Who sets the bar in North Asia transaction banking?
In 2016, you can say that the renminbi cross-borde...
High yield bond issuance was off to a slow start in 2016, on the back of the volatile market environment, which particularly impacted the Chinese issuers who account for the large share of the annual G3 deal volume. The Chinese property companies and other high yield issuers also found the onshore bond market more accommodating as they shifted their fund raising at home.
The third quarter, though, saw a market revival as China issuances gained traction, underpinned by the growing Chinese bid. At the same time, companies from India and Indonesia came out to access the market to take advantage of the lower funding cost.
Two banks provided leadership in the high yield space. Deutsche Bank was involved in several interesting transactions, acting as the sole global coordinator, left lead bookrunner, and rating adviser in the US$1.2 billion dual tranche senior secured note for Studio City Company. The largest high yield offering ever from North Asia, the deal was positioned as a Reg S/144A trade to capture the strong technical bid for high yield supply in Asia, and the demand for gaming assets across the US accounts.
In other transactions, it was a joint global coordinator in the US$260 million re-opening for Lippo Karawaci, and in the US$300 million senior bond for HT Global IT Solutions Holdings, which was the first high yield bond transaction post Brexit. Deutsche Bank was also a joint bookrunner in the US$500 million green bond for Greenko Investment Company, the first such deal from an Asian high yield corporate, and in the US$550 million senior bond for Cikarang Listrindo, which re-opened the 10-year space for Indonesian non-sovereign-linked corporates.
HSBC likewise brought several high yield issuers into the G3 bond market. Twelve of its sixteen mandates came from HSBC commercial banking clients, reflecting the importance of this client base within the bank and continuing its ongoing collaboration efforts. It was a joint global coordinator in the first high yield US dollar bond issuance by an Indian credit in the last 12 months, in June 2016 for Samvardhana Motherson Automotive Systems, amounting to US$300 million. It also secured a repeat mandate from the company for the re-opening of US$100 million tap in August, acting as the only global coordinator for both deals.
In other notable transactions, HSBC was a joint global coordinator in the US$200 million offering by Glenmark Pharmaceuticals, which represented the inaugural offshore bond issue by an Indian pharmaceutical company. It was also involved in the first liability management and high yield issuance from Indonesia in 2016 for Sri Rejeki Isman (Sritex). The positive response from the tender offer drove the momentum for the new issue, which was priced significantly lower than the outstanding notes.
The bank was a joint global coordinator in Greentown China’s US$400 million perpetual non-call three securities, which features an innovative structure tailor-made to the company and investors’ requirements.
The winner of the Triple A Best Emerging Market Bond House will be revealed on February 28, 2017 during The Asset’s Regional House & Deal Awards Dinner. For more information about the awards ceremony please click here.
12 Jan 2017