 150bp. programme with HSBC as arranger, revolving credit facility (tranche A) and a according to a stock exchange filing. HK$1.34bn term loan (tranche B). Hongkong Electric Finance is the issuer Proceeds will be used to refinance a RESTRUCTURING and Hongkong Electric is the guarantor. HK$8bn syndicated loan maturing in HSBC is also dealer of the programme September and for general corporate › CENTURY HEARING IN OCTOBER with ANZ, Bank of China (Hong Kong), purposes. Barclays, BNP Paribas, Bank of America, The HK$8bn five-year loan to be A court hearing will be held on October Citigroup, Credit Agricole, Deutsche Bank, refinanced was signed in August 2015 with 12 on a winding-up petition from cash- Goldman Sachs, Mizuho Securities, Morgan 18 lenders. strapped CENTURY SUNSHINE GROUP HOLDINGS. Stanley, Standard Chartered Bank and UBS. It offered a top-level all-in pricing of The Hong Kong-listed company failed to The programme is listed on the Stock 146bp based on a margin of 135bp over redeem a S$101.75m (US$74m) 7% bond Exchange of Hong Kong. Hibor. on July 3 and submitted the petition to Hongkong Electric on June 2 raised For full allocations, see www.ifre.com. the Grand Court of Cayman Islands. Four US$500m from a 2.25% 10-year bond judicial provisional liquidators from various that priced at 99.370 to yield 2.321%, or › CONSORTIUM IN TALKS FOR YAU TONG Ernst & Young offices were appointed Treasuries plus 165bp. by the court in mid-July to help Century A consortium led by Hong Kong-listed blue- Sunshine manage its debt restructuring. chip developer HENDERSON LAND DEVELOPMENT is in The fertiliser and magnesium producer SYNDICATED LOANS talks with banks for a loan of approximately is looking at various restructuring options, HK$20bn for a residential development in the including an equity injection from third- › LEI SHING HONG ATTRACTS SIX Yau Tong area of Hong Kong. party investors, a debt restructuring that The non-recourse five-year facility is could include haircuts for creditors and a Hong Kong-based mortgage lender likely to offer an all-in pricing above 200bp further reduction in the group’s operating LEI SHING HONG CREDIT has wrapped up a over Hibor. The loan size is yet to be costs. US$330m-equivalent three-year term loan finalised. The Century Sunshine group has after attracting six lenders in general The consortium comprises other local outstanding offshore debt of HK$675.66m syndication. developers including Central Development, and a further HK$818.83m of onshore Far Eastern International Bank was the Hang Lung Properties, New World debt. This includes subsidiary Rare original mandated lead arranger and Development, Sun Hung Kai Properties, and Earth Magnesium Technology Group’s bookrunner of the facility. KGI Bank, Wheelock Properties. outstanding US$20m 7% bond due to Mega International Commercial Bank, Taishin Proceeds raised will support the second mature on August 11.

International Financing Review Asia August 15 2020 29

B&RXQWU\LQGG 

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ifre.com/new-ifr-website COUNTRY REPORT INDIA

INDIA ICICI wins global support

„ Equities Indian bank raises Rs150bn in record-equalling institutional placement DEBT CAPITAL MARKETS ICICI BANK took advantage of a recent surge days thanks to webinars,” a Mumbai-based › HDFC PRINTS THREE-YEAR BONDS in demand from foreign investors to ECM banker said. raise Rs150bn (US$2bn) from a qualified ICICI Bank itself benefited from the HOUSING DEVELOPMENT FINANCE CORP has raised institutional placement, equalling India’s fact this was the first time in more than a Rs36.93bn (US$493m) from three-year largest such offering on record. decade that it has raised capital through bonds at 5.4%, according to market sources. The offering follows a spate of large a primary share sale, and its declining bad It was targeting Rs20bn plus a greenshoe share sales from Indian banks that have loan ratio. ICICI’s net non-performing asset of Rs50bn. also attracted a significant bid from foreign ratio decreased to 1.23% in the quarter that Kotak Mahindra Bank, Axis Bank, ICICI Bank, buyers. Earlier this month, AXIS BANK and ended on June 30 2020 from 1.41% three JM Financial and Morgan Stanley India are the HOUSING DEVELOPMENT FINANCE CORP raised months earlier. arrangers for the deal. Rs100bn and Rs140bn in primary capital, “Investors are happy with the Crisil and Icra have assigned a AAA rating respectively, while the controlling shareholder management’s transparency and the way to the notes. of BANDHAN BANK sold shares worth Rs106bn in it has handled the bad loan problem,” the Recently, HDFC raised Rs100bn from a an overnight block. banker said. “There was also a novelty qualified institutional placement of shares. “The financial sector valuations are element which attracted investors.” attractive and risk- reward balanced,” said ICICI Bank last sold primary shares in 2007, › NBFCS PRINT AS RATES EASE Mrinal Parekh, head of South-East Asia and when it raised Rs200bn. But it has been India ECM at BNP Paribas, a bookrunner on selling stakes in subsidiaries ICICI Prudential Non-bank lenders continued to issue short- the Axis, HDFC and ICICI Bank deals. “Despite Life Insurance, ICICI Lombard General term bonds as rates eased in the domestic the ongoing Covid-linked uncertainties, there Insurance and ICICI Securities since 2016. bond market on the back of government is a fair amount of faith in the managements Proceeds from the latest deal will be used to measures. of these institutions, which have been around strengthen its balance sheet. “The market financing conditions for non- for decades.” Bankers expect the Indian QIP party to banking financial companies, which had Foreign investors bought three quarters of continue and forecast issuance of at least become challenging, have largely stabilised ICICI Bank’s offering, which tied State Bank US$2bn during the rest of the year. Mall in the wake of targeted policy measures,” of India’s 2017 record for the country’s largest developer PHOENIX MILLS is targeting an up to Reserve Bank of India governor Shaktikanta QIP. These international investors were Rs10bn QIP this week, while INDIABULLS HOUSING Das said at a policy meeting on August 6. allocated two-thirds of the three bank deals FINANCE and INTERGLOBE AVIATION are planning The spreads of AA+ rated three-year that priced last week. US$300m and US$500m respective share NBFC bonds over government securities ICICI Bank’s deal priced on Tuesday at the sales sometime this year. have narrowed from 360bp on March 26 to top of the Rs355–Rs358 marketed range. ICICI sold 419m shares, equal to a 6.47% 139bp on July 31, Das noted. It was covered 3.5 times with 125 investors stake. The final price represents a discount In May, the cabinet approved a Rs450bn participating. The top 10 accounts were of 1.5% to the pre-deal close of Rs363.55. (US$6bn) second partial credit guarantee allocated 60% of the shares. ICICI Bank shares were above the QIP price at scheme, PCGS 2.0, under which the Rs368.05 on Friday. government absorbed the first 20% of losses MORE INVESTORS ON BOARD Like HDFC, ICICI Bank opted for a large on state-owned banks’ purchases of bonds Indian financial institutions are benefitting syndicate for its share placement. The 18 or commercial paper issued by NBFCs with from the global liquidity surge as a result of banks on the deal were Axis, Bank of America, a rating of AA and below, including unrated interest rate cuts. Bankers said the increased BNP Paribas, Citigroup, Edelweiss, Goldman bonds. Several lower-rated NBFCs have use of online investor meetings during the Sachs, HDFC, ICICI Securities, IIFL, JP Morgan, been raising short-term bonds at attractive pandemic has enabled them to meet more Jefferies, JM Financial, Kotak Mahindra, levels since June under the scheme. clients in less time. Nomura, Motilal Oswal, Morgan Stanley, SBI AADHAR HOUSING FINANCE is targeting up to “Non-deal roadshows which would have Capital Markets and Yes Securities. Rs3bn, including a Rs2.75bn greenshoe, normally taken weeks are now completed in S ANURADHA from three-year notes at 8.2%. Care has assigned a AA rating to the bonds. AK Capital Services is said to be the from 18-month notes at 9.25%. Icra has › PFC PLANS TO SELL TWO-TRANCHER arranger. The coupon will step up by 25bp assigned a A+ rating to the notes. for every notch rating downgrade. ECL FINANCE printed Rs5bn 18-month bonds India’s POWER FINANCE CORP is planning to PIRAMAL CAPITAL & HOUSING FINANCE aims to at 8.95%, according to market sources. The raise up to Rs50bn from two-tranche bonds, raise Rs1.5bn from 18-month notes at bonds are rated A+ by Crisil. according to market sources. 7.85%. Care has assigned a AA rating. MAHINDRA RURAL HOUSING FINANCE raised The state-owned issuer is targeting Rs5bn INDOSTAR CAPITAL FINANCE is planning to sell Rs1.85bn from short two-year bonds at plus a greenshoe of Rs25bn from a three- Rs2bn 18-month bonds at 8.95%. Care has 7.35%. India Ratings has assigned a AA+ year tranche and Rs5bn plus a greenshoe of assigned a AA– rating. rating to the notes. R15bn from a 15-year piece. Recently, MUTHOOT FINCORP issued Rs2.5bn AROHAN FINANCIAL SERVICES raised Rs1bn from The issuer has asked investors to 18-month notes at 9.25%. Crisil has assigned 15-month notes at 10.25% and Rs2.5bn from place bids on the electronic platform on a A rating to the notes. 18-month notes at 10.5%. The bonds are August 18 from 10:30am to 11:30am India EDELWEISS HOUSING FINANCE raised Rs1bn rated A– by Icra. time.

International Financing Review Asia August 15 2020 31

B&RXQWU\LQGG  Crisil, Icra and Care have assigned AAA acquire a controlling stake in the listed InterGlobe raised Rs30bn in its 2015 IPO, ratings to the bonds. company from the founding Mody family. priced at Rs765 per share. On August 7, PFC raised Rs32.16bn from The PE firm will purchase 41,732,332 two-tranche bonds. shares, or 54% of the voting share capital, The issuer is yet to make an official for up to Rs31.09bn (US$415m) at Rs745 per announcement on the planned bond sale. share. The transaction requires a mandatory INDONESIA › SBI CARDS TO SELL RS5BN BONDS open offer for an additional 26% of the company, which may cost up to Rs14.96bn SBI CARDS AND PAYMENT SERVICES is planning to assuming full acceptance of the offer. DEBT CAPITAL MARKETS raise up to Rs5bn from three-year three- JB Chemicals’ Ebitda for the financial month bonds, according to market sources. year ended March 2020 was Rs3.77bn, up › MAYORA INDAH PLANS FOUR TRANCHER Crisil and Icra have assigned AAA ratings 23.4% from Rs3.05bn in the same period a to the notes. year earlier. MAYORA INDAH is planning to raise Rp500bn SBI Cards is yet to make an official The company makes cardiac, (US$34m) from a four-tranche bond issue, announcement on the planned bond sale. gastrointestinal and anti-infective according to the offer document. therapeutic products across the branded The Indonesian food and beverage › SIDBI TO PRINT THREE-YEAR BONDS formulations market. company has announced indicative yield JB Chemicals exports to over 40 countries ranges of 6.25%–7.00% for a 370-day SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA is across the world and earns more than tranche, 6.50%–7.25% for a three-year piece, looking to raise up to Rs5bn from three- half of its revenue from its international 7.50%–8.25% for a five-year portion and year bonds, according to market sources. business, KKR said. 7.75%–8.50% for a seven-year tranche. The state-owned issuer is eyeing Rs2.5bn The interest on the bonds will be paid plus a greenshoe of the same amount. quarterly. Icra has assigned a AAA rating to the EQUITY CAPITAL MARKETS The funds will be used to provide loans bonds. to a subsidiary for its working capital The issuer has asked investors to place › MAHINDRA FINANCE RIGHTS RAISE RS31BN requirements. bids on NSE’s electronic platform on The issue opens today and closes August August 17 from 11:00am to 12:00pm India MAHINDRA & MAHINDRA FINANCIAL SERVICES has 25. time. raised Rs31bn (US$415m) from a rights The notes are rated AA by Pefindo. Sidbi is yet to make an official offer that was subscribed 1.34 times. Mandiri Sekuritas, Indo Premier Sekuritas and announcement on the planned bond sale. The deal, which closed on August 11, RHB Sekuritas Indonesia are the underwriters comprised 617.8m shares offered at Rs50 for the bond issue. each in a 1-for-1 entitlement ratio. SYNDICATED LOANS The issue price was at a 76% discount to › MEDIKALOKA PLANS BONDS the pre-deal close of Rs207.90. Mahindra › JB CHEMICALS LBO LOAN LAUNCHES Finance closed Tuesday at Rs132.15. MEDIKALOKA HERMINA plans to raise Rp600bn Axis, BNP Paribas, HDFC Securities, HSBC, from a three-tranche bond issue, according Private equity giant KKR & Co has launched ICICI Securities, Kotak, Nomura and SBI Capital to the offer document. into syndication a US$206m five-year loan Markets are the banks on the transaction. The Indonesian hospital chain operator to support its acquisition of a majority The company is raising capital to has announced indicative yield ranges stake in Indian pharmaceutical company JB strengthen its balance sheet as the Covid-19 of 7.75%–8.75% for a three-year piece, CHEMICALS & PHARMACEUTICALS. pandemic is likely to increase loan defaults 8.25%–9.25% for a five-year tranche and Sumitomo Mitsui Banking Corp has joined by customers. 8.75%–9.75% for a seven-year part. mandated lead arrangers and bookrunners The books opened on August 14 and BNP Paribas, Credit Agricole, Deutsche Bank and › INTERGLOBE PLANS UP TO RS40BN QIP close on August 25. Goldman Sachs on the deal, which has a 4.75- Mandiri Sekuritas, DBS Vickers Sekuritas year average life. INTERGLOBE AVIATION plans to raise up to Indonesia and Maybank Kim Eng Sekuritas are The financing is split into a US$191m Rs40bn through a qualified institutional the underwriters for the deal. term loan and US$15m revolving credit placement, according to a stock exchange The notes are rated AA– by Pefindo. facility and pays an opening interest announcement. Around 40% of the funds raised will be margin of 450bp above Libor. The deal’s The owner of IndiGo, India’s largest used to increase hospital capacity, 25% to leverage is around 4x. airline, is raising the funds to strengthen purchase general medical equipment and Banks joining the deal on or before its balance sheet as the Covid-19 pandemic the remainder for working capital. September 11 will earn a 15bp early-bird and the nationwide lockdown since March The bonds will be listed on September fee. The final deadline is September 25. 25 have severely affected business. 8. The issue is part of a Rp1trn bond MLAs committing US$25m or above will InterGlobe reported a net loss of Rs28bn programme. earn a 175bp fee for a top-level all-in of in the quarter to June 30 compared with a 486.84bp (excluding the early-bird fee). loss of Rs8.71bn in the March quarter. › PEGADAIAN EYES BONDS, SUKUK Lead arrangers taking US$15m–$24m Globally airlines are raising capital earn a 150bp fee for an all-in of 481.58bp, through steeply discounted rights issues Indonesian state-owned auction house while arrangers with tickets of US$10m– and it remains to be seen the discount at PEGADAIAN plans to sell Rp2trn of bonds and $14m receive a 125bp fee for an all-in of which InterGlobe will sell its shares. In a sukuk in two tranches, according to the 476.32bp. QIP a discount of up to only 5% can offered offer document. KKR said on July 2 it had agreed to to the floor price. The indicative price ranges are

32 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT JAPAN

Soechi Lines eyes refi amid downgrade

„ Loans Moody’s downgrades borrower’s credit rating by one notch

SOECHI LINES is negotiating a refinancing of a US$27m will not be sufficient to cover its on the back of higher dry docking days, loan due in August next year, according to debt maturities over the next 18 months, while poor domestic demand for fuel could Moody’s, which downgraded the company’s Moody’s said. potentially hinder the timely renewals of credit rating on Tuesday. As a result, Moody’s expects Soechi to be Soechi’s time charter contracts. Moody’s cut Soechi’s corporate family reliant on external funding to address debt In 2016, Soechi raised a US$180m five- rating to B2 from B1 with a negative outlook maturities of around US$98m, which include year financing, which originally comprised as the shipping industry continues to struggle scheduled debt amortisation payments of a US$130m amortising term loan and a amid the coronavirus pandemic. around US$15m and US$83m outstanding US$50m revolver. Standard Chartered The move takes into account mounting under its syndicated financing. Bank was the mandated lead arranger and refinancing risk associated with Soechi’s Soechi’s adjusted leverage, as measured bookrunner of the financing, which attracted outstanding US$83m syndicated financing by adjusted debt-to-Ebitda, increased to five other lenders in general syndication. due August 2021, which comprises a 5.6x for the 12 months ending June 30, as The deal paid top-level all-in pricing of US$50m revolving credit facility and a operating losses at its shipyard business 396bp based on a blended interest margin of US$33m amortising term loan. weighed on earnings. 375bp over Libor and blended average life of “The downgrade reflects our expectation Moody’s estimates Soechi’s adjusted 4.13 years. that Soechi’s credit metrics will remain leverage will remain elevated at 5.3x–5.9x Soechi Lines provides shipping services materially weaker than we had previously over the next 12–18 months as the company’s primarily to oil and gas companies, including expected, driven by persistent losses at its shipyard business is expected to continue Pertamina and its associates. It also operates shipyard operations,” said Stephanie Cheong, generating operating losses through 2020– a shipbuilding and maintenance business a credit analyst at Moody’s. 21. through its 99.99% subsidiary Multi Ocean Soechi’s total cash balance of US$62m Moreover, the rating agency expects Shipyard. at June 30 and estimated free cashflows of shipping revenues to decline slightly in 2020 CHIEN MI WONG

5.50%–6.50% for a 370-day tranche and The issuer is yet to make an official of June, according to Fitch, while APLN had 6.25%–7.50% for a three-year piece. The announcement on the planned bond sale. a consolidated cash balance of Rp492bn, yield and profit rates are the same for the down from Rp767bn at the end of March. conventional and sukuk mudaraba parts. APLN has a US$12m coupon payment due Bookbuilding began on August 13 and RESTRUCTURING on its dollar bonds in December. will close on September 1. The pay-in will Moody’s in April cut APLN to B3 with a take place on September 21. › FITCH CUTS AGUNG PODOMORO LAND negative outlook from B2. Pegadaian has appointed Bahana, BNI, APLN’s 2024 bonds were quoted at a cash Danareksa, IndoPremier and Mandiri Sekuritas Fitch on August 7 downgraded AGUNG price of 57 on Friday, according to Refinitiv as lead arrangers. PODOMORO LAND (APLN) to C from CCC- after data. Pefindo has assigned a AAA rating to the a subsidiary of the Indonesian property secured bonds. company agreed to restructure its rupiah The issuance is part of a phase three bonds. sustainable bond programme which The rating agency has kept APLN’s includes Rp5.9trn of conventional notes US$300m bonds due June 2 2024 at CCC– JAPAN and Rp1.6trn of sukuk mudaraba. but placed them on rating watch negative. APLN announced that SINAR MENARA DELI, in › POLYTAMA PROPINDO TO OFFER BONDS which it holds a 58% stake, had agreed with DEBT CAPITAL MARKETS bondholders to change the key terms of Indonesia’s POLYTAMA PROPINDO is targeting up Rp350bn (US$24m) of bonds that were due › TOYOTA DRIVES TIGHT DEAL to Rp750bn from a three-tranche bond and to be redeemed on August 26. sukuk offering, according to a source close The maturity date of SMD’s bonds will be TOYOTA MOTOR CREDIT CORP (A1/A+/A+) on to the plans. changed to August 22 2021 and the coupon Tuesday priced a US$2.75bn three-tranche The polypropylene manufacturer has increased to 11.61% from 11.00%, following global offering inside its curve. announced yield ranges of 9%–10% for a the signing of an indicative term sheet. A US$750m 1.5-year floating-rate note one-year, 10.25%–11.25% for a three-year Fitch considers the changes to the priced at par with a coupon of three-month and 11%–12% for a five-year tranche. onshore bonds to constitute a distressed Libor plus 15bp, from initial price thoughts It aims to raise Rp400bn from conventional debt exchange. of 30bp area. bonds and Rp350bn from the sukuk portion. SMD is a restricted subsidiary under A US$1.4bn 0.5% three-year fixed-rate The books opened on August 13 and APLN’s US dollar bonds documentation note priced at 99.923 to yield 0.526% or close on August 25. and when the rupiah bond restructuring Treasuries plus 35bp, inside IPTs of 60bp BNI Sekuritas, CIMB Niaga Sekuritas, Indo is completed it could trigger a cross- area. Premier Sekuritas and Mandiri Sekuritas are the acceleration of APLN’s US dollar bonds. A US$600m 1.15% seven-year fixed-rate arrangers for the bonds. SMD had only Rp50bn of cash at the end tranche priced at 99.953 to yield 1.157% or

International Financing Review Asia August 15 2020 33

B&RXQWU\LQGG  Treasuries plus 70bp, inside IPTs of 87.5bp domestic food company Shinmei two years the pricing day, after deducting a ¥5,947 area. later in an undisclosed amount. expected dividend for the period ending Combined books reached over US$5.4bn Shimei will buy 436,500 additional shares August 31. and the three and seven-year tranches in the IPO, representing 2.5% of the deal. There is an overallotment option of 2,000 looked to have priced 2bp and 1bp, About 77.5% of the deal will be allocated primary units. respectively, inside the curve. to retail buyers and 20% to institutional About 30% of the deal will be earmarked BNP Paribas, Credit Agricole, HSBC, JP investors. for international investors, while domestic Morgan and MUFG were bookrunners for the Founded in 1983, Yukiguni Maitake institutional buyers will get 30% and retail SEC-registered offering. produces and markets mushrooms and buyers 40%. processed foods in Japan. The books will open on August 17 and Bookbuilding will run from September close on August 21. The deal will price in EQUITY CAPITAL MARKETS 2 to September 7. The deal will price on between August 24 to 26. September 9 and the shares will be listed SMBC Nikko, Mitsubishi UFJ Morgan Stanley › BAIN CAPITAL EXITS YUKIGUNI MAITAKE on the TSE on September 17. and Daiwa are the joint bookrunners and SMBC Nikko and Daiwa are the joint lead lead managers. US private equity firm Bain Capital plans managers and bookrunners. to divest its entire 51% stake in Japanese mushroom producer YUKIGUNI MAITAKE in an › MITSUBISHI REIT PLANS FOLLOW-ON IPO of up to ¥41bn (US$385m). The offer of 17.7m secondary shares is MITSUBISHI ESTATE LOGISTICS REIT INVESTMENT MALAYSIA being marketed at an indicative price of is planning to raise up to ¥18bn from a ¥2,330 each and there is an overallotment follow-on offering of primary units, based › BANK RAKYAT PLANS SUKUK option of 2.6m shares. on a minimum 3% discount to Thursday’s Bain Capital acquired Yukiguni Maitake close of ¥458,000. BANK KERJASAMA RAKYAT MALAYSIA, rated AA2 in 2015 for around ¥9.5bn and delisted the It is issuing 40,500 units at an indicative by RAM, has set up an Islamic MTN business. It sold 49% of the company to discount of 3%-5% to the market close on programme for up to M$10bn (US$2.38bn). Axiata gets strong reception

„ Bonds Malaysian telecom company achieves lowest 30-year coupon from Asia’s corporate sector

Malaysian telecommunications company majority-owned by Malaysian government- around 5bp tighter and the 30-year seen AXIATA GROUP has raised US$1.5bn from an linked entities. around reoffer. upsized dual-tranche Reg S bond offering, One private banker said the scarcity of Orders came in at US$3.8bn from 136 despite aggressive price tightening that saw telco bonds also made the deal attractive accounts for the sukuk tranche and US$3bn orders almost halve from their peak. to investors. Including Axiata, only six Asian from 109 accounts for the 30-year portion. A US$500m 10-year sukuk priced at par telcos tapped the international bond market Asia took 59% of the sukuk, EMEA 28% to yield 2.163% or Treasuries plus 148bp, the this year, including Singtel, PLDT and Globe and offshore US 13%. Asset managers and tight end of final guidance and inside initial Telecom, according to IFR data. fund managers bought 71%, insurers, pension guidance of plus 200bp area. The sukuk size was fixed at US$500m funds and sovereign wealth funds 16%, banks A US$1bn 30-year bond priced at par to because Axiata has a US$500m sukuk due in 11% and private banks and others 2%. yield 3.064% or Treasuries plus 170bp, in November, the banker on the deal said. Asia took 64% of the 30-year bond, EMEA line with final guidance and inside initial The dual-tranche deal is the company’s 25% and offshore US 11%. Asset managers and guidance of plus 220bp area. single largest offering and includes its fund managers bought 59%, insurers, pension The 10-year Islamic tranche came at the longest-dated tenor. funds and sovereign wealth funds 35%, banks lowest coupon/profit rate for any US dollar Leads referenced recent issues from 5% and private banks and others 1%. offering from Malaysia’s corporate sector, Malaysia’s state oil company Petroliam Axiata SPV2 is the trustee of the sukuk while the conventional tranche was upsized Nasional (Petronas) to derive fair value as and Axiata SPV5 (Labuan) is the issuer of from US$500m and priced at the lowest Axiata’s 2026s are illiquid and outdated. The the conventional bond. Axiata Group is the 30-year US dollar coupon for a standalone issuer’s existing bonds were trading in the obligor as well as guarantor of both tranches. corporate issue from Asia, excluding callable Treasuries plus 180bp area, while the new The sukuk will be drawn off a US$1.5bn bonds. bonds priced just 35bp back of Petronas, multi-currency sukuk issuance programme “The issuer had a different target investor rated A2/A– (Moody’s/S&P), with the same and the 30-year bond from a US$1.5bn base for the 30-year tranche, like insurance 10-year and 30-year tenors. EMTN programme. companies, and saw very good demand on The tight pricing led to a dramatic drop in Proceeds of the two-tranche offering, with the back of its rarity and operations in the orders from a peak of more than US$11.4bn expected ratings of Baa2/BBB+ (Moody’s/ relatively stable telecommunications sector,” when the final guidance was announced. S&P), will be used for refinancing debt, said a banker on the deal. Still, the senior notes were covered more capital expenditure and general corporate Axiata last visited the international bond than 4.5 times at pricing, receiving combined purposes. market in 2016. The company, rated Baa2/ final orders of over US$6.8bn. CIMB, Citigroup, Standard Chartered and BBB+ (Moody’s/S&P), is one of Asia’s largest The new bonds held up well on their first UBS were joint bookrunners. regional cellular telecom providers and is trading day, with the 10-year sukuk trading JIHYE HWANG

34 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT NEW ZEALAND

Funding vehicle IMTIAZ SUKUK II will be the a deleveraging exercise that included by M$3m over the first two years, M$5m for issuer of the notes. the disposal of Eastern Dispersal Link the subsequent two years, and M$7m for Maybank Investment Bank is sole principle Expressway for M$1.3bn and the M$1.1bn the final two years. lead adviser for the programme. sale of an 80% stake in Bukit Jalil Sentral The borrower’s land, contract proceeds, Bank Rakyat is a state-owned Islamic property project. a charge over the debt service reserve cooperative bank and enjoys implicit account and debenture by way of fixed support from the government. and floating charges on all the present and SYNDICATED LOANS future fixed and floating assets will act as › MRCB PRINTS TRIPLE-TRANCHER security for the financing. › BORNEO OIL UNIT BAGS BILATERAL Parent Borneo Oil will also provide a MALAYSIAN RESOURCES (MRCB) has raised corporate guarantee. M$600m from the sale of three, seven and A unit of BORNEO OIL has signed M$50m Upon full drawdown of the facilities, the 10-year sukuk. (US$12m) of bilateral facilities with Sabah gearing ratio will increase to 9.71% of the The M$250m three-year tranche will pay Development Bank, according to a stock total equity from 2.29%. 3.85%, the M$200m seven-year tranche will exchange filing on Thursday. Borneo Oil is an investment holding pay 4.25% and the M$150m 10-year tranche SB Resorts is the borrower of the company and operates oil, gas, mining, will pay 4.45%. financing, which comprises a M$20m term restaurant and franchising, trading of The sukuk, rated AA by Marc, settled loan and a M$30m revolving credit facility. machinery and spare parts, management last Friday, off a M$5bn sukuk murabaha Proceeds of the term loan are to partially and operations services through its programme. finance the construction of an integrated subsidiaries. The property and construction company clinker and cement manufacturing plant at plans to use the proceeds to fund growth Ulu Segama, Lahad Datu, Sabah. and meet future financing requirements. Funds from the revolver will finance HSBC Amanah Malaysia and Maybank the capital expenditure for infrastructure were joint lead managers for the deal, as upgrading and additional property, plant NEW ZEALAND well as joint principal advisers, joint lead and equipment at the group’s quarries. arrangers and joint lead managers for the The term loan will be repaid in 24 programme. quarterly installments with the first DEBT CAPITAL MARKETS MRCB enjoys strong support from major installment to come 12 months from shareholder Employees Provident Fund, the date of first disbursement, while the › INVESTORE SIGNALS NOTE OFFER which has helped fund the issuer’s various revolver will be repaid in full within 12 projects. MRCB’s group borrowings fell months of the date of each drawdown. INVESTORE PROPERTY has mandated Westpac as to M$1.8bn at end-2019 from M$3.4bn The revolver is subject to an annual limit arranger and joint lead manager with ANZ, in 2015 after the company undertook reduction over six years. The limit reduces Forsyth Barr and Jarden for a New Zealand Kinetic drives in for A$589m loan

„ Loans Aussie transport operator borrows for Kiwi bus company buy

Australian mass transit operator KINETIC Australasia and Go Bus has been early to the new operator of bus services at Adelaide HOLDING has obtained a A$589m-equivalent work with partners to adopt these next Airport and to help the airport transition to (US$423m) four-year loan for its acquisition generation transport products including become Australia’s first to introduce a fully of New Zealand bus operator Go Bus and the demand responsive busing,” said Kinetic electric bus fleet. refinancing of an existing borrowing. co-CEO Michael Sewards. “The Go Bus In July 2019, Kinetic, formerly known as Bank of China, Bank of Queensland, acquisition will see Kinetic proudly operate AATS Group, raised a A$405m five-year loan Commonwealth Bank of Australia, Export the largest fleet of electric passenger to back its acquisition of Transit Australia Development Canada, First State Super, vehicles in the region within the next 12 Group, the operator of SkyBus. Industrial & Commercial Bank of China and months.” CBA was the original mandated lead Macquarie Bank were the lenders. Under the Go Bus brand, Kinetic will arranger and bookrunner for the deal. BOC The multi-tranche borrowing, operate a new fleet of electric buses for and EDC joined as MLABs. First State Super, denominated in Australian and New Zealand Auckland Transport as part of a new bus Metrics Credit Partners and Macquarie dollars, is split into eight term loan tranches route connecting growth suburbs with Bank came in as lead arrangers, while Bank and four revolving credit portions, according Auckland Airport. In Greater Christchurch, of Queensland and ICBC participated as to Refinitiv LPC data. the company will operate a further 25 new arrangers, according to Refinitiv LPC data. Melbourne-headquartered Kinetic has electric buses. AATS Holding is the borrower for that acquired Go Bus from a partnership between Kinetic’s growing mass transit platform facility. Ngai Tahu Holdings and Tainui Group includes Queensland bus operators Surfside Canadian pension fund OPSEU Pension Holdings, according to its press release on Buslines and Sunbus, Sydney’s largest bus Trust (OPTrust) is a majority shareholder in August 4. and coach charter company Telford’s, and Kinetic and is considering selling a stake, with “The prioritisation of electric and other airport transit business SkyBus (Australia and indicative bids due in September, according sustainable bus technology over diesel New Zealand). to local media reports in Australia. buses is becoming an increasing trend in Earlier this year SkyBus was named as MARIKO ISHIKAWA

International Financing Review Asia August 15 2020 35

B&RXQWU\LQGG  dollar seven-year senior secured fixed-rate to ensure food security and reduce poverty retail note offer, expected to open this in the country. week. PHILIPPINES “The Philippines has made tremendous The commercial real estate investment strides in reducing the national poverty company previously issued an unrated rate, but rural poverty remains high NZ$100m (US$65.9m) 4.40% six-year retail DEBT CAPITAL MARKETS because of low productivity and limited note in March 2018. crop diversification,” said ADB vice- › DEL MONTE FILES FOR MAIDEN BONDS president Ahmed M Saeed. “This loan will support the government’s comprehensive SYNDICATED LOANS DEL MONTE PHILIPPINES is targeting up to suite of policy and regulatory reforms, Ps7.5bn (US$153m) from a maiden bond resolving institutional weaknesses in › SKY NETWORK TUNES IN FOR A&E offering. land and water management, expanding It is targeting Ps5bn from the retail agricultural financing to boost productivity, SKY NETWORK TELEVISION has completed an bond with an upsize option to raise up to and extending the social safety net to amendment and extension of a NZ$200m Ps7.5bn. unserved and underserved rural families.” (US$131m) loan. The subsidiary of DEL MONTE PACIFIC has Other reforms supported by the loan The maturity of the loan has been filed an application with the Philippine include additional assistance through cash extended to July 2023, Sky said in exchange Securities and Exchange Commission to grants and zero-interest loans to farmers filings in New Zealand and Australia on register the public bond issue. making the transition towards higher value Wednesday. The proposed offering consists of three crops and those affected by the coronavirus The A&E exercise on the NZ$200m and/or five-year maturities. It will use the pandemic. loan announced in May was subject proceeds to refinance existing loans and Upcoming investments that complement to documentation and the successful fund other corporate purposes. the new loan will enhance flood risk completion of an equity raising of at least BDO Capital & Investment, China Bank management in major river basins, NZ$80m, net transaction costs. Capital, First Metro Investment and RCBC improve irrigation efficiency, and promote In June, the Auckland-based company Capital are joint lead underwriters, joint agro-enterprise development, ADB said in a said it completed an equity raising of issue managers and joint bookrunners for media release on Wednesday. approximately NZ$157.2m. the offering. Sky used the proceeds from that Exchange Equity Partners Group is the fundraising to pay down all bank debt and financial adviser for the issue. it held cash of A$118m as at August 12, according to the filings on Wednesday. SINGAPORE It has also announced the sale of its SYNDICATED LOANS outside broadcast unit to global operator NEP Group as part of a plan to reduce › ADB LENDS US$400M TO THE PHILIPPINES DEBT CAPITAL MARKETS capital expenditure while maintaining coverage of live sports in New Zealand. The Asian Development Bank has approved › KEONG HONG PRICES NEW NOTES The financial terms of the deal were not a US$400m policy-based loan to the disclosed. REPUBLIC OF THE PHILIPPINES to support reforms KEONG HONG HOLDINGS last Wednesday priced As part of the deal, NEP New Zealand will aimed at raising the productivity and three-year notes at par to yield 6.25%, flat to be Sky’s technical production partner in competitiveness of the agriculture sector the minimum level targeted by the issuer New Zealand for the next 10 years. and reducing poverty in rural areas. and sole lead manager HSBC. Sky had a NZ$250m five-year revolver The Philippine government has identified The S$48m (US$35m) 2023s will comprise from ANZ, Commonwealth Bank of agriculture, which employs a quarter of S$14.25m sold to new investors and Australia, Bank New Zealand and Westpac the country’ workforce, as a priority area S$33.75m exchanged by investors holding a Banking Corp that matured in July, for reform under its coronavirus pandemic 5.75% bond due September 15 2021. according to Refinitiv LPC data. economic recovery programme, as it seeks The new deal is part of a bond exchange

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36 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT SINGAPORE

Bondholders keep faith with Keppel

„ Bonds Keppel bond prices hold up on pulled Temasek offer

Bondholders kept faith with Singaporean nowhere near that seen in the stock price. during the second quarter were excluded, conglomerate KEPPEL even as equity investors “The bond markets are less speculative Keppel would have registered a net profit dumped its shares after major shareholder than the equity markets,” said a DCM banker. of S$222m. The impairments were mainly Temasek Holdings pulled the plug on a “Keppel’s credit fundamentals are not due to weak results from its oil and gas S$4bn (US$2.9bn) offer to raise its stake to changed dramatically with Temasek pulling businesses. 51% from the current 21.4%. its offer.” Temasek’s pullout came a day before State-owned investment fund Temasek Temasek’s unsolicited offer, made in shareholders in SEMBCORP INDUSTRIES and announced it was dropping its offer on October, to pay S$7.35 a share to minority SEMBCORP MARINE voted overwhelmingly for Monday, when financial markets were stakeholders, was not about an injection of a demerger of the two companies. There closed for Singapore’s National Day holiday. funds, so its withdrawal will have no critical had been widespread speculation that Keppel’s stock price plunged 13% when impact on Keppel’s financial position. Temasek would consolidate its rig-building markets opened on Tuesday before ending In pulling its offer, Temasek invoked a assets with plans to merge Keppel’s marine 11% down at S$4.80 that day. The share condition in its acquisition proposal under business with Sembcorp Marine in a new price was still hovering around S$4.87 on which Keppel should report no material entity in which Temasek would be the largest Thursday. adverse change (MAC) in its financial shareholder. Local bondholders showed more performance and condition. The MAC clause Such expectations are now reduced with confidence in Keppel with the outstanding was breached in July when Keppel reported a Temasek pulling its offer, although its 21% Singapore dollar 2.25% 2025s rising slightly second-quarter loss of S$697.6m. stake in Keppel still leaves the door open for from 97.7 on August 7 to 97.9 last Thursday. OCBC credit analyst Ezien Hoo said that other forms of alliances. In the short-term, Foreign bondholders were slightly nervous while Keppel’s credit metrics had declined Keppel will have to continue to deal with the with Keppel’s US dollar 2.459% 2025s falling over time, its businesses, other than its heavy drag of the underperforming oil and from a cash price of 99.3 on August 7 to 98.4 offshore marine operations, remained gas businesses on its profitability, which in last Thursday – the lowest since the notes resilient in currently weak global conditions. turn will keep its bond prices treading water. were issued in early June. Still, the drop was Indeed, if impairments of S$919m KIT YIN BOEY

offer for the outstanding S$85m of 2021s. The deal could be between US$1.2bn 364-day revolver for its European subsidiary Under the offer, which expired Tuesday, and US$2.0bn in size. Olam will use the Olam Holdings BV from seven lenders. investors could exchange the 2021s into sustainability-linked loan to refinance debt It followed a US$250m multi-tranche self- the new 2023s for a higher coupon and a for itself and its subsidiaries. arranged SLL Olam closed in June. longer maturity. The tenor of the latest refinancing will The Singaporean construction and be similar to a US$1.525bn three-tranche property company said investors holding revolver Olam completed in October last RESTRUCTURING S$33.75m of the 2021s, about 39.71% year. However, the pricing on the new of the total issue size, had offered the borrowing is likely to be around 20bp–30bp › KRISENERGY SKIPS OBLIGATIONS notes for exchange. These notes will be richer. cancelled, leaving the balance of the 2021s Olam International and its wholly Cash-strapped KRISENERGY said last Tuesday at S$51.25m. owned subsidiary, Olam Treasury, are it will not pay the interest and principal HSBC was sole dealer manager and the borrowers on that 2019 loan, which payments due on bank loans and an Deutsche Bank was agent for the exchange comprises a US$610m 364-day portion due outstanding S$200m (US$145.6m) 4% bond offer. in October this year, and two and three- due 2023. Settlement of the unrated unsecured year tranches of US$457.5m each. Principal and interest payments totalling 2023s, to be issued off a S$200m multi- Last year’s self-arranged club deal US$4.38m are due on August 21 on currency MTN programme, is scheduled attracted 19 lenders, including senior separate loans owed to HSBC and Standard for August 19. Proceeds will be used for mandated lead arrangers ABN AMRO Chartered Bank. In addition, a S$4m general corporate needs, including debt Bank, HSBC, National Australia Bank and interest payment on the 2023s is due on refinancing, acquisitions and capital Sumitomo Mitsui Banking Corp. August 22. expenditure. Olam has been active in the loan markets The Singaporean upstream oil and gas this year. In July it launched a ¥25bn company said it was conserving all available (US$237m) Samurai loan into general cash to meet its funding requirements SYNDICATED LOANS syndication, offering interest margins of while working on a restructuring proposal 60bp and 75bp over Libor, respectively, for that would protect the interests of all › OLAM TAPS UP TO US$2BN REFI the three and five-year tranches. stakeholders. As such, it will not pay the The one-year portion pays higher pricing coming obligations. Singapore-headquartered food and agri- than the 45bp over Libor margin on a KrisEnergy applied for court protection in business OLAM INTERNATIONAL is in talks with ¥25bn three-year loan completed in July August last year to restructure total debt of banks to raise up to US$2bn from a multi- 2017 that is being refinanced. around US$477m. It plans to hold meetings tranche revolving credit facility. Last month Olam also closed a US$375m in August under a court-supervised scheme

International Financing Review Asia August 15 2020 37

B&RXQWU\LQGG  of arrangement where unsecured creditors The offering is expected to close on or Cooperative Bank on a NT$8bn (US$272m) five- will vote on the restructuring proposals. around August 27. year loan and Mega International Commercial Drew & Napier is legal adviser and Houlihan Bank on a US$160m five-year borrowing. Lokey Singapore is financial adviser to The terms and details of both loans are KrisEnergy on the restructuring process. SYNDICATED LOANS yet to be determined. The NT dollar borrowing will refinance › QUANTA LAUNCHES REFI a NT$7bn five-year deal completed in November 2015, while the US dollar QUANTA COMPUTER has launched a US$1bn loan will refinance a US$144m five-year SOUTH KOREA three-year revolving credit facility into revolving credit signed in February 2017. general syndication. Both of the latest borrowings will also Mega International Commercial Bank is the fund working capital. DEBT CAPITAL MARKETS mandated lead arranger and bookrunner Bank of Taiwan led the 2015 deal, which of the bullet loan, which carries a two-year was equally split into a revolving credit › KEXIM SENDS RFP FOR OFFSHORE BOND extension option with a 5bp fee. tranche A and a term loan tranche B paying The facility comprises a US$600m interest margins of 65bp over Taibor and The EXPORT-IMPORT BANK OF KOREA (Kexim), tranche A for Quanta and a US$400m 68bp over the NT dollar interest rate swap. rated Aa2/AA/AA–, has sent a request for tranche B for Cayman-incorporated There is a pre-tax interest rate floor set at proposal to banks for a potential offshore subsidiary Quanta International. Tranche A 1.7%. bond offering, according to market sources. is unsecured, while tranche B is guaranteed BoT also led the 2017 transaction, which The issue size and currency are not by the parent company. offers margins ranging from 90bp to 135bp decided yet, said a source close to the The deal offers an interest margin of over Libor based on the borrower’s after-tax potential deal. 75bp over Libor, and the borrower will net profit margin. The South Korean policy bank previously pay any excess interest rate beyond a 48bp In July, the Taiwan Ministry of Economic visited the international bond market in difference between TAIFX and Libor. Affairs approved the borrower’s plan May to print a A$700m (US$500m) dual- Banks are being invited to join as MLABs to invest over NT$2.1bn in capacity tranche Kangaroo bond, which was the first with commitments of US$100m or more for expansion, as part of a programme to Kangaroo issue by a Korean credit this year. an upfront fee of 7bp, MLAs with US$60m– encourage Taiwanese companies to invest $99m for a 4bp fee, or as participants with domestically. › KT CORP HIRES FOR US DOLLAR BOND US$30m–$59m for a 2bp fee. Depo was one of the earliest automotive The deadline for responses is September lighting makers to set up factories in China, Telecom company KT CORP, rated A3/A–/A, 25. according to a ministry press release. has hired BNP Paribas, Citigroup, Credit Funds are to refinance the borrower’s Agricole, HSBC and Standard Chartered Bank outstanding debts, including a US$480m › MEGA SET FOR TWIN TOWERS MANDATE for a proposed US dollar bond offering three-year revolver completed in December that could come as early as the end of this 2015, and for working capital purposes. Mega International Commercial Bank is tipped to month, according to market sources. Credit Agricole CIB led the 2015 deal, win the mandate from Taiwanese computer The issue size and format are undecided which attracted 10 other MLABs. The loan maker CLEVO for a NT$23bn to back the yet, one of the sources said. offers a margin of 108bp over Libor and a construction of two skyscrapers in Taipei. KT previously visited the international top-level fee of 18bp. The borrower would Mega is approaching relationship banks bond market in July last year to print a pay any excess interest rate beyond a 38bp to expand the arranger group. dual-tranche Samurai bond. The company difference between TAIFX and Libor. Clevo and its property development last issued a US dollar bond in 2017 when it The Taiwan-listed borrower last raised an affiliate Hongwell Group, along with the raised US$400m from a five-year note. increased US$880m three-year loan in July Taipei city government, will jointly develop 2018. Mizuho Bank was the original MLAB, the Taipei Twin Towers project near the while 15 other banks joined with the same city’s main station. title. Last October, the city government The 2018 deal comprises a US$560m transferred the project development TAIWAN tranche A for Quanta and a US$320m contract to Clevo and Hongwell from the tranche B for Quanta International, and previous contractor, a consortium led by paid margins of 87bp and 95bp over Libor, Hong Kong-based Nan Hai Development DEBT CAPITAL MARKETS respectively. Lenders were offered a top- and Malaysian property developer Malton. level fee of 15bp. › MANULIFE PRICES FORMOSA Quanta Computer is primarily engaged in the research, development, manufacture Canadian insurer and asset manager and sale of notebook computers. Its MANULIFE FINANCIAL, rated A/A (S&P/Fitch), on products are mainly sold to China, the Thursday priced US$1.155bn 3.05% 40-year Netherlands, the United States and Japan. Formosa bonds in Taiwan at par. There is an option to call the bonds at par › DEPO AUTO PARTS DRIVES IN after five years and every year thereafter. Follow IFR Asia Standard Chartered Bank (Taiwan), HSBC Taiwan-listed DEPO AUTO PARTS INDUSTRIAL is Bank (Taiwan), ANZ Taipei branch, BNP Paribas raising US$432m-equivalent through two @IFRAsia Taipei branch and DBS Bank (Taiwan) are separate loans. managers for the offering. The borrower has mandated Taiwan

38 International Financing Review Asia August 15 2020

B&RXQWU\LQGG  COUNTRY REPORT THAILAND

The total investment required for the two conglomerate Charoen Pokphand Group. SYNDICATED LOANS towers is estimated at more than NT$60bn, In March Tris affirmed CPF Thailand’s and Clevo must pay a NT$1.8bn deposit on rating at A+ but lowered its outlook › CP FOODS UNIT MAKES LOAN DEBUT the city project. to negative from stable to align with a The 76-storey and 56-storey skyscrapers similar negative outlook for its parent CP MERCHANDISING, a wholly owned unit of are due to open in 2027. Construction is company. CPF’s outlook was downgraded Charoen Pokphand Foods, is seeking its expected to start in 2021. on concerns that its leverage ratio would loan market debut through a three-year The NT$23bn borrowing would be surge to fund a joint acquisition of Tesco’s borrowing of up to US$500m. Clevo’s largest loan. Its previous visit to operations in Thailand and Malaysia. The Deutsche Bank is the sole mandated lead the loan market was in December 2018 acquisition, made in March with Charoen arranger and bookrunner of the facility, for a NT$6bn five-year facility. Taiwan Pokphand Holdings and CP All, is valued which has been launched into senior Cooperative Bank was the mandated lead at US$10.6bn. syndication. arranger and bookrunner of that deal, CIMB Thai Bank, Government Savings Bank, The deal pays an interest margin of which has a NT$4bn term loan tranche A, Kasikornbank, Krungthai Bank, Phatra Securities, 270bp over Libor and will fund general a NT$2bn revolving credit tranche B and Siam Commercial Bank and TMB Bank are joint corporate purposes. a NT$2bn guarantee tranche C. The three lead managers for the deal. Sponsor CP Foods is providing a letter of tranches could not exceed a combined comfort, while convenience store operator NT$6bn. › DTN PLANS A CALL CP All will provide support through a Tranches A and B pay interest margins pledge of shares. of 65bp over Taibor, with a pre-tax interest DTAC TRINET (DTN), rated AA by Tris, is The loan follows close on the heels of a rate floor set at 1.7%. Tranche C has a planning to raise a minimum of Bt7bn in US$400m five-year refinancing completed guarantee fee of 55bp. tenors of three to 12 years next month. in July for Hong Kong-listed agri-food Bangkok Bank, Bank of Ayudhya and conglomerate CP Pokphand, which is also a Kasikornbank will be joint lead managers unit of CP Foods. for the deal. Bookbuilding is slated for Bank of Communications Hong Kong September 18. branch was the sole mandated lead THAILAND DTN, Thailand’s third largest mobile arranger and bookrunner of the borrowing, phone operator, is a core subsidiary of which attracted 14 lenders in general Thai telecoms company Total Access syndication. DEBT CAPITAL MARKETS Communication, which in turn counts The transaction offered a top-level all-in Norway’s Telenor as a major shareholder. pricing of 200bp based on an interest › CPF THAI TARGETS BT20BN HARVEST margin of 190bp over Libor and an average › GULF ENERGY POWERS FOUR-TRANCHER life of 4.3 years. CPF THAILAND, rated A+ by Tris, has fixed final Separately, Charoen Pokphand pricing on a jumbo bond offering in tenors GULF ENERGY DEVELOPMENT has priced four bond Indonesia is in the market for a US$300m- of 4.5 to 15 years to raise a targeted Bt20bn tranches to good demand for a targeted equivalent revolving credit facility, which (US$643m). Bt10bn in its first offering since January has attracted three lenders in senior The 4.5-year tranche, for up to Bt14bn, 2019. syndication so far. was priced at par to yield 3.15%, a seven- A Bt4.5bn three-year tranche was priced Citigroup and DBS Bank are the MLABs of year tranche, for up to Bt3bn, will pay at par to yield 2.65%, a Bt2.5bn five-year the borrowing, which comprises Indonesian 3.35%, a 10-year piece, for up to Bt1bn, tranche at 3.1%, a Bt2bn seven-year tranche rupiah and US dollar tranches. The one- will pay 3.55%, a 12-year tranche, for up at 3.34% and a Bt1bn 10-year tranche year revolver carries an extension option of to Bt1bn, will pay 3.8% and the 15-year at 3.46%. Initial price guidance on the another year. tranche, for up to Bt3bn, will pay 4.11%. respective tranches was 2.55%–2.85%, 2.9%– The transaction offers a blended The total issue size is capped at Bt20bn 3.2%, 3.1%–3.4% and 3.3%–3.5%. two-year top-level all-in pricing of with the notes to be drawn from a Bt130bn The deal was covered twice with strong 257.5bp over Jibor and 150bp over Libor, MTN programme. demand for the three and 10-year tranches, respectively, based on an interest margin Pricing on the short-dated tranches is at said a banker on the deal. Gulf Energy of 210bp over Jibor and 115bp over Libor the tight ends of guidance while that on the however decided to keep the longest-dated for the first year before stepping up to longer-dated tranches is at or near the wide tranche at Bt1bn. 250bp and 130bp respectively in year ends. Initial price guidance was 3.15%–3.2%, The bonds were offered to institutional two. 3.35%–3.45%, 3.45%–3.55%, 3.7%–3.8% and and high-net-worth investors. CPI is a unit CP Indonesia Group, which 4%-4.15%. Settlement is scheduled for August 19. in turn is a subsidiary of Thai conglomerate The tranche sizes will be set after a three- The Thai independent power producer is Charoen Pokphand Group. day subscription to institutional and high- rated A by Tris with the notes rated A–. CP Foods, also a unit of CP Group, net-worth investors ends on August 19. Bangkok Bank and Siam Commercial operates a vertically integrated agro- CPF Thailand is owned by Charoen Bank were joint lead managers and industrial and food business including Pokphand Foods, which in turn is part of underwriters. livestock and aquaculture. www.ifre.com

International Financing Review Asia August 15 2020 39

B&RXQWU\LQGG  ASIA DATA

ASIAN SYNDICATED LOAN PIPELINE UPDATES WEEK OF 12 AUGUST Company Currency Size (m) Margin (All-in) Tenor (mths) Facility Arrangers Taiwan Depo Auto Parts Industrial NT$ 8,000 60 Revolver/Term Loan Taiwan Coop Depo Auto Parts Industrial US$ 160 60 Revolver/Term Loan Mega IntL Hong Kong Henderson Land Development HK$ 20,000 (200) 60 Revolver/Term Loan 0 Source: Refinitiv data LPC

LAST WEEK’S ECM DEALS Stock Country Date Amount Price Deal type Bookrunner(s) ICICI Bank India 10/08/2020 Rs150bn Rs358 Follow-on(primary) Axis, BoA, BNPP, Citigroup, Goldman Sachs, HDFC Bank, ICICI Securities, IIFL, Jefferies, JM, JPM, Kotak, MS, Motilal Oswal, Nomura, SBI Caps, Yes OneConnect Financial Technology China 13/08/2020 US$324m US$18 Follow-on(primary) Goldman Sachs, Morgan Stanley, China PA Securities KE Holdings China 12/08/2020 US$2.1bn US$20 IPO (primary) Goldman Sachs, Morgan Stanley, China Renaissance, JP Morgan, CICC Fineos Corporation Holdings Australia 12/08/2020 A$85m A$4.26 Follow-on(primary) Macquarie, Moelis Sydney Airport Holdings Australia 12/08/2020 A$2bn A$4.56 Follow-on(primary) UBS China Education Group China 11/08/2020 HK$2bn HK$15.50 Follow-on(primary) UBS Wisdom Education China 11/08/2020 HK$551m HK$4.24 Follow-on(primary) Citigroup Source: IFR Asia

MERRILL LYNCH ASIAN DOLLAR INDEX Index Description Index level 1 week total return 1 month total return 3 months total return OAS ADIG Asian-dollar high-grade index 464.340 –0.300 2.060 5.688 170 ADHY Asian-dollar high-yield index 697.639 0.703 3.386 11.477 754 AGIG Asian-dollar government high-grade index 442.343 –0.181 2.801 6.493 139 AGHY Asian-dollar government high-yield index 769.498 2.453 8.984 35.053 827 ACIG Asian-dollar corporate high-grade index 490.916 –0.343 1.816 5.437 181 ACHY Asian-dollar corporate high-yield index 578.430 0.498 2.735 9.056 745 Source: Merrill Lynch

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