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The Asset Triple A Country Awards 2020 – Southeast Asia
Region sees strong deal flow amid economic contraction
1 Dec 2020 | The Asset

The Asian Development Bank (ADB) is predicting that Southeast Asian economies will contract by an average 3.8% in 2020, with Thailand, the Philippines and Singapore each projected to experience a decline of more than 6% due to the coronavirus pandemic. But the negative impact of Covid-19 is hardly being felt in the region’s capital markets.

Issuances in both the G3 and local currency bond markets this year are up from 2019 as borrowers and issuers continued to take advantage of the large pool liquidity and low interest rates to raise new capital and refinance existing debt. According to Refinitiv, issuers in the Philippines, Indonesia, Singapore, Malaysia and Thailand, including supranationals, priced a total of US$86.85 billion worth of G3 bonds as of November 16 this year, up 51.9% compared with US$57.18 billion in the comparable period of 2019. The board of editors at The Asset has sifted through several deals during the evaluation process for The Asset Triple A Country Awards 2020 and we are able to identify the themes and trends that defined the market this year.

One of the themes that emerged in 2020 is the issuance of longer-tenor financing with PTT of Thailand, Temasek Holdings of Singapore and the Republic of Indonesia pricing 50-year offerings, and PETRONAS of Malaysia and Pertamina, also of Indonesia, printing 40-year transactions. This comes as investors are willing to buy into longer-term deals for yield pick-up, although there are issuers resisting to follow suit, refusing to pay up.

The attractiveness of the G3 bond market this year is very evident in the Philippines, where both local corporates and financial institutions raised a total of US$12.33 billion as at November 16, according to Refinitiv, or nearly twice the US$6.65 billion total trade in the corresponding period in 2019. Included in the issuances are a number of first-time issuers such as Jollibee Foods Corporation, Manila Water Company, DoubleDragon Properties Corporation and Aboitiz Equity Ventures, as well as other corporates, which after long absences, returned to the market to lock in low-cost funds. These included the two leading telecoms providers PLDT and Globe Telecom, which did not tap the G3 bond market for 18 years and 16 years, respectively.

Several issuers out of the Philippines are also embracing the green and sustainable financing theme with AC Energy Finance International printing the first-ever fixed-for-life perpetual green bond issued globally. The US$400 million offering is also the only third perpetual issued out of Asia in 2020 with the fixed-for-life structure.

Manila Water debuted with a US$500 million sustainability bond in July – the single largest green, social or sustainability bond issued by a listed private water utility in Asia. It is also the first Asean sustainability bond by a corporate issuer out of the Philippines.

The state-owned Development Bank of the Philippines likewise issued an Asean sustainability bond amounting to 18.125 billion pesos (US$376.60 million). The proceeds are used to fund projects that contribute towards economic inclusion, climate change mitigation and adaptation, natural resource conservation, pollution control and prevention, and other social issues.

The Bank of the Philippine Islands (BPI) printed 21.50 billion pesos (US$446.80 million) CARe bonds, representing the first peso-denominated bonds to be issued as a direct response to the Covid-19 pandemic, with the proceeds to be used to finance or refinance micro, small and medium enterprises’ loans under the BPI Group that meet qualifications under its sustainable funding.

Sustainable financing

Singapore issuers and borrowers are also subscribing to the green and sustainable financing theme, accessing both the bond and loan markets. Independent power producer and renewable energy developer Vena Energy debuted in the bond market with a green issuance amounting to US$325 million – the first-ever corporate US dollar green bond offering from a Singapore-headquartered company.

Olam International and Olam Treasury Pte Limited arranged US$250 million sustainability-linked revolving credit facilities, with the interest margin linked to the achievement of sustainability KPI (key performance indicator) improvement targets and could be lower than comparable conventional loans, if those targets are met.

Several Thai issuers have likewise joined the green and sustainability bond bandwagon this year with no less than the sovereign, the Kingdom of Thailand, leading the issuance activity with a 30 billion baht (US$989.45 million) offering in August. This is the inaugural issuance of a government sustainability bond with the funds earmarked for the MRT mass transit orange line project and for Covid-19 relief package.

PTT priced in July a dual-tranche green debenture totalling 15 billion baht, which is certified by Climate Bond Initiative (CBI). This is the first Thai baht green debenture offering to retail investors with CBI certification to finance forest conservation projects. Global Power Synergy printed also in July the first Thai baht green debenture amounting to 5 billion baht, with the proceeds allocated for a waste-to-energy project. This is also the first digital green debenture that utilized the ThaiBMA e-bookbuilding platform.

Apart from the landmark debt capital markets’ transactions, Thailand is also witnessing a stellar year in terms of initial public offerings (IPOs). The deal flow included the 78.124 billion baht share sale by Central Retail Corporation in February, which is the largest-ever in the country since the establishment of the Stock Exchange of Thailand (SET).

That deal, though, was overshadowed by a comparatively smaller offering from Sri Trang Gloves (Thailand), whose 14.905 billion baht IPO in July amply rewarded investors and is voted as the Best IPO in Thailand in The Triple A Country Awards 2020. This is the largest domestic-only IPO in SET and one of the best performing IPOs in the country, with its share price closing at 75.25 baht on November 27, or more twice its offer price of 34 baht apiece.

The winners

In terms of the best banks and best advisers, Citi is a big winner in Southeast Asia, winning four Best bank – Global awards in Indonesia, the Philippines, Singapore and Thailand, as it manifested strong performances across consumer banking, treasury and trade, commercial banking, and markets and securities. HSBC, on the other hand, wins the same award in Malaysia and Vietnam – regaining the latter, which it last won in 2017.

Credit Suisse demonstrated the strength of its franchise in winning the Best corporate and institutional adviser – Global award in Indonesia, Malaysia, the Philippines, Singapore and Vietnam. Among these markets, it made a big stride in the Philippines, where it is also voted as the Best bond adviser – Global. The Swiss bank participated in several landmark transactions and brought inaugural issuers into the market. It arranged the US$300 million deal for Rizal Commercial Banking Corporation on a sole basis, which introduced a new asset class with the first additional tier 1 capital securities in the Philippines.

The bank was a joint bookrunner and lead manager in the Republic of the Philippines’ (RoP) 1.20 billion euro (US$1.43 billion) dual-tranche deal priced in January, the first-ever zero-coupon euro issuance by the sovereign in the international debt capital markets, and when the RoP returned to the US dollar bond market in April with a US$2.35 billion SEC-registered offering.

Among the local banks, DBS again is a big winner in Singapore with five awards for Best bank, Best corporate and institutional adviser – Domestic (which it lost to United Overseas Bank in 2019), Best equity adviser, Best bond adviser and Best loan adviser.

In the Philippines, BDO Unibank and its investment banking subsidiary BDO Capital & Investment Corporation also scooped several awards, winning the Best bank, Best corporate and institutional adviser – Domestic, Best equity adviser and Best loan adviser.

Another multiple awards’ winner is Maybank Investment Bank, which is voted in Malaysia as Best corporate and institutional adviser – Domestic, Best bond adviser – Domestic and Best M&A adviser.

In Thailand, Siam Commercial Bank is chosen as Best bank and Best corporate and institutional adviser – Domestic, while in Vietnam, SSI Securities Corporation is selected as Best corporate and institutional adviser – Domestic and Best equity adviser.

For the complete list of winning advisers, please click here.

For the complete list of winning deals, please click here.

The virtual awards ceremony will be held on 18 March, 2021, please reserve your place by contacting events@theasset.com