So there has been a pandemic. But guess what? Local currency bond markets in Asia held up. For those who have been tracking the market since the Asian financial crisis in 1997, one word best describes it: resilient. According to the Asian Development Bank’s Bond Monitor, East Asia’s local currency bond market expanded to US$18.7 trillion at the end of September 2020, up 4.8% quarter-on-quarter and up 17.4% year-on-year.
Such is the strength of the region’s local markets that domestic banks in each market compete regularly with a clutch of international banks that have continued to remain relevant. Across the region, four international banks stood out in 2020 and are the nominees for The Asset Triple A best local currency bond adviser.
Credit Agricole CIB is active in the Hong Kong dollar, yuan and CNH bond markets. It helped arrange the HK$4 billion Covid-19 response bond by Industrial Bank (Hong Kong). It brought into the market the HK$4 billion SME-themed social bond and the CNH3 billion blue bond, both issued by Bank of China Macau. It was also the sole bookrunner in the 600 million yuan bond by Hyundai Capital Services.
DBS, as expected, is at the forefront of bringing bond deals in its home currency – leading several significant Singapore dollar bond transactions. It was the sole bookrunner and lead manager in the S$300 million green bond for the National University of Singapore – the first of its kind among universities in Asia. It likewise arranged a number of Covid-19 response bonds denominated in yuan, including the 5 billion yuan coronavirus-combating Panda bond by New Development Bank and the 3 billion yuan Panda bond by Asian Infrastructure Investment Bank.
HSBC arranged bonds in eight major Asian currencies during the review period, and was especially notable in the Hong Kong dollar market. It acted as the sole lead manager in two 30-year bonds: HK$1.24 billion for Hong Kong Electric and HK$1.51 billion for Hong Kong and China Gas Co. It also flexed the strength of its bond franchise in Malaysian ringgit, arranging the 750 million ringgit tier-2 subordinated notes for UOB (Malaysia) and the 1.2 billion ringgit four-tranche offering for Tropicana Corporation.
Standard Chartered, a perennial candidate, closed bond deals in several Asian local currencies. It arranged several peso-denominated bonds for leading Philippine banks, highlighted by the 36 billion pesos retail bond for BDO Unibank, in which it acted as the sole arranger and bookrunner. It was the structuring adviser in the 18.125 billion pesos Asean sustainability bond for state-owned Development Bank of the Philippines. It was also a joint structuring adviser for the Kingdom of Thailand’s 50 billion baht sustainability bond. In another deal, it was a mandated lead arranger in the 7.5 billion taka bond for Pubali Bank, representing the largest private sector bond issued in Bangladesh.
Who should get the recognition as The Asset Triple A best local currency bond adviser?
Shining the spotlight on Asia’s largest domestic market, the renminbi bond market has become a significant funding avenue for both Chinese and foreign issuers. As such, arranging deals is not just the domain of the big Chinese banks as foreign banks are proving to be competition as well.
Bank of China assisted Central Huijin Investment Co to issue a medium-term note worth 15 billion yuan in the China interbank bond market (CIBM). It was the sole lead underwriter in the 1.5 billion yuan green bond for Chongqing Rail Transit (Group) Co and in the one billion yuan issue combatting Covid-19 Panda bond for Hengan International Group Co.
With a full underwriting licence for Panda bonds in CIBM, HSBC participated in a number of landmark transactions, including the first-ever issuance by Xiaomi Corporation amounting to one billion yuan, which was also a Covid-19 virus prevention bond. It also participated in the Panda bond offerings by New Development Bank, Asian Infrastructure Investment Bank, Sumitomo Mitsui Banking Corporation and JD.com.
ICBC actively promotes the renminbi bond market through different funding instruments and platforms such as anti-Covid-19 bonds, green bonds and Panda bonds. It was a co-lead underwriter when China Development Bank issued the first “tackling climate change” green financial bond through Bond Connect, amounting to 10 billion yuan, in July 2020. It was the sole lead underwriter in the one billion yuan bond for Hubei Jointown Pharmaceutical Group, the first anti-Covid-19 bond underwritten by a large state-owned bank. ICBC was the sole underwriter when Huawei Technologies Corporation issued its first bond amounting to 2 billion yuan in the interbank market in March 2020.
Standard Chartered’s strong credentials in the renminbi bond market are in the asset-backed securities (ABS) and residential mortgage-backed securities (RMBS) markets. It closed several auto loan transactions, including those for Tianjin Great Wall Binyin Automotive Finance, Mercedes-Benz Auto Finance Company and Beijing Hyundai Auto Finance. It was also a joint lead underwriter in the RMBS deals for China Construction Bank and China Merchants Bank.
Who deserves The Asset Triple A best renminbi bond adviser?
As per tradition, The Asset will announce the winners of these categories in an Oscar-style ceremony taking place live on the 18th of March 2021 starting at 5pm Hong Kong time. To register to watch the ceremony, please click here.