To say that 2022 was an interesting year for North Asia’s capital markets would be putting it lightly. From the fallout of China’s high-yield bond market to ongoing geopolitical tensions, issuers and investors had to carefully navigate the market to avoid dud deals and overvalued transactions.
China’s zero-Covid stance has had a telling impact on its economic growth and companies chose to either ride out the storm or look elsewhere for opportunities. Tech giants such as Alibaba and Tencent saw their share prices hammered as central authorities sought to rein in their influence in society. Many corporates had to suspend their listing plans amid the highly volatile market conditions.
The country’s high-yield bond market suffered greatly from negative investor sentiment, with a number of highly leveraged real estate names unable to tap international bond markets following a series of credit defaults in the sector. Still, deals were able to get done as investment-grade issuers found favour in the international bond markets. Overseas branches of Chinese banks, for example, were active in the scene, and several of them incorporated ESG thematics into their fund-raising strategy. Other issuers turned their attention to the onshore market given the lower financing costs.
A similar story unfolded in South Korea’s bond markets, where there was a strong demand for ESG-themed offerings. A number of leading Korean financial institutions and corporates continued to raise funds and pledge to use the proceeds towards certified sustainable projects.
During the review period for The Asset Triple A Country Awards for Sustainable Finance, a number of Korean block trades got executed despite the market volatility. LG Energy Solution was able to raise US$10.7 billion from international investors in January last year, just before the initial market shock from the Russia-Ukraine conflict. It was the largest South Korean initial public offering of all time.
Other key markets in North Asia such as Hong Kong and Taiwan struggled in similarly difficult environments. The Hong Kong stock exchange, which saw a slew of homecoming listings in 2021, had to grapple with a slowdown of activity. The poor market performance saw the Hang Seng Index drop by more than 9%.
The Hong Kong bond market was a bit more vigorous, with the government leading the way with a green bond issuance and corporates following suit with their own ESG-themed offerings.
Capital market activity in Taiwan was equally interesting. A number of semiconductor companies such as WT Microelectronics and Powerchip Semiconductor Manufacturing Corp took the GDR (global depositary receipt) route to raise funds.
Taiwan’s local syndication market was also vibrant with borrowers going for sustainability-linked transactions to showcase their ESG credentials. On the other hand, the Formosa bond market was heavily impacted by the unfavourable investor sentiment.
Regardless, the tough market conditions enabled the most resilient institutions to stand out, enabling The Asset’s board of editors to pick the best advisers and deals in the region.
China Gas Holdings’ US$250 million social loan, the first loan by a Chinese enterprise aimed at supporting small and medium-scale enterprises and providing affordable basic infrastructure, is recognized as the Best social loan in China. South Korean company LG Energy Solution wins the Best IPO award in South Korea for its 12.8 trillion won (US$10.8 billion) offering with proceeds being used to support the company’s rechargeable lithium-ion batteries business. In Taiwan, Baring Private Equity Asia and Ginko International’s US$639.60 million equivalent management buyout loan is recognized as the first leveraged financing linked to ESG metrics in the market.
New World Development and Far Eastern New Century are honoured as Best issuers for sustainable finance in Hong Kong and Taiwan respectively. In China, CICC is named Best corporate and institutional adviser among other achievements.
Citi had nearly a clean sweep of the awards in South Korea, being honoured as Best bank for sustainable finance and Best corporate and institutional adviser.
For the complete list of Best Banks/advisers in North Asia please click here.
For the complete list of Best deals in North Asia, please click here.
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