IFRASIA

INTERNATIONAL FINANCING REVIEW ASIA

JUNE 13 2020 ISSUE 1142 www.ifre.com

Banks hope Cathay Pacific rights will fly

with underwriting role on rescue deal

Primary miracle: UPL dollar bond shows

new issues repricing curves in India too

Green or black? Kepco green bond a hit

while equity investors push back on coal

EQUITIES BONDS BONDS PEOPLE & MARKETS

JD.com, NetEase How low can you Welcome back: Institutions jostle
and Burning Rock go? Bank of Japan Chinese developers for private credit
add to rush for buys corporate rush for high yield boom as banks
Chinese IPOs bonds flat to JGBs bonds as yields fall battle Covid costs
06 07 08 12
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Upfront
OPINION INTERNATIONAL FINANCING REVIEW ASIA

Secondary education If trading in JD.com and Netease follows a similar path,

any US attempts to use the capital markets as a trade or

I
f the latest Hong Kong listings are any guide, Chinese political bargaining chip will carry little weight. The sooner
companies have little to fear from US threats to kick politicians come to that conclusion, the better.
them off American exchanges.
The rapturous response to the secondary listings of
Netease and JD.com underlines the depth of the local Green folly
following for big Chinese technology stocks. JD.com’s

I
US$3.88bn share sale is the city’s most popular public s South Korea’s electricity grid operator green or brown?
offering of the year, with the retail portion close to 180 It depends who you ask. Equity investors like BlackRock,
TIMESûOVERSUBSCRIBEDû.ETEASEûPOSTEDûAûSOLIDûlRST DAYûPOPû APG Asset Management, the Church of England and UBS
and traded on Friday at a small premium to its US price. Asset Management are putting Kepco under pressure over
These listings challenge the assumption that Chinese ITSûINVESTMENTûINûOVERSEASûCOALûPLANTSû"UTûûlXED INCOMEû
companies would somehow struggle to fund their investors piled into the US$500m green bond it sold last
expansion without access to the US equity market. week.
-OREûSIGNIlCANTLYûTHEYûALSOûNEUTRALISEûTHEûTHREATûOFûAû The problem is, they can both be right. Kepco’s portfolio
forced delisting if Chinese companies fail to make their INCLUDESûCOAL lREDûPOWERûSTATIONSûINûCOUNTRIESûLIKEûTHEû
audit trail available to US regulators. Once a secondary Philippines and South Africa, and it is considering new coal
LISTINGûISûINûPLACEûITûWOULDûNOTûBEûDIFlCULTûFORûAû#HINESEû projects in Indonesia and Vietnam. That is hard to stomach
company to make Hong Kong its primary trading venue, for investors with a commitment to environmental, social
and governance principles. At the same time, the proceeds
FROMûTHEûGREENûBONDûWILLûONLYûlNANCEûCLEANûENERGYû
Alibaba has seen a much bigger projects, which should be very palatable to investors who
care about sustainability.
shift than expected, with 46% What makes it possible for Kepco to be both beauty
of all trading now taking place ANDûTHEûBEASTûISûTHATûEQUITYûANDûlXED INCOMEûINVESTORSû
take different perspectives. Shareholders care about the
in Hong Kong. company as a whole and will apply their ESG standards
across its operations. Bond investors, however, can just
buy an instrument with a green label and rest easy in the
bringing international shareholders along with them. KNOWLEDGEûTHATûTHEYûWILLûNOTûBEûlNANCINGûANYTHINGûTHATû
In fact, that switch may be already underway. would make them uncomfortable.
Alibaba, which started the ball rolling with its US$13bn Despite this loose ringfencing, any notion of true
Hong Kong listing last November, has seen a much bigger separation from the rest of an issuer’s business is fanciful.
shift in its shareholder base than expected, with about 46% Kepco’s credit quality – and, therefore, its ability to repay
of all trading over the past month now taking place in the ITSûGREENûBONDSûnûRELIESûONûITSûSTABLEûCASHmOWSûFROMûSELLINGû
city. electricity, no matter how it is generated. By the same
On Thursday, 33.0 million Alibaba shares changed hands TOKENûTHEûABILITYûOFû+EPCOûORûANYûOTHERûFOSSILûFUEL DRIVENû
in Hong Kong, versus 29.7 million (via 3.71m ADRs) the COMPANYûTOûSERVICEûITSûDEBTûDEPENDSûONûTHEûLONG TERMû
same day in New York, giving Hong Kong a 53% share. At VIABILITYûOFûITSûBUSINESSûMODELû4HISûWILLûBEûINmUENCEDû
55%, the Hong Kong stock will be deemed to have become by government policies designed to speed the transition
Alibaba’s primary listing, in a test the exchange applies over to renewable energy, as well as the migration of capital
THEûWHOLEûlNANCIALûYEARû towards more sustainable companies.
A Hong Kong primary listing would not exempt Alibaba In other words, Kepco’s investments in coal projects
from any US disclosure rules, but it would make it eligible SHOULDûBEûJUSTûASûMUCHûOFûANûISSUEûFORûlXED INCOMEû
for the Stock Connect trading link with mainland China, investors as they are for their equity cousins. Bond buyers
opening up a new investor base. It would also simplify the should put aside the comfort blanket provided by the green
cancellation of its New York listing, if such a move were to format and recognise that sustainability is now simply a
be enforced. credit factor.

International Financing Review Asia June 13 2020 1

INTERNATIONAL FINANCING REVIEW ASIA

COMPANY INDEX Eagle Hospitality Trust 38 Leofoo Tourism Group 39 Shandong Weigao Orthopedic Device 27
58.com 23 Emerging Towns & Cities Singapore 33 Liberty Financial 17 Shanghai Construction Group 22
Aditya Birla Fashion & Retail 5 ESR Cayman 27 Liberty Series 2020-2 17 Shanxi Securities 25
Alliance Aviation Services 18 Estaleiro Jurong Aracruz 35 Link Finance 29 Shenzhen Hepalink Pharmaceutical 26
Alphamab Oncology 27 Evergreen Marine Corp 39 Litian Pictures Holdings 25
Shriram Transport Finance 5, 31
Arcland Sakamoto 32 Ezion Holdings 36 Mahindra and Mahindra
Falcon Energy Group 37 Financial Services 5, 31 Sichuan Langjiu 26
Asia Orient Holdings 27
Fame Well Creation 29 Manappuram Finance 31 Sikka Ports & Terminals 30
Asia Standard Hotel Group 27
Far East Consortium International 18, 38 Media Nusantara Citra 32 Simcere Pharmaceutical Group 26
Asia Standard International 27
Asian Infrastructure Investment Bank 22 Far East Horizon 27 MGM China 33 Singapore Airlines 5
Bangkok Expressway and Metro 40 FEC May22 18 Miclyn Express Offshore 38 Sinic Holdings (Group) 8, 23
Bank of Communications 19 Fernvale Lane 36 Midea International 24 Sinocelltech Group 26
Bank of Japan 7 FKS Food and Agri 8, 35 Mingfa Group (International) Co 27 SK Biopharmaceuticals 9
Bank Rakyat Indonesia 8 Fletcher Building 34 Municipality Finance 34
Smoore International 26
BBI Life Science 29 Founder Securities 20 Nabha Power 31
South Australian Government
Beijing Orient Franklin Templeton 30 Nanjing Securities 25
Freeport Indonesia 8 National Bank for Agriculture and Financing Authority 10
Landscape & Environment 24
Gan & Lee Pharmaceuticals 25 Rural Development 31 State Bank of India 5, 30
Big Hit Entertainment 9
Burning Rock Biotech 6 Garuda Indonesia 32 Nederlandse Waterschapsbank 17 Sumitomo Mitsui Banking Corp 23
CAR Inc 19 Geo Energy Resources 32 NetEase 6 Sundaram Finance 31
Cathay Pacific Airways 4 Gigadevice Semiconductor (Beijing) 25 New Oriental Education & Swiber Holdings 38
Central China Real Estate 8, 19 Greenland Holding Group 8, 20 Technology Group 24 TAL Education 24
Chailease Holding 39 Happiest Minds Technologies 31 New Zealand Treasury 34 Tata Motors Finance 31
Chailease International Financial Hilong Holding 21 Nio 25
Tei Ko Co 39
Services (Singapore) 39 Housing and Development Board 35 North Eastern Electric Power Corp 30
Housing Development Finance Corp 30 OUE Commercial REIT 35 Thai Oil 40
Chailease International Leasing 39
Hyflux 37 Pegadaian 31 The Islamic Republic of Pakistan 35
Champion REIT 27
Charoen Pokphand Foods 40 Hygeia Healthcare 26 Pepper 17 The Republic of the Philippines 35
China Bohai Bank 24 Hyundai Card 9 Pepper Residential Securities Tiphone Mobile Indonesia 8
China Everbright Greentech 19 IGB Commercial REIT 33 Trust No 26 (PRS26) 17 Tokyo Metro 7
China Everbright Water 23 Immunotech Biopharm 26 Perennial Treasury 36 TPG Telecom 18
China Fortune Land Development 8, 19 Indiabulls Housing Finance 31 Perusahaan Listrik Negara 8 TPI Polene 40
China Mengniu Dairy 20 Indofood Sukses Makmur 8 Ports and Free Zone World FZE 29
Trina Solar 26
China Pacific Insurance (Group) Co 24 Indomobil Finance Indonesia 8 Power Finance Corp 5, 30
Powerlong Real Estate Holdings 8, 21 UPL Corp 5
China Shuifa Singyes Infratil 34
Energy Holdings 22 International Container Prasac Microfinance Institution 18 Ventia Finco 17
China South City Holdings 19 Terminal Services 36 Prasarana Malaysia 33 Vodafone Hutchison Australia 18
China Traditional Chinese International Finance Corp 17 Radiance Group 8, 21 Western Australian Treasury Corp 17
Medicine Holdings 23 IRB Infrastructure Developers 30 Redsun Services 26 Wynn Macau 33
China Yongda Automobiles Services 27 Japan Airlines 33 Robinsons Land 34 Yang Ming Marine Transport 39
Cholamandalam Investment JD.com 6 Ronshine China Holdings 8, 21 Yanlord Land Group 24
and Finance 31 Kaisa Prosperity Holdings 25 Ryman Healthcare 34
Z Holdings 7
CIFI Holdings (Group) 24 Kangji Medical 26 Sands China 33
Zheneng Jinjiang
CIMB Group Holdings 33 Kogan.com 18 Sarana Multi Infrastruktur 8
Commercial Bank of Ceylon 39 Korea Electric Power Corporation 6 Sarana Multigriya Finansial 32 Environment Holding 23
DCB Bank 31 Korean Air Lines 4 Sembcorp Marine 5, 38 Zhengzhou Airport Economy Zone
Democratic People’s Republic L&T Finance 31 Shandong Weigao Group Xinggang Investment Group 23
of Korea 11 Lei Shing Hong Credit 29 Medical Polymer 27 Zhenro Services Group 26

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2 International Financing Review Asia June 13 2020

Contents
INTERNATIONAL FINANCING REVIEW ASIA
JUNE 13 2020 ISSUE 1142

COVER STORIES COUNTRY REPORT

EQUITIES
04 Banks step up for Cathay rights 17 AUSTRALIA 33 MYANMAR
IFC was the biggest SSA issuer Emerging Towns & Cities
Four banks are underwriting a portion of Cathay Pacific last week with a A$120m tap Singapore obtained a US$50m
Airways’ HK$11.7bn rights issue, backing a major Asian of its 1.5% April 2035 social dual-currency loan to develop
rights issue for the first time since the coronavirus. Kangaroo bond. Golden City in Myanmar.

BONDS 18 CAMBODIA 34 NEW ZEALAND

Prasac Microfinance Institution The New Zealand Treasury
05 UPL bond finds fertile ground increased a dual-tranche loan has mandated four for a
Investors handed India a vote of confidence last week to US$95m from US$75m after syndicated sale of new May 15
with strong support for the country’s first dollar bond in attracting eight in syndication. 2024 nominal bonds.
a month, despite a sovereign downgrade.
19 CHINA 35 PAKISTAN
BoCom said it will redeem all The Asian Development Bank
BONDS
its outstanding US$2.45bn 5% has approved US$1bn in loans
06 Kepco shakes off coal shadow offshore preference shares on to the governments of Pakistan
Kepco garnered strong investor demand for a five-year the date of first call, July 29. and the Philippines.
green bond despite mounting pressure from global
27 HONG KONG 34 PHILIPPINES
investors over its involvement in overseas coal projects.
Asia Orient Holdings and units Robinsons Land plans to issue
exchanged US$112m of 11% up to Ps20bn of fixed-rate
bonds issued by Mingfa Group bonds. Proceeds will partially
NEWS for newly issued 22% bonds. fund capital expenditure.

06 Chinese listings draw crowds 30 INDIA 35 SINGAPORE

Chinese listings, both in Hong Kong and the US, State Bank of India has received OUE Commercial REIT held
continued to draw strong demand from investors board approval to raise up to fixed income investor calls last
despite the market sell-offs late last week. US$1.5bn from offshore bonds Tuesday ahead of a potential
in one or more tranches. Singapore dollar bond offering.
07 BoJ buys corporate bonds flat to JGBs The BoJ bought ¥300bn of
corporate bonds last week at negative yields, including a portion flat to JGBs. 31 INDONESIA 39 SRI LANKA
08 China developers seize window Chinese high-yield developers are Indonesian state-owned The IFC is providing a US$50m
rushing to the dollar bond market as spreads have continued to tighten. auction house Pegadaian loan to ComBank to help SMEs
08 Indonesia Inc eyes offshore debt Indonesia is the lone bright spot in plans to raise Rp1.125trn from in Sri Lanka deal with the
Asia’s syndicated loan market with a pipeline of US$6bn of offshore loans. three-tranche bonds. impact of Covid-19.

32 JAPAN 39 TAIWAN
PEOPLE & MARKETS Arcland Sakamoto is to raise a
one-year bridge loan of up to
Yang Ming Marine Transport
has launched an NT$8bn loan
12 Investors eye Asian private credit ¥143.6bn to back its planned to take out a same-sized bridge
acquisition of Lixil Viva. financing put in place earlier.
The economic dislocation caused by the Covid-19
pandemic is expected to lead to a pullback in lending 33 MACAU 40 THAILAND
from both international and local banks. MGM China priced a Bangkok Expressway and Metro
US$500m five-year non- has raised Bt3bn from a triple-
13 Aviva hits out at HSBC, StanChart Major shareholder Aviva rebuked both
call two bond at par to yield tranche bond offering after a
HSBC and StanChart for their support for China’s security law in Hong Kong.
5.25%, inside initial guidance. two-day subscription.
14 Private equity firms eye take-private deals PE firms are hunting for
bargain Chinese companies but banks aren’t keen to finance them. 33 MALAYSIA
14 David Webb diagnosed with cancer HK activist investor David Webb will CIMB Group Holdings has
step back from regular posting after being diagnosed with prostate cancer. raised M$350m from a private
12 Who’s moving where Enrico Mattoli has been appointed UBS’s head of placement of three-year bonds
distribution within the direct investments group in Asia Pacific. priced at par to yield 3.12%.
15 In brief Hong Kong’s SFC has proposed new rules that would relax some
of the existing requirements for sponsors of real estate investment trusts.

International Financing Review Asia June 13 2020 3

NewsHK secondary listings 06 BoJ erases corporate spreads 07 Indonesia’s debt binge 

Banks step up for Cathay rights

„
Equities Struggling carrier takes in US$5.3bn from rights issue and government aid

BY FIONA LAU, S ANURADHA of that amount, BOCI 20%, HK$19.5bn preference shares passenger revenue to around
HSBC 20% and BNP 10%. The and a HK$1.95bn warrants issue only 1% of prior year levels has
Four banks are underwriting a underwriting commission is 2%. to the Hong Kong government, meant that it has been burning
portion of CATHAY PACIFIC AIRWAYS’ “Cathay is a leading carrier in which is also providing a cash at a rate of HK$2.5bn
HK$11.7bn (US$1.5bn) rights Hong Kong and we believe its HK$7.8bn bridge loan. to HK$3bn per month since
issue, backing a major Asian business will recover gradually. The government, in return, February.
rights issue for the first time The government bailout also will own a 6.08% stake in the
since the coronavirus outbreak. gives us confidence to join the company, have the right to OTHER RIGHTS ISSUES
Cathay Pacific last Tuesday deal,” said a banker on the deal. appoint two observers to attend A W1trn (US$829m) rights issue
announced the rights issue “We think the discount Cathay’s board meetings and for KOREAN AIR LINES, which won
alongside a HK$29.3bn offered by the rights price is big have access to management the support of local banks, is
bailout from the Hong Kong enough to attract investors.” and information. According to a similar story. South Korea’s
government that will help the Cathay’s shares took a wild Hong Kong’s financial secretary largest airline announced the
city’s flag carrier weather the ride last week, highlighting the Paul Chan, the government rights plans in May alongside
pandemic. risks facing the underwriters does not plan to hold the a W1.2trn government capital
The Hong Kong-listed airline in a volatile market. Down Cathay stake for the long term. injection to help it withstand
is selling 2.5bn shares on a 24% this year before the The preference shares carry a the effects of the crisis.
7-for-11 basis at a rights price recapitalisation plans were 3% dividend which will step up KB Securities, Kiwoom Securities,
of HK$4.68 each, a discount announced, Cathay briefly to 9% after five years, while the Korea Investment & Securities,
of 47% to last Monday’s close rebounded as much as 19% exercise price of the warrants Mirae Asset Daewoo and NH
of HK$8.81 and 35% to the at one point last Wednesday is set at HK$4.68. The interest Investment and Securities are
theoretical ex-rights price. before closing 1% lower at rate on the bridge loan is Hibor underwriting the offer, which is
Major shareholders Swire HK$8.72. The stock fell another plus 150bp. priced at a 31% discount to the
Pacific, Air China and Qatar 3.4% to HK$8.42 last Thursday Cathay Pacific said last pre-deal close.
Airways will take up their and was quoted at HK$8.28 month that it had made an In Singapore, state-owned
entitlements in full, but on Friday, down 6% since the unaudited loss of HK$4.5bn at investment firm Temasek
will see their stakes slightly announcement. full-service airlines Cathay and Holdings continues to back
diluted as a result of the The rights issue comes Dragon from January to April. local firms. It is underwriting
government bailout. After the alongside an issue of Last Tuesday, it said the drop in S$600m (US$431m) of loss-
recapitalisation, Swire will own
42.3% of Cathay Pacific, down
from 45%, Air China 28.2%,
down from 29.99%, and Qatar
Airways 9.4%, down from 9.9%.
Rights issues in Asia
Pacific have become more
common since the Covid-19
outbreak, but most have been
underwritten by government-
related entities and majority
shareholders. The Cathay
Pacific transaction shows
that banks remain capable of
backstopping rescue financings
even in one of the hardest-hit
industries.
BNP Paribas, BOC International,
HSBC and Morgan Stanley are the
underwriters. Morgan Stanley is
also the sole adviser to Cathay
Pacific.
The four banks will
underwrite 376m shares
or about 15% of the deal,
equivalent to US$226m. Morgan
Stanley will underwrite half

4 International Financing Review Asia June 13 2020

 For daily news stories
visit www.ifre.com

India’s bankruptcy holiday 10 SAFA <3 Aonia 10 North Korea rounds up dollars 11

making SEMBCORP MARINE’s

S$2.1bn rights issue, and
backstopped SINGAPORE AIRLINES’
UPL bond finds fertile ground
S$15bn rights issue of shares „
Bonds Indian agrochemicals giant shows market is open for high-grade issuers
and mandatory convertible
bonds. BY DANIEL STANTON grade, with a negative outlook. 217bp on May 12 – a long way
Parent Sembcorp The rating agency warned that from the peak of 305bp in late
Industries will subscribe to its Investors handed India a India faces a period of sustained March.
S$1.27bn entitlement and an vote of confidence last week slower growth and highlighted Since issuer UPL Corp is
additional S$230m in case of with strong support for the the persistent stress in the not incorporated in India it
undersubscription. country’s first US dollar bond financial system. Covid-19 cases is not subject to the RBI yield
The rig builder’s business has in almost a month, despite a also continued to climb last cap, but it would have priced
been hit by the pandemic and sovereign downgrade and a week, with officials warning comfortably within that limit.
the oil price crash. mounting toll from the Covid- that Delhi’s health system faces India-headquartered UPL
“Like the SIA convertible 19 outbreak. being overwhelmed by more Limited owns around 78% of
bond issue, the Sembcorp Agrochemicals maker UPL than half a million cases by the Mauritius-incorporated UPL
Marine rights issue will not be CORP raised US$500m of 10-year end of July. Corp, while private equity firm
easy to sell. It needs Temasek’s money on Tuesday, finding that UPL is rated on par with the TPG Capital and the Abu Dhabi
help in a big way,” an ECM market conditions had actually sovereign at Baa3/BBB–/BBB–, Investment Authority each hold
banker said. improved since Moody’s with negative outlooks on the 11%.
SIA’s S$15bn right issue downgraded the sovereign S&P and Fitch ratings. Moody’s
comprised S$5.3bn of shares earlier this month. said that UPL’s business was PIPELINE INTACT
and S$9.7bn of zero-coupon, UPL’s 4.625% 2030 bond fairly resilient during the That bodes well for Indian
10-year mandatory convertible priced at 99.565 to yield 4.68%, coronavirus pandemic and state-owned issuers such as
bonds. While the rights share or Treasuries plus 385bp, national lockdown, and noted POWER FINANCE CORP and STATE BANK
issue was oversubscribed, the tightening 50bp from initial that only 10% of its revenues OF INDIA, which are considering
first S$3.5bn tranche of MCBs guidance. come from India – explaining US dollar bond offerings.
was only 60% sold. The rest of An outstanding 2028 bond why its UPL rating outlook is Bankers said the pipeline
the MCBs can be issued within was bid at a G spread of stable while it has a negative remained unaffected by the
15 months. 377bp and, accounting for the outlook for the Indian correction in risk appetite after
Sembcorp Marine is selling longer tenor, one bookrunner sovereign. UPL priced, with the Asian
5-for-1 rights shares at S$0.20 estimated the new 10-year had This was the first Indian iTraxx investment-grade index
apiece or a 76% discount to the priced 10bp–15bp inside the dollar issue since state-owned widening 14bp in the last three
pre-deal close of S$0.85. curve. REC sold US$500m three-year days of the week.
In India, it is common for Not only that, but the new bonds on May 12. That deal had Price tension for UPL’s
controlling shareholders, issue rallied 10bp in secondary to comply with a Reserve Bank new deal was also helped
not banks, to underwrite trading on Wednesday, despite of India rule requiring issuers by a tender offer at par for
rights issues – even if the generally weaker market to pay all-in funding costs of UPL Corp’s US$500m 3.25%
shareholders may require bank conditions. not more than 450bp over bonds due October 31 2021,
financing to do so. “A lot of curves are repricing dollar Libor for offshore bonds. which the issue will fund. The
More Indian issuers are after primary issues. It REC barely managed to Treasury spread on the 2021s
exploring the rights option as happened with Thailand, now squeeze below the RBI ceiling, declined from 511bp on May
their best way of navigating it’s happening with India,” paying a yield of 4.865% and a 12 to 329bp on Tuesday, having
regulations to attract investors. said one bookrunner, referring spread over Treasuries in the hit a peak of 772bp in late
Qualified institutional to the previous week’s new high 400s. April.
placements, the quickest way issue from Thai oil group PTT At the time, long-tenor “The lack of recent primary
to raise additional equity, Exploration and Production. bonds looked out of reach supply from India certainly
restrict companies to selling Final orders for UPL were for Indian issuers, but UPL helped, but so did the tender,”
new shares at a discount of no over US$2bn from 146 managed to print at a longer said another bookrunner.
more than 5% to their two-week accounts, with Asia Pacific tenor than REC and beat both “Hopefully this will encourage
trailing average. taking 64% of the Reg S notes its yield and spread, thanks other Indian issuers.”
After Reliance Industries and EMEA 36%. Fund managers to improvements in market Bank of America, JP Morgan,
completed a Rs531bn (US$7bn) and asset managers booked conditions. MUFG, Citigroup, Rabobank,
rights issue, the country’s 72%, insurers 13%, banks 7%, The 10-year US Treasury yield Societe Generale and UBS were
largest-ever equity capital private banks 4% and others rose to 0.83% at the time of joint global coordinators and
markets transaction, other 4%. pricing from 0.67% on May 12. bookrunners for the new issue.
likely rights issuers are MAHINDRA The strong response came Over the same period the cost BofA, JP Morgan and MUFG
AND MAHINDRA FINANCIAL SERVICES despite Moody’s decision on of five-year CDS for State Bank are dealer managers for the
(Rs35bn), SHRIRAM TRANSPORT June 1 to downgrade the Indian of India, the nearest thing to an tender offer, which ends on
FINANCE (Rs20bn) and ADITYA BIRLA sovereign by a notch to Baa3, Indian sovereign benchmark, June 15. DF King is information
FASHION & RETAIL (Rs10bn). „ the lowest rung of investment declined to 132bp mid from agent. „

International Financing Review Asia June 13 2020 5

News
Kepco shakes off coal shadow
„
Bonds Green bond issue succeeds despite investor doubts over transition strategy

BY JIHYE HWANG thanks to good market 13%, central banks and sovereign COAL PRESSURE
conditions, strong credit and the wealth funds 9% and private The near-monopoly operator of
KOREA ELECTRIC POWER CORPORATION ESG factor,” said a banker on the banks and others 1%. South Korea’s electricity grid
garnered strong investor demand deal. The bonds held up with the is under pressure from global
for a five-year green bond despite Investor demand was also tight pricing in the secondary investors over its climate policy.
mounting pressure from global seen in the US, which took 22% on their first few days of Kepco said it has received a
investors over its involvement in of the notes. Asian investors trading, but spreads widened letter from Blackrock asking
overseas coal projects. bought 66% and the rest went to to around 85bp over Treasuries for fuller disclosure on its
The state-backed utility, rated EMEA. Asset managers and fund last Friday, according to overseas coal projects, while
Aa2/AA/AA–, priced the US$500m managers took 62%, insurers Tradeweb, broadly in line with a group of international
1.125% senior unsecured notes and pension funds 15%, banks a wider market sell-off. investors, including APG
at 99.695 to yield 1.188%, or
Treasuries plus 75bp, inside
initial guidance of 120bp area.
Final pricing came flat to
Korea Development Bank’s five-
year bonds, priced in late May at
plus 90bp, and tighter than other
comparable credits, including
Korea East-West Power and
Kepco’s other genco subsidiaries,
according to an investor note.
Despite the tight pricing, the
144A/Reg S deal was over 10
times subscribed, drawing final
orders of more than US$5.2bn
from 270 accounts. There was
virtually no attrition from the
peak book of US$5.3bn at final
guidance.
“Generally, around 150–200
accounts buy Korean paper so
the bonds were well received

Chinese listings draw crowds popular Hong Kong IPO this

year among retail investors in
terms of total subscriptions.
„
Equities JD.com draws strong demand while Burning Rock prices above range There is a 15% greenshoe on
the JD.com deal. The shares will
BY FIONA LAU both institutional and retail funds which want to trade the start trading on June 18.
investors despite the Hang stock in Asia hours, and global Bank of America, CLSA and UBS
Chinese listings, both in Hong Seng Index dropping 2.27% on funds which already own the were sponsors.
Kong and the US, continued Thursday, the day when JD.com stock and are looking to top up A stellar debut of NETEASE’s
to draw strong demand from closed the retail portion of its their position in Asia,” said a shares in Hong Kong last
investors last week despite the offering. banker on the deal. Thursday also helped drive
market sell-offs late last week. The Nasdaq-listed Chinese The books were more than momentum for JD.com. The
JD.COM raised HK$30bn e-commerce giant sold 133m 10 times covered with over stock rose as much as 10%
(US$3.88bn) from its Hong Kong shares or around 4.3% of its 460 investors participating before ending the day at
secondary listing last Thursday enlarged share capital at including long-only funds, HK$130, still up 5.7% from the
in the world’s second-largest HK$226 per share. The price sovereign wealth funds and issue price of HK$123.
float so far this year, after the represents a 3.9% discount to hedge funds. Around 30% of the The Nasdaq-listed
Rmb30.7bn (US$4.3bn) Shanghai the US close last Wednesday, investors got zero allocation. Chinese online gaming and
IPO of Beijing-Shanghai High when JD.com’s ADRs rose 3.2% More than 390,000 investors entertainment company raised
Speed Railway in January. to close at US$60.70. One ADR participated in the retail HK$21bn from the secondary
The deal, which is also represents two common shares. tranche, which was close to listing.
Hong Kong’s largest equity “There is strong interest from 180 times subscribed. In total, CICC, Credit Suisse and JP
offering year to date, has drawn Chinese investors as well as retail investors bet HK$282bn Morgan are sponsors.
overwhelming demand from global funds. There are Chinese on the deal, making it the most In the US, BURNING ROCK BIOTECH

6 International Financing Review Asia June 13 2020

 For daily news stories
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Asset Management, Church

Commissioners of England and
UBS Asset Management, urged
deemed to have “insufficient
business value” last year.
Kepco has acknowledged
BoJ buys corporate
it in late March to reconsider its
plans to finance new overseas
investors’ ESG concerns and
said it will focus on low-carbon
bonds flat to JGBs
coal-fired power plants. and environmentally friendly „Bonds Central bank purchases have dragged credit spreads
APG shunned the new green projects in the future, while to zero
bond, saying it wanted to see participating in coal projects
a climate transition strategy only under strict standards, BY TAKAHIRO OKAMOTO week. According to DealWatch,
from Kepco, as with all energy according to a letter to IFR’s sister publication, 16
companies it invests in. The investors early last month. The BANK OF JAPAN bought corporate issuers tapped the
Dutch pension fund, which In a press release, Kepco ¥300bn (US$2.8bn) of corporate market, raising ¥880bn. The
managed €538bn (US$611bn) in said its new bond offering bonds last week at negative issuers included TOKYO METRO,
assets last year, has already sold demonstrated investor demand yields, including a portion flat which borrowed ¥400bn via a 10,
a €60m equity stake in Kepco for sustainable investments to Japanese government bonds, 30, 40 and 50-year bond offering,
over lack of progress to lower and highlighted that it was the in the most extreme example and Z HOLDINGS, formerly Yahoo
carbon emissions. This left APG first Korean company to issue of its impact on the domestic Japan, which raised ¥200bn from
with a minimal position in green bonds for two straight credit market. a five-tranche bond.
Kepco, with less than €1m held years. The central bank on Tuesday Japanese issuers’ aggressive
in a passive strategy. Kepco previously visited the offered to buy corporate bonds pricing expectations – the
Kepco plans to invest in international bond market in with one to three years to result of the BoJ’s willigness
new coal mines and power June last year with a debut maturity and received ¥375.7bn to buy corporate bonds at
stations including Jawa 9 and green bond offering, which was of bids. zero credit spreads – are also
10 in Indonesia and Vung Ang its first offshore deal for nearly Market participants were pushing domestic investors to
2 in Vietnam, pending final nine years. able to sell corporate bonds at focus more on international
board approval. Before that, the The bonds have expected average yields of -0.114%, but credits, which are not eligible
projects need to be approved by ratings of Aa2/AA (Moody’s/ the BoJ actually bought some for the BoJ’s purchases.
the government, which under S&P), which is in line with bonds at yields as low as -0.14%, “Some pension funds are
the current administration Kepco’s and South Korea’s the floor the central bank put starting to walk away from
has been calling for a shift to sovereign ratings. The in place for this operation. domestic bonds as they feel
renewables and cutback in government holds a 51% stake Participants believed that pricing levels in some deals
the dependence on coal and in the firm. the floor was based on where are too aggressive, so they
nuclear power. Proceeds will be allocated three-year JGBs had closed the have started to look at the
The Indonesian projects to green eligible categories, previous day. They also said international yen market
recently received the green in accordance with Kepco’s it was reasonable to have a hoping that foreign issuers will
light in the South Korean sustainable finance framework. floor in order to prevent the price their bonds in line with
government’s preliminary Citigroup, HSBC and JP Morgan Japanese credit market from the secondary market levels
feasibility test after being were joint bookrunners. „ overheating, especially after the in dollars and euros,” said a
BoJ decided to boost its corporate Japanese syndicate banker.
debt purchases in March and Indeed, the latest Samurai
last Thursday priced a US$223m actually recover faster than increased those purchases in bond offering from Credit
Nasdaq IPO above the price their western peers given the April to help Japanese companies Agricole earlier this month
range despite a 6.9% slide in the pandemic seems under control raise funds smoothly. drew a hefty ¥122.1bn of orders
Dow Jones Industrial Average. in this part of the world,” said a “There is nothing wrong with strong support coming
The US stock market banker on the deal. with setting the floor,” said from pension funds.
plummeted on investor On June 4 China’s Legend a salesperson at a Japanese Pension funds had been
concerns about a resurgence Biotech raised US$423m from securities house. “There is no facing unrealised losses after
of coronavirus infections and an upsized Nasdaq float. The need for them to buy corporate global credit spreads widened
the US Federal Reserve’s pledge stock fell 4.7% to close at bonds at a yield below JGBs.” in March, but they have
to keep rates steady through US$36.25 last Thursday, but still He added that one of his clients returned to buying as the
2022, which implied it may 58% above the IPO price. asked him to sell electric power Federal Reserve and European
take longer than previously Several existing shareholders company bonds through the Central Bank also demonstrated
expected for the economy to and their affiliates have operation. their willingness to support
recover. indicated their interest in In effect, the results of credit markets, causing spreads
Despite the sell-off, Burning investing a total of US$79m in the operation indicated that to tighten again.
Rock, which specialises in the Burning Rock IPO. Japanese investors were so The BoJ is scheduled to buy
cancer diagnostics, sold 13.5m Alongside the IPO, the Lake confident of the central bank’s corporate bonds with three to
American depositary shares Bleu Prime Healthcare Master support for the credit markets five years to maturity on June
at US$16.50 each, above the Fund has agreed to purchase they chose not to let go of bonds 23. It has not announced yet
US$13.50–$15.50 range. US$25m of the company’s unless they could sell at yields whether it will again set a floor
“US investors have made shares in a concurrent equivalent to those of JGBs. for that operation, but some
good money from recent placement. The strong results came participants believe it will do so
biotech IPOs and they believe Morgan Stanley, Bank of America even after heavy supply in the by using a JGB with five years
Chinese companies would and Cowen led the float. „ domestic market the previous to maturity as a reference. „

International Financing Review Asia June 13 2020 7

News
China developers seize window
„
Bonds Busiest week for new high-yield issues since January

BY CAROL CHAN sell-offs with bond yields for HOLDINGS and POWERLONG REAL Some of the deals were more
many of the property names ESTATE HOLDINGS. There were also than six times oversubscribed,
Chinese high-yield developers coming back to the 2019 two relatively new names with including Greenland’s offering,
are rushing to the dollar year-end level, although still a short offshore track record, which despite a relatively large
bond market as spreads have wider than January’s tightest RADIANCE GROUP and SINIC HOLDINGS issue size of US$500m was eight
continued to tighten since levels,” said a banker from a (GROUP). times covered, and CCRE’s
Zhenro Properties Group Chinese brokerage. “Developers All transactions were US$400m issue, which was
reopened the market for the nearly nine times subscribed.
sector in mid-May. “We’ve seen the strong recovery from the Both priced on June 8.
Seven property companies March sell-offs with bond yields for many of
raised a combined US$2.16bn SOLID DEMAND
the property names coming back to the 2019
last week, a return to the levels “Most of the deals priced in the
of activity last seen before
year-end level, although still wider than week didn’t see considerable
the Covid-19 pandemic closed January’s tightest levels.” order attrition despite the
high-yield primary in early significant tightening from
March. It was the busiest week are opportunistic, they’re oversubscribed, and most of IPGs, although we saw a bigger
since January 12-18, which also monitoring the market and the issuers priced the new drop [in orders] on Tuesday’s
featured seven deals, but still waiting for the right window.” bonds inside or flat to their deals because of weaker market
lagged the January 5-11 peak Five frequent issuers with an curves with final pricing sentiment on the day,” said the
for the year, when 14 property established curve tapped the tightening 50bp–60bp from banker. “The market overall
deals were priced, according to market last week – GREENLAND initial guidance. The exception remains stable and supportive
IFR data. HOLDING GROUP, CENTRAL CHINA was Radiance’s US$250m deal, and we don’t see the window
“We’ve seen the strong REAL ESTATE, CHINA FORTUNE LAND which only tightened 25bp for developers closing soon.”
recovery from the March DEVELOPMENT, RONSHINE CHINA from IPG. The new issues all had two

Indonesia Inc eyes offshore debt borrowers, the future looks

more uncertain. Financial
services company SARANA MULTI
„
Loans South-East Asia’s largest economy provides spark amid pandemic woes INFRASTRUKTUR is still undecided
on the launch of a US$500m
BY CHIEN MI WONG of 2019, according to Refinitiv months ago. five-year loan after mandating
LPC data. Borrowers that initially opted five banks in April. The
Indonesia is emerging as the “Indonesia seems to be the for club loans are now mulling deal marks its return to the
lone bright spot in South- brighter spot in South and the option of syndication. BRI’s syndicated loan markets after a
East Asia’s syndicated loan South-East Asia with a few deals US$1bn multi-tranche financing four-year hiatus.
market with a pipeline of cooking, although traction is and INDOMOBIL FINANCE INDONESIA’s Meanwhile, Freeport
around US$6bn of offshore very slow,” said a Singapore- US$240m three-year facility Indonesia is going back to the
loans primed for launch in the based syndicated loans banker. were initially intended as club drawing board with a US$2.8bn
coming months. “That said, transactions are loans. loan it was preparing to launch
Instant noodles manufacturer coming in and will boost However, the financings are in April after mandating nine
INDOFOOD SUKSES MAKMUR, state- volumes a lot in the second now expected to be syndicated. banks in late February. A
owned electricity utility half.” Along with agricultural smaller loan size of around
PERUSAHAAN LISTRIK NEGARA, gold Indofood is expected to commodities firm FKS FOOD US$1.2bn–$1.5bn is being
and copper miner FREEPORT shortlist around half a dozen AND AGRI’s US$250m five-year discussed, but it could be
INDONESIA and BANK RAKYAT banks for a US$2bn loan refinancing, they will be another two months before
INDONESIA are among a number backing the proposed US$3bn among the first few to test the borrower makes a decision
of top-tier borrowers that are acquisition of its manufacturer sentiment. on the fundraising for the
eyeing offshore borrowings. partner Pinehill. “No deals from Indonesia construction of a new copper
The deals will provide a boost The deal is expected to be have launched post-Covid. It’s smelter.
for lenders in the region, who well received given it is an a chicken-and-egg situation, Adding to the jitters,
have been starved of action acquisition financing and where lenders are waiting for telecommunications company
since the Covid-19 outbreak marks the borrower’s return new deals to launch in order TIPHONE MOBILE INDONESIA fell
upended economic activity to the loan market for the first to gauge market appetite and victim to the pandemic, having
globally. Year-to-date loan time in more than a decade. pricing levels,” said a second defaulted on a US$181m-
volume from Indonesia stood at PLN is seeking a US$500m Singapore-based loans banker. equivalent three-year loan
US$4.87bn as of June 11, nearly multi-tranche loan, adding to signed in June 2018. The
a third lower than US$6.97bn another US$1bn borrowing it PANDEMIC JITTERS company, which missed an
raised in the first six months was sounding out a couple of For some Indonesian interest payment in March,

8 International Financing Review Asia June 13 2020

 For daily news stories
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or three-year tenors to meet

current investor preferences.
B names to gradually catch up
with Double B names as risk SK Biopharm peps
“Investors are more
comfortable with the short-end
of the curve. If risk appetite
appetite returns, but there will
be a divergence among Single
B credits as small developers
up Korean IPOs
further improves, developers with tight liquidity could face „Equities IPO market set to gain momentum with big names
will try longer-dated bonds,” refinancing pressure. gearing up for listings
said a banker from a Chinese Nomura has raised its
investment bank. estimate for the gross supply BY CANDY CHAN disorders and the latter for
He said high-yield bond of offshore bonds from China’s epilepsy.
supply will continue to property sector this year South Korea’s SK The development of anti-
come mainly from China’s to US$50bn–$55bn, from a BIOPHARMACEUTICALS last week epileptic drugs is a niche area
property sector as it has the prediction of US$45bn earlier. launched the country’s largest with few players, according
lowest default risk among the “The need for a liquidity IPO for three years, seeking to the person. Another one is
country’s high-yield issuers. buffer on delayed pre-sales up to W959bn (US$800m) and Belgian biopharma company
“The business of developers should drive more aggressive playing on the popularity of the UCB which developed Vimpat,
is more transparent and their bond issuance,” Nomura wrote. biotech and healthcare sectors a drug to treat patients with
assets are more transferrable in Chinese property sales ground amid the coronavirus pandemic. seizures the FDA approved in
the event of a liquidity crunch,” to a halt for much of the first The drugmaking unit of 2009.
he said. quarter as showrooms were conglomerate SK Group Another person close to
In a report dated June 8, forced to close at the height of is selling 19.6m shares, deal said the offer is expected
Nomura’s trading desk said it the Covid-19 outbreak. comprising 68% primary and to draw strong domestic
expects the solid demand in Some developers may use 32% secondary, for a 25% free- demand as investors are
the dollar market to persist as their offshore debt issuance float. The indicative price range looking to a potential rebound
the spread differential between quotas to refinance 2021 of W36,000–W49,000 gives the in the country’s lacklustre
offshore and onshore property maturities, while others may company a potential enterprise capital markets following
bonds has become more issue bonds with a tenor of less value of W2.8trn–W3.8trn. the coronavirus crisis. South
attractive. than one year, for which they do If it prices at the top of range, Korea’s benchmark Kospi 200
It also expects solid Single not need to use their quotas. „ the deal would be the largest stock index has regained more
float in South Korea since than a third of its value since
biopharmaceutical distributor March.
has hired a financial adviser to That US$700m loan paid Celltrion Healthcare’s W1trn A successful IPO will give
restructure its debt. top-level all-in pricing of KRX listing in July 2017. confidence to other companies
60bp, 91bp and 103bp based This eagerly anticipated deal seeking to go public this year,
PAYING UP? on interest margins of 40bp, caused a 10% spike in shares of including BIG HIT ENTERTAINMENT,
Given the circumstances, 74bp and 84bp over Libor and parent SK Holdings on May 20, the music label behind boy
some borrowers might need remaining lives of 0.75, 2.75 the day after the listing plan band BTS, and HYUNDAI CARD, the
to pay up in order to attract and 3.75 years for its three was officially announced. credit card unit of Hyundai
bank liquidity, especially tranches. SK Holdings, a subsidiary Motor Group.
as participating banks have Despite what was considered of the conglomerate that The international bookbuild
become more risk-averse and tight pricing then, BRI tasted focuses on energy and runs until June 18, while
funding costs are rising. success with a US$700m three- chemicals, telecommunications the domestic offer will take
“For widely syndicated tranche loan, which attracted and trading, is the selling place on the last two days of a
deals, I expect pricing to be participation from 27 lenders, shareholder in the IPO. roadshow from June 17-18.
wider to take into account the including 15 that joined in The popularity of biotech About 60% of the deal will
funding costs of a wider pool of general syndication. stocks has driven investor be allocated to institutional
participating banks,” said the Fifteen months later, interest in the offering, which investors, split between
first loans banker. “We have sentiment among lenders was fully subscribed on its international and domestic
seen the cost of funds for banks has turned cautious largely first day of bookbuilding last accounts, while the rest will go
has gone up by 50bp–100bp on because of the impact from the Wednesday. to domestic retail buyers and an
average.” pandemic. “Demand has been strong and employee stock ownership plan.
Borrowers with strong “We will be very selective way exceeded the offer size,” Proceeds will be used to
financials or rarity value, such in lending to borrowers from said a person close to the deal. develop SK Biopharm’s pipeline
as PLN and Indofood, are likely Indonesia’s banking sector “With some of its drugs having of products and for drug
to achieve tighter pricing, he as Moody’s has downgraded received approval from the FDA, discovery, hiring additional
said. Indonesia’s banking industry investors have some visibility on personnel, funding future
Pricing on BRI’s new outlook to negative from stable the company’s prospects.” growth initiatives and general
financing, comprising a in early April over concerns SK Biopharm, which was corporate purposes.
US$500m one-year tranche, a of rising credit costs and founded in 2011, last year The deal will price on June
US$200m two-year piece, and declining profitability as the received regulatory approval 19, and the shares are set to be
a US$300m five-year portion pandemic is disrupting the from the US Food and Drug listed on July 2.
is only marginally higher than global economy,” said a senior Administration for two of its Citigroup, Morgan Stanley and
for its previous multi-tranche loans banker from a Taiwanese drugs, Sunosi and Xcopri. The NH Investment & Securities are the
facility in March 2019. bank. „ former is a treatment for sleep joint bookrunners. „

International Financing Review Asia June 13 2020 9

News
Bankruptcy freeze to hurt banks
„
Restructuring India’s bad loan pile may double in the next two years loans, which was extended by
another three months on May
BY KRISHNA MERCHANT director of global restructuring with weak progress on inter- 22, to tide debtors over the
advisory at Duff & Phelps. creditor agreements. economic crisis. Goldman Sachs
India’s freeze on fresh India introduced a new “Any such action would expects India’s economy to
bankruptcy proceedings due insolvency and bankruptcy be negative as it would delay shrink 45% year on year in the
to the coronavirus pandemic is framework in 2016 to try to timely recognition of bad assets April to June quarter and 5% in
expected to hurt the country’s speed up debt workouts and has and affect recoverability,” said fiscal 2021 after India imposed a
already fragile banking system tweaked it over the years. Saswata Guha, director at Fitch. lockdown lasting more than two
and delay bad debt resolutions. The clean-up track record Also, given the suspension months to limit the spread of the
The government amended for India’s banking system of section 10 filings under the coronavirus.
the Insolvency and Bankruptcy is weak, though, with few IBC, whereby corporate debtors Depending on the pace of
Code 2016 so that no new significant restructurings in cannot voluntarily file for economic recovery, there is a risk
bankruptcy cases can be the past until the central bank insolvency, some businesses may that bad loans as a percentage of
filed for defaults arising on pushed financial institutions not be able to get the support total loans will rise more than
or after March 25, when the to appropriately recognise the that was previously available five percentage points, or even
lockdown was declared, with the stress on their balance sheet. under the bankruptcy code. double in the next two years
suspension to last for six to 12 The Reserve Bank of India “This will lead to unnecessary from an estimated 9% at the end
months, according to a gazette forced lenders in 2017 to begin decay of their businesses for of March quarter, according to
notification dated June 5. insolvency proceedings against the next six to 12 months,” Fitch.
While the suspension of some of the biggest defaulters, said Jain at Duff & Phelps. Banks are also likely to face
fresh bankruptcy cases will help rather than rolling over bad “Given these circumstances, it bigger principal losses. Corporate
businesses facing a near-term debts or understating them. would be prudent if the central insolvency resolution proceedings
liquidity crunch, “banks and Some analysts believe there bank announces a one-time are likely to suffer from lower
financial institutions are worried could be an incentive for banks restructuring scheme to resolve valuations and a possible decline
that the credit discipline which to revert to their old ways for such stressed assets during the in interest from bidders because
was enforced by the bankruptcy handling large non-performing six-months moratorium period.” of the uncertainty across many
code may go for a toss”, said accounts in the absence of On March 27, the RBI offered sectors of the economy.
Aviral Jain, co-head and managing bankruptcy proceedings and a three-month moratorium on “This in turn may result in

SAFA grows Aonia-linked market financial stress.

Obvious candidates include
regular FRN issuers like
„
Bonds Aussie state lengthens curve as investor base continues to grow Queensland and Western
Australia, though both seem
BY JOHN WEAVERS there was strong interest from Rate (BBSW), the conventional perfectly happy using the
asset managers and official reference point for Australian dominant BBSW regime,
The SOUTH AUSTRALIAN GOVERNMENT institutions out of Australia, Asia dollar floating-rate notes. according to one DCM manager.
FINANCING AUTHORITYfurther and Europe. SAFA sold the inaugural Outside the states he pointed
broadened the local market for “Considering the challenging A$500m one-year Aonia-linked to SSAs which have already
risk-free reference rates last environment, it was a floater in June 2019, followed issued bonds referencing
Thursday with a record-breaking remarkable achievement to by a A$250m one-year FRN in offshore risk-free overnight rates,
A$1.2605bn (US$882m) sale of extend the curve, adopt a new December and a further A$660m especially Sonia, the Sterling
three-year Aonia-linked floating- quarterly rather than monthly one-year note this March. Overnight Index Average, and
rate notes. coupon payment format, while SAFA, rated Aa1/AA+ Sofr, the US Secured Overnight
The notes, which follow attracting new investors and (Moody’s/S&P), remains the Financing Rate.
SAFA’s trio of one-year Aonia- larger volumes from the existing only Aonia-linked issuer in the Local and overseas banks could
linked FRNs, priced at daily investor base,” said Andrew senior unsecured market, but also use Aonia as more and more
compounded Aonia plus 34bp Kennedy, director for treasury that could change as the success investors adopt the required
and raised more than the services at SAFA. and size of its latest deal at least systems and become comfortable
targeted A$100m–$1bn issue size Kennedy estimated the new encourages discussions with with the product, the DCM
as the accumulated order book issue concession to be around potential participants. manager suggested.
was allocated in full. 3bp versus SAFA’s interpolated Aonia is seen as especially Beyond SAFA, Commonwealth
The enlarged deal attracted Aonia curve, once adapted for suitable for highly rated state Bank of Australia last
several investors new to Aonia quarterly coupon payments. governments which want to November sold an Aonia-linked
and one which had never bought Aonia is the Reserve Bank of price off a risk-free rate rather securitisation, the A$1.5bn
any SAFA notes before. The Australia’s overnight cash rate, than a credit benchmark Medallion Trust Series 2019-1
majority of demand came from which is published daily and like BBSW that includes a prime RMBS, and plans to use
local or foreign banks seeking offers a risk-free alternative to counterparty risk premium and Aonia for all its future new
high-quality liquid assets, while the domestic Bank Bill Swap can blow out during times of RMBS.

10 International Financing Review Asia June 13 2020

 For daily news stories
visit www.ifre.com

creditors having to agree on

higher haircuts,” said Abhishek
Dafria, vice president of Icra, in a
North Korea forages for dollars
recent note. „
Bonds Government bond issue targets elite’s foreign currency holdings
However, the recession
is expected to throw up BY DANIEL STANTON, JIHYE HWANG were repackaged into zero- Florian Schmidt, CEO of
opportunities for distressed debt coupon bonds after it stopped Frontier Strategies, a capital
investors. North Korea’s introduction of servicing the debt in the 1980s, markets consultancy firm for
“There is an opportunity to US dollar bonds signals a foreign and turned into a €163m Asian frontier markets. “There
extend credit to good quality currency shortage rather than (US$185m) piece denominated seems to be a shortage of euros
borrowers due to an increase a step towards engagement in Deutschemarks and a and dollars in the system right
in demand for capital following with the global capital markets, SFr240m (US$253m) tranche, now, whereas in the past the
the slowdown in growth, and according to experts. both of which were supposed to access to foreign currency has
a constraint in supply as non- News sources and analysts mature in March this year but always been relatively easy
banking financial companies are said that the North Korean are believed to be outstanding. and was tacitly accepted by the
less able to provide liquidity,” regime appeared to sell government.”
said Haseeb Malik, partner and government bonds onshore last ECONOMIC CRISIS A researcher from a South
head of Asia corporate and month after sanctions and the Tomas Ojea Quintana, UN special Korean government-linked
traded credit at Varde Partners. global coronavirus pandemic rapporteur on human rights in institution said that the last
It will take longer for investors caused its foreign currency North Korea, voiced alarm on time North Korea sold bonds, it
to be able to restructure bad reserves to dwindle. Tuesday at “widespread food was to tackle inflation. He did
debts, though, given the national Details of the issue are not shortages and malnutrition” not wish to be named because
moratorium. known, but Daily NK, a news in the country, made worse his institution had not been able
Distressed fund investors service focused on North Korea by a nearly five-month border to confirm the new bond issue.
have to come to terms with new and considered credible by closure with China and strict Another Seoul-based
realities such as “bankruptcy other experts, reported that quarantine measures against researcher estimated that North
courts not functioning, pre-Covid 60% of the bonds were allocated Covid-19, Reuters reported. He Korea’s commodity trade deficit
term-sheets expiring, drop in to state-owned enterprises and urged the UN Security Council was US$2.3bn last year and
valuations of the underlying 40% to individuals including to ease sanctions to ensure food would have worsened this year.
assets, and their inability to carry donju, or entrepreneurs. supplies. He believes that North Korea
out site due diligence,” said Jain This is not the first time Fitch Solutions, which is is currently suffering from
at Duff & Phelps. „ that the DEMOCRATIC PEOPLE’S independent of Fitch’s credit deflation, because both supply
REPUBLIC OF KOREA has embarked rating division, expects the and demand are down after it
on a so-called ‘bond-buying’ North Korean economy to closed its border with China in
Interestingly, SAFA employed programme. In 2003, it shrink by 6% this year. January to limit the spread of
no lead managers for its latest sold People’s Life Bonds Exports to China dropped the coronavirus.
transaction, with investors denominated in North Korean to US$50m last year from Experts on the North Korean
instead invited to bid through won and targeted at resident US$350m in 2016, according to economy estimated in early
SAFA’s 13-strong deal panel individuals. The bonds had a North Korea watchers, and are 2018 that it would face foreign
members comprising ANZ, 10-year tenor and did not pay expected to be even lower this currency shortages as the
Bank of America, Citigroup, coupons, but bondholders year. That could make it hard to sanctions began to bite, yet
CBA, Deutsche Bank, HSBC, selected by a lottery were due fund new projects. imports of non-sanctioned
JP Morgan, NAB, Nomura, to be repaid more than the Rodong Sinmun, the official products increased in 2018-19
RBC Capital Markets, Toronto principal. newspaper of North Korea’s as purchasing power in the
Dominion Bank, UBS and “The last time the Workers’ Party, wrote in April private sector increased.
Westpac. government issued bonds, it that major projects due to be “Chairman Kim Jong Un
The overall fees paid by was alleged that they essentially completed this year include has promoted the idea of a
SAFA are on a par with the coerced individuals and the construction of Pyongyang prosperous economy with
combined payments typically businesses to purchase these General Hospital and the people saving and accumulating
made to a much smaller and they eventually became a upgrade of an iron and steel wealth,” said Schmidt. “As a
subset of lead managers. They vehicle for transaction,” wrote factory. result a fairly wealthy middle
were distributed to the panel Fitch Solutions, the credit and Fitch Solutions wrote that class has emerged in Pyongyang.
members according to the country research unit of Fitch state-owned enterprises like Now might be payback time.”
allocated amounts each of them Group, in a report on May 22. Construction Bureau 8, which Schmidt said that the
brought in. It is not known whether that is building the hospital, would ‘bond buying’ programme, if
“We have had many is the case this time, although use the bond proceeds to successful, could fund more
discussions with the panel banks some Western commentators procure raw materials from than half of this year’s budget.
and thought it fair to allow have pointed to the likelihood local companies. Rodong Sinmun reported
all of them to participate, a that it is. In any case, investing “After the programme was that state budgetary revenue
decision which generated greater in North Korea’s debt is not announced, the black market was expected to grow 4.2%
awareness of the deal and many for the faint-hearted: it has value of the North Korean won from the previous year, while
more bilateral discussions never repaid any of its offshore went down, which supports the expenditure would increase
between banks and investors,” borrowings. Pyongyang’s loans possibility that foreign currency by 6%. It did not give any
explained Kennedy. „ from Western governments savings were involved,” said monetary values. „

International Financing Review Asia June 13 2020 11

 People
& Markets
TOP STORY PRIVATE CREDIT

Investors eye Asian private credit

Institutions aim to swoop in post-Covid
Institutional investors anticipate an uptick “Asia is around two-thirds of global GDP BORROWERSûBYûOFFERINGûMOREûmEXIBILEûTERMSû
in private credit activity in Asia, as the growth, which is a useful proxy for capital than banks are willing to provide, such as less
economic dislocation caused by the Covid-19 consumption, but only around 7% of private amortisation or a delayed drawdown.
pandemic is expected to lead to a pullback credit AUM is dedicated to Asia.” Whereas in Europe and North America
in lending from both international and local mid-market deals have become increasingly
banks. LIMITED COMPETITION crowded, leading to lower pricing and looser
Private debt volumes, encompassing The majority of institutional investors in Asia covenants, most institutional investors were
everything from senior secured lending to date have focused their efforts on direct sanguine about the situation in Asia, saying
through to distressed debt, have increased lending, due to the number of small and mid- that competition was limited and the terms
SIGNIlCANTLYûINû!SIAûSINCEûTHEûGLOBALûlNANCIALû SIZEDûBORROWERSûTHATûSTRUGGLEûTOûACCESSûBANKû more investor-friendly than seen in other
crisis as investors globally have sought out credit in the region. regions.
alternative investment opportunities because The target clients for these institutional “The US and Europe are certainly more
of the relatively attractive yields on offer. investors tend to be companies with established markets and hence more
Volumes in the region are still dwarfed by earnings before interest, tax, depreciation crowded,” said Neeraj Seth, head of Asian
those in North America and Europe, however. and amortisation of between US$15m and credit at BlackRock.
According to research from alternative US$100m, which are usually below the radar “In Asia, if you analyse the market in a
investment information provider Preqin, total of most major banks, sources said. matrix structure with different countries on
private debt assets under management in Larger deals, at least in developing Asia, one axis and various private credit strategies
Asia, which reached a record US$56.8bn last are rare, but institutional lenders have closed across the risk-return spectrum on the other
YEARûWEREûLESSûTHANûAûlFTHûTHEûSIZEûOFûTHOSEûINû some big deals with private equity-backed axis, the competitive landscape doesn’t look
North America. intense relative to the number of institutions
Still, several institutional investors IFR ASIA PRIVATE DEBT that are active in broader private credit
spoke with said that they were allocating strategies.”
50 60
more capital, as well as resources, to the Most institutional investors are expecting
region because of the increasing demand 40
50 more opportunities in Asia as banks grapple
among borrowers and the fact that with the fallout from the Covid-19 crisis.
40
COMPETITIONûISûLESSûlERCEûCOMPAREDûWITHû 30 “Historically, the region was very well-
Europe or North America. 30
served by banks but a lot of international
Most institutional investors typically invest 20
banks have been retreating and local banks
using a combination of their balance sheet 20 are taking more of a conservative stance on
and capital from their global credit funds, risk on the back of Covid-19, so there are
10
although a few such as BlackRock already 10 more opportunities now,” said Seth.
have closed Asian private credit funds. 0 0
“It [private credit] has grown for sure 2015 2016 2017 2018 2019 FEW OPTIONS
since the GFC, but relative to the rest of the No. Funds Closed (left axis) The economic disruption caused by Covid-19
AUM (US$bn) (right axis)
world, it has trailed very far behind,” said is expected to lead to a rise in non-performing
Brian Dillard, head of Asia credit at KKR. Source: Preqin loans with a number of institutional investors

Who’s moving where...

„ UBS has announced committee in APAC „ Sachin Chandiwal Dharmesh Mehta,
changes to its private alongside Selina has moved from Yes owner and CEO of
markets-focused Cheung, who heads Securities to IDFC IDFC Securities, in his
groups. up the regional SECURITIES to become new role.
Enrico Mattoli has private financing head of corporate Before joining Yes
been appointed head markets team. finance, people with Securities, he worked
of distribution within The changes are knowledge of the at Axis Capital in its
the direct investments designed to improve development said. investment banking
group in Asia Pacific. coordination between Chandiwal, who division for over a
Mattoli, who heads the private markets spent three years at decade. He also
up the Greater China teams in UBS’ wealth Yes Securities and spent two years at
family office business, management and was president of the the National Stock
will also co-chair a investment banking merchant banking Exchange of India.
new private markets divisions. division, reports to

12 International Financing Review Asia June 13 2020

 For daily news stories
visit www.ifre.com

eyeing distressed debt opportunities in China

and India, in particular. Aviva hits out at HSBC, StanChart
According to the China Banking and
Insurance Regulatory Commission, total NPLs HSBC and STANDARD CHARTERED faced more the US with both governments having
in China’s banking sector are Rmb2.61trn criticism last week following their public strongly criticised the new law.
(US$369bn), equivalent to 1.9% of total loans, support for China’s planned security law in The UK has mooted the possibility of
ALTHOUGHûMOSTûANALYSTSûESTIMATEûTHEûlGUREûTOû Hong Kong, earning a rebuke from a major offering refuge to up to nearly 3 million
be far higher. shareholder in both banks. (ONGû+ONGûCITIZENSûELIGIBLEûFORû"RITISHû
In India, total NPLs are Rs8.94trn AVIVA INVESTORS, which is the 18th and 20th National (Overseas) passports. The US has
(US$118bn), equivalent to 9.1% of total sector largest shareholder in HSBC and StanChart said it will remove some of the economic
loans, according to data from the Reserve RESPECTIVELYûACCORDINGûTOû2ElNITIVûDATAû privileges afforded to the city after it was
Bank of India. Analysts are predicting that the made a statement on Tuesday criticising DEEMEDûNOûLONGERûSUFlCIENTLYûAUTONOMOUSû
NPL ratio could double to 18%–20% over the the pair’s backing of Beijing’s proposal. from mainland China by US Secretary of
next 12 months as a result of the economic “We are uneasy at the decisions of HSBC State Mike Pompeo.
impact from the country’s lockdown. and Standard Chartered to publicly support Pompeo also weighed in on HSBC’s
In China, international investors have had the proposed new national security law in response on Tuesday, saying that “the CCP’s
limited exposure to distressed debt as NPLs Hong Kong without knowing the details of browbeating of HSBC…should serve as a
are typically sold to the country’s big four the law or how it will operate in practice,” cautionary tale”, in a statement entitled
asset management companies, which in turn said Aviva Investors’ equities chief “On China’s Attempted Coercion of the
are reluctant to sell them on at a discount INVESTMENTûOFlCERû$AVIDû#UMMING United Kingdom”.
that would satisfy institutional investors’ “If companies make political statements, “That show of fealty seems to have
return targets. they must accept the corporate earned HSBC little respect in Beijing, which
According to research from PwC, only responsibilities that follow. Consequently, continues to use the bank’s business in
14 deals closed last year involving a foreign WEûEXPECTûBOTHûCOMPANIESûTOûCONlRMûTHATû China as political leverage against London,”
buyer with around US$1.1bn in foreign they will also speak out publicly if there are he said.
capital committed. However, several investors any future abuses of democratic freedoms Most market observers expressed
said that the pandemic has increased the connected to this law.” disquiet about HSBC’s support for the new
opportunities for international investors, Cumming’s statement comes after HSBC law, although several said the Anglo-Asian
especially given that China was already released a picture on WeChat earlier this lender, which makes around a third of its
PUSHINGûDELEVERAGINGûINûITSûlNANCIALûSECTORû MONTHûOFûITSû!SIAû0ACIlCûCHIEFûEXECUTIVEû revenues from Hong Kong and literally
before the crisis hit, including among the big Peter Wong signing a petition backing has a licence to print money in the special
four AMCs. the new law, which Beijing argues is administrative region, was left with few
“Because the shadow banking system was necessary to tackle separatism, subversion options.
already being reined in by the government and terrorist activities, but which critics “HSBC doesn’t really have much of
over the last few years, and commercial argue undermines the autonomy that was a choice in the matter,” said Patrick
banks are focused on cleaning up their NPLs, promised to Hong Kong for 50 years under Perret-Green, the former head of foreign
companies in China today have fewer sources the Sino-British Joint Declaration. exchange and local markets strategy in
of credit to turn to,” said Benjamin Fanger, Meanwhile, StanChart released a short Asia at Citigroup, who now runs his own
managing partner at ShoreVest. statement earlier this month in which it INDEPENDENTûRESEARCHûlRMû!D-ACROû
“This means the special situations side of said that “the national security law can “It’s been suggested in the Chinese media
what we do – bridge lending, restructurings, help maintain the long-term economic and before that if the bank doesn’t cooperate
ANDûRESCUEûlNANCINGSûnûHASûPICKEDûUPû social stability of Hong Kong”. then they could easily be replaced by the
tremendously.” Both banks’ stances have caused a Chinese banks in Hong Kong.”
THOMAS BLOTT backlash among politicians in the UK and THOMAS BLOTT

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

„ JEFFERIES has Chinese and Hong „ CREDIT SUISSE has Aletheia Capital, an
hired Shujin Chen as Kong banks. appointed Edmond independent research
head of China FIG Previously she was Huang as head of firm founded by
research from Huatai with Barclays for just China equity strategy. Credit Suisse’s former
Securities. over two years. Huang retains his Asia Pacific executive
Chen spent three Jefferies has existing positions as chairman of global
years at Huatai, been expanding head of Hong Kong markets, Ali Naqvi.
where she led aggressively in Asia. and China equity Huang joined
H-share research. It hired a number of research and regional Credit Suisse in
She also worked ex-CLSA analysts head of industrial 2014 from Bank of
for three years at including Christopher research. America. He has also
DBS subsidiary DBS Wood, who joined as He replaces worked at UBS and
Vickers Securities, global head of equity Vincent Chan, who Schroder Investment
where she covered strategy last year. recently joined Management.

International Financing Review Asia June 13 2020 13

 People
& Markets
Private equity founding partner of Asia-based private
EQUITYûlRMû$#0û#APITAL
It is likely that the worst is yet to come in
terms of market impact.”

firms look for “It’s easier to conduct privately

negotiated transactions with listed
A Hong Kong-based loans banker with a
7ALLû3TREETûlRMûSAIDûTHEûBANKûWOULDûNOTû

Chinese targets companies at more attractive valuations in

this environment.”
UNDERWRITEûORûGUARANTEEûLOANûSIZESûINûCASEû
it proved unable to fully syndicate them to
other banks.
Private equity investors are seeking Chinese ‘FAR FROM STRAIGHTFORWARD’ Buyers would have to put in more equity
companies to take private in the hope they Funding is the biggest challenge for any and tap alternative sources of debt, said the
can snap up bargains amid the coronavirus- take-private deal, though. banker, which could raise the cost of a deal
RELATEDûSELL OFFûBUTûTHEûBANKSûTHATûHELPûlNDû “The banks are being extra careful these and lower the expected returns.
SUCHûDEALSûAREûPROVINGûLESSûKEENûTOûlNANCEû days,” said Liu, adding that the caution was Chinese banks may offer a glimmer of
them. prompted by the risks posed to their loan hope, however. With big balance sheets
Interest in Chinese take-private deals books by the global economic downturn. and strong domestic relationships, they
is also rising along with tension between Samson Lo, head of Asia M&A at UBS, said are more willing to lend to home clients.
China and the US, as several companies lNANCINGûWASûhFARûFROMûSTRAIGHTFORWARDvûINû 58.com’s consortium of buyers, which
consider whether to keep a New York the current environment. INCLUDESûPRIVATEûEQUITYûlRMSûWARBURG PINCUS
listing or move instead to Shanghai, “Banks tend to lend to repeat customers and GENERAL ATLANTIC, is in talks with Chinese
3HENZHENûORû(ONGû+ONG with visible long-term revenue streams, BANKSûFORûABOUTû53BNûOFûlNANCINGûSAIDû
)Nû!PRILûPRIVATEûEQUITYûlRMûOCEAN FROMûlNANCINGûAûPARTICULARûDEAL ûTHROUGHû three people with direct knowledge of the
LINK offered to buy Nasdaq-listed online FUTUREûRElNANCINGûTOûULTIMATEûEXITSvûHEû MATTERûADDINGûTHATûGLOBALûBANKSûlNDûTHEû
CLASSIlEDSûMARKETPLACEû58.COM for US$8.3bn added. lGUREûCHALLENGING
in equity value, a premium of 17.8% to its Lenders are also valuing companies Warburg Pincus declined to comment.
undisturbed price in the largest Chinese below what bidders want to offer, with 58.com, Ocean Link and General Atlantic
take-private deal so far this year. some going as much as 20% to 30% below did not respond to requests for comments.
"IGGERûDEALSûMAYûALSOûBEûINûTHEûOFlNGû the acquisition price because of a more Some shareholders of Hong Kong and
Internet giant BAIDU, with a market cap of CAUTIOUSûOUTLOOKûSAIDû%FlEû6ASILOPOULOSûAû US-listed companies seeking outside funds
US$39.4bn, is considering delisting from PARTNERûWITHûLAWûlRMû3IDLEYû!USTIN to help them go private, have also turned
Nasdaq and moving to an exchange closer “How do you catch a falling knife? A to local governments in China, said another
to home to boost its valuation, Reuters common response has been to adopt very person with direct knowledge of the moves.
reported in May. conservative valuations,” she said. “We The people sought anonymity because of
“The best time to cut take-private deals have not seen this dynamic in terms of CONlDENTIALITYûCONSTRAINTS
would be after a big crisis,” said David Liu, lNANCINGûANDûVALUATIONSûFULLYûPLAYûOUTûYETû KANE WU, JULIE ZHU

David Webb diagnosed with cancer of margin calls, although he was still widely
CREDITEDûFORûHAVINGûmAGGEDûISSUESûWITHûMANYû
of the companies beforehand.
Hong Kong-based activist investor and disclosures, has been known to trigger Similarly, in 2018, more than 15 listed
corporate governance evangelist David stock market routs, although he has always stocks linked to China Huarong Asset
Webb said he would step back from MAINTAINEDûTHATûHEûDOESûNOTûPROlTûFROMû Management and China Minsheng Bank fell
posting regular opinion pieces after being any research he makes public. following Webb’s earlier report outlining
diagnosed with prostate cancer. Around six weeks after he published shareholder and lending links between the
Webb, 54, whose research on Webb- different companies.
site.com is widely read in Hong Kong As a former independent director at Hong
banking circles despite the site’s slightly Kong Exchanges and Clearing and champion
clunky design, said he would only be
“I have seized every opportunity of good corporate governance, he was a
posting sporadically from now on as he and lived life to its fullest so strong opponent of plans to introduce dual-
concentrates on battling the disease. that I will have no regrets at the class shares before the listing rules were
He said he would eschew some of the in- end of it, however long or short altered to accommodate them in 2018.
depth, investigative research that has made it may be.” Webb described his prognosis in a blunt
HIMûARGUABLYûTHEûCITYSûMOSTûFAMOUSûGADmYû letter to his readers on Monday, saying his
although he would still continue to speak life expectancy had been shortened but
out on important issues. that he was hopeful about recent treatment
Having retired from a career in his ‘Enigma’ report in 2017, detailing a advances.
investment banking in 1998 at the age of complex web of cross-shareholdings among He also spoke fondly of his experiences
just 33, Webb has spent the past 20 plus Hong Kong-listed companies, the share to date. “There is no afterlife or
years splitting his time between managing PRICESûOFûDOZENSûOFûTHEûCOMPANIESûHEûWROTEû REINCARNATIONvûHEûSAIDûh)ûHAVEûSEIZEDûEVERYû
his own money and championing good about plummeted. opportunity and lived life to its fullest so
corporate governance practice. Webb was unable to explain the exact that I will have no regrets at the end of it,
His research, which often involves timing of the collapse, telling IFR at the time however long or short it may be.”
painstakingly sifting through reams of that it may have been triggered by a cascade THOMAS BLOTT

14 International Financing Review Asia June 13 2020

 For daily news stories
visit www.ifre.com

Hong Kong eases quarantine rules restrictions from next month. At present
the mandatory 14-day quarantine for all
travellers entering Hong Kong is due to
Hong Kong has eased quarantine rules for attending board meetings, executing legal end on July 7 for visitors from the Chinese
executives of listed companies travelling documents and visiting clients among the mainland, Macau and Taiwan but will
from mainland China as it looks to kick- essential tasks. remain in place until September 18 for
start its economy, which has taken a knock It also said that executives arriving in travellers from all other points of origin.
following the coronavirus outbreak and Hong Kong would be subject to medical Hong Kong has received praise
widespread political unrest. surveillance arranged by the Department internationally for its handling of the
The Hong Kong government said on of Health for 14 days and would need to coronavirus. The former British colony has
Monday that the new scheme would cover regularly check their body temperature RECORDEDûJUSTûOVERûûCONlRMEDûCASESûANDû
companies that are listed on the exchange among other precautions. only four fatalities so far, an enviable record
and included in the Hang Seng Index, the The government cautioned that travellers compared with much of the rest of the world.
Hang Seng China Enterprises Index or the to mainland China from Hong Kong would The SAR had already fallen into recession
Hang Seng Composite LargeCap, MidCap still be subject to the 14-day quarantine before the coronavirus pandemic hit
and SmallCap indices. This is equivalent to requirement imposed there, although following months of anti-government
about 95% of the total market capitalisation it said it was in discussions with the protests last year, which hurt business
of companies listed in Hong Kong. authorities there about mutual recognition sentiment and impacted tourist numbers.
The government said that those of coronavirus testing with a view to “We strive to balance the need of
companies would be able to put forward exempting Hong Kong travellers from the safeguarding public health and promoting
two directors or executives each month quarantine requirement in the future. Hong Kong’s economic development,” said
that would be able to travel to Hong Kong Other groups exempt from the quarantine Christopher Hui, Hong Kong’s secretary for
from mainland China without being subject in Hong Kong include auditors, arbitrators lNANCIALûSERVICESûANDûTHEûTREASURY
to the 14-day quarantine currently required and businesses with manufacturing “This (scheme) is conducive to
for all arrivals from outside the special operations in mainland China. maintaining the normal business
administrative region. Bankers in Hong Kong expect to be operation of these enterprises under the
)TûSAIDûTHATûANYûTRAVELLERûWHOûQUALIlESûFORû able to travel to neighbouring Guangdong very dynamic and challenging business
the quarantine waiver must be performing province – home to major clients such as environment.”
duties essential to the company. It listed Tencent Holdings – without quarantine THOMAS BLOTT

than take the traditional green bond route of

IN BRIEF earmarking money – via a “use of proceeds”
Securities & Futures Commission previously, subject to unitholder approval. structure – for specific projects.
REIT regulations relaxed It pointed out that REIT managers face As a result, more companies could follow Italian
increasing difficulties in sourcing yield-accretive utility Enel’s lead into the market for SLBs. Enel
The Securities & Futures Commission of Hong properties. The option of participating in the is the only issuer so far to use the structure,
Kong has proposed new rules that would relax early development stage of projects would help having sold two deals last year with coupon
some of the existing requirements for sponsors address that. step-ups linked to its carbon emissions and its
of real estate investment trusts. In addition, the SFC proposed raising the limit transition to renewables.
The securities watchdog said the proposed on aggregate borrowings to 50% of GAV from Issuance of SLBs is expected to grow and could
changes stemmed from the feedback it received 45% previously. It said that as Hong Kong REITs match or exceed the success of the product in
from participants in CHINA MERCHANTS COMMERCIAL are required to distribute at least 90% of their the private loan market. More than US$38bn of
REAL ESTATE INVESTMENT TRUST’s HK$2.57bn profits to unitholders, REIT managers usually sustainability-linked loans have been issued this
(US$331.6m) IPO in December, the last REIT to need to raise debt to finance acquisitions. year, according to Refinitiv LPC data.
list in Hong Kong. It added that since many REITs trade at a SLBs are designed to complement rather than
Hong Kong has struggled to attract REIT IPOs, substantial discount to their net asset value, compete with use of proceeds deals such as
especially compared with Singapore, despite equity financing would be dilutive. green or social bonds, and are expected to be
previous efforts to encourage more listings. Only Respondents have until August 10 to submit used by companies finding it difficult to identify
11 REITs have listed in the city since the first in their feedback to the SFC. specific projects or capital expenditure.
2005. CMC REIT was the first to float since the Some technical issues remain to be resolved,
regulator introduced reforms in 2014. ICMA chiefly around the coupon step-up mechanism
Under the proposed changes, the SFC would Sustainability-linked bonds guidance that activates if borrowers fail to hit their
scrap the existing majority control and targets, which could be difficult for investors to
ownership requirement, which stipulates that The International Capital Markets Association include in conventional portfolios and also make
REIT managers can only invest up to 10% has issued guidance that aims to give impetus to bonds ineligible for the European Central Bank’s
of their gross asset value in minority-owned the fledgling sustainability-linked bond market. corporate sector purchase programme.
properties. The ICMA’s publication of principles for Hopes are high, however, that the instrument
The Hong Kong regulator has also proposed sustainability-linked bonds is expected to will deliver after a slow start, and the principles
raising the threshold for investments in encourage more issuers to link bond pricing to are expected to give comfort and confidence to
development projects to 25% of GAV from 10% their ability to hit general ESG targets, rather issuers.

International Financing Review Asia June 13 2020 15

 People
& Markets

Goldman Sachs Finance Minister Tengku Zafrul Aziz, who joined Media reports in December 2018, under the
Malaysia demands more than US$3bn the three-month old government from the previous government, had said Malaysia was
corporate world, said he had held a conversation seeking US$7.5bn in reparations from the bank.
Malaysia’s new government would not be willing with Goldman representatives last month. Edward Naylor, Goldman’s Asia head of
to accept even compensation of US$3bn from “We are continuing our pursuit to get some corporate communications, declined to
GOLDMAN SACHS in a settlement over the 1MDB money from GS and the legal case is still ongoing comment.
scandal, the finance minister told Reuters, so we will have to wait for the outcome of that,” Former Prime Minister Mahathir Mohamad said
ruling out a figure that is far higher than what the minister said in an interview on June 6. in December that Goldman had offered “one
the bank offered last year. “If it’s US$2bn, I can say no. US$3bn, no,” point something billion” dollars for an out-of-
Malaysia has charged Goldman and 17 current he added. “As long (as) the amount is not court settlement over it role in the scandal at
and former directors of its units for allegedly something we think we can accept, then we 1MDB.
misleading investors over bond sales totalling continue with the legal case.” According to the US Justice Department,
US$6.5bn that the US bank helped raise for He declined to say what an acceptable sum Goldman earned US$600m in fees for its work
sovereign wealth fund 1MDB. would be. with 1MDB.

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16 International Financing Review Asia June 13 2020

 COUNTRY REPORT
Australia 17 Cambodia 18 China 19 Hong Kong 27 India 30 Indonesia 31 Japan 32 Macau 33 Malaysia 33
Myanmar 33 New Zealand 34 Pakistan 35 Philippines 34 Singapore 35 Sri Lanka 39 Taiwan 39 Thailand 40

› WESTERN AUSTRALIA OPENS 2041 LINE 8 with the dual-currency A$500m non-
conforming Liberty Series 2020-1, which
AUSTRALIA WESTERN AUSTRALIAN TREASURY CORP,
rated Aa1/ included a rare yen tranche of ¥26.3bn
AA+ (Moody’s/S&P), issued a A$300m long (A$375m) that represented 75% of the
21-year bond last Friday through sole lead transaction.
DEBT CAPITAL MARKETS manager Citigroup. The Australian Office of Financial
The 2.25% July 23 2041s priced at 99.624 Management bought all of the A$64.5m
› IFC AND NWB TARGET LONG END to yield 2.2725%, 138bp over EFP (10-year Class A2 notes under its A$15bn Structured
futures) and 63.5bp wide of the May 2041 Finance Support Fund scheme, which drove
INTERNATIONAL FINANCE CORP, rated Aaa/AAA ACGB. the pricing margin down to 120bp over
(Moody’s/S&P), was the biggest SSA issuer one-month BBSW.
last week with Friday’s A$120m (US$82m)
tap of its 1.5% April 2035 social Kangaroo STRUCTURED FINANCE
bond which increased the outstanding SYNDICATED LOANS
amount to A$375m. › LIBERTY SOUNDS OUT INVESTORS
The reopening, via joint lead managers › VENTIA SPEEDS UP DEADLINE ON LOAN
Deutsche Bank and TD Securities, priced at Non-bank lender LIBERTY FINANCIAL is taking
99.044 for a yield of 1.525%, 51bp over asset indications of interest for the indicative Infrastructure services company VENTIA FINCO
swaps and 35.25bp wide of the June 2035 A$500m (US$346m) LIBERTY SERIES 2020-2 RMBS has accelerated the deadline for lenders
ACGB. offering that may launch this week. to commit to a A$525m (US$367.5m)
SSA issuance remains active Down For the senior A$190m Class A1a, incremental term loan.
Under. Three days earlier Dutch agency A$160m Class A1b and A$100m Class The debt is available in US or Australian
NEDERLANDSE WATERSCHAPSBANK, rated Aaa/ A2 notes, with respective weighted- dollars.
AAA (Moody’s/S&P), sold a A$50m 1.67% average lives of 0.9, 2.9 and 2.9-years, Lenders had until 5pm Eastern Time
10.5-year bond at par, 64bp and 54bp initial guidance is one-month BBSW plus last Wednesday to commit to the US dollar
wide of asset swaps and the December 100bp area, 165bp–170bp and 220bp area, component of the financing.
2030 ACGB. respectively. Initially, lenders had until 5pm Eastern
Sole lead TD Securities also arranged a NAB is arranger and joint lead manager with last Thursday.
A$15m addition to the new bond later the Bank of America, CBA, Deutsche Bank and Westpac. The deadline for final commitments in
same day that also priced at asset swaps A regular issuer of RMBS, Liberty Australian dollars was Friday. No exact time
plus 64bp. previously accessed the market on May was specified.

Pepper adds heat to RMBS market

„ Structured Finance No direct AOFM support required for A$700m non-conforming issue

PEPPER became the sixth non-bank lender March 19 to underpin RMBS and other ABS D notes is 30%, 30%, 14.5%, 9%, 6% and 3.8%.
to access the RMBS market since Firstmac originated by smaller lenders during the Pepper previously accessed the market last
reopened the segment on March 27 with last Covid-19 crisis. October with the A$750m-equivalent non-
Wednesday's A$700m (US$484m) no-grow, conforming RMBS, Pepper PRS25, which
non-conforming sale via PEPPER RESIDENTIAL MARGIN PRESSURE included a US dollar and green euro tranche.
SECURITIES TRUST NO 26 (PRS26). The Pepper PRS26 A$160m Class A1s notes The senior Aussie tranche of PRS25, the
The transaction was also the fourth with a 0.6-year weighted average life priced A$161.4m Class A1a notes, with a 2.3-year
RMBS in a row not directly supported by the at one-month BBSW plus 105bp. WAL, priced at one-month BBSW plus 128bp,
Australian Office of Financial Management's The A$330m Class A1a and A$108.5m Class 52bp tighter than the latest A1a note which
A$15bn Structured Finance Support Fund A2 notes, both with 3.1-year WALs, priced has a longer 3.1-year WAL.
scheme. 180bp and 240bp over one-month BBSW. The PRS25 A$100m Class A2, A$42.3m
Pepper has, however, benefited from a The A$38.5m Class B, A$21m Class C Class B, A$23m Class C and A$16.5m Class
combined A$224.6m of secondary market and A$15.4m Class D notes, all with 4.1-year D notes, all with 4.0-year WALs, priced at
purchases of its outstanding RMBS tranches WALs, priced 310bp, 410bp and 535bp wide one-month BBSW plus 160bp, 190bp, 280bp
by the AOFM between May 6 and June 3, of one-month BBSW. and 380bp or 80bp, 120bp, 130bp and 155bp
which freed up existing investors to buy the Pricing was not disclosed for the A$9.1m inside the PRS26 equivalents.
new bonds on offer. Class E, A$6.4m Class F or A$5.55m Class CBA was arranger for the latest trade and
The AOFM also invested A$39m in G1 notes, while the A$5.55m Class G2 notes joint lead manager with NAB, Macquarie,
Pepper's warehouse facilities on May 28 were retained. Standard Chartered Bank and Westpac.
under the SFSF, which was formed on Respective credit support for the Class A1s to JOHN WEAVERS

International Financing Review Asia June 13 2020 17

 The US dollars are still being offered at credit facility tranche C. outbreak and acquire additional aircraft,
450bp–475bp over Libor with a 1% floor, In April, the interest margins on the self- according to the filing.
while the Australian dollar portion is being arranged club facility were increased by Alliance Aviation is a provider of
shopped at 550bp–575bp over BBSY with a 65bp on each of the three tranches. contract, charter and allied aviation
0% floor. Facility A now pays 190bp over BBSY services to the mining, energy, tourism and
Both currencies are being offered at an from 125bp earlier, while facilities B government sectors.
original issue discount of 97 cents. and C offer 210bp compared with 145bp
There will be 101 soft call protection for previously. The margins are based on a net
12 months. debt-to-Ebitda ratio of between 2.5x and 3x. EQUITY CAPITAL MARKETS
The incremental term loan will mature For full allocations, see www.ifre.com.
alongside Ventia’s existing debt due in May › KOGAN.COM EYES EXPANSION
2026. › FAR EAST CONSORTIUM HITS MELBOURNE
Barclays, Citigroup, Credit Suisse, JP Morgan, Australian online retailer KOGAN.COM has
and UBS are arranging the deal. Hong Kong developer FAR EAST CONSORTIUM raised A$100m (US$68m) through a share
The debt will be fungible with the INTERNATIONAL has obtained a A$648m loan placement to fund expansion opportunities.
company’s existing senior secured term for a mixed-use property construction It issued 8.7m new shares, or 9.2% of its
loans of approximately A$410m and project in Melbourne. existing capital, at A$11.45 each, or a 7.5%
US$392m, Refinitiv LPC reported on May ANZ was the mandated lead arranger and discount to the pre-deal close of A$12.38 on
21. bookrunner for the loan, which offers an June 9.
Corporate and first-lien ratings are Ba2/ interest margin of BBSY plus 150bp, a line The deal received support from existing
BB. fee of 95bp and an establishment fee of and new shareholders.
Proceeds will support Ventia’s acquisition 50bp. Kogan is also looking to raise up to
of Broadspectrum. Ventia announced Bank of East Asia Singapore and Labuan A$15m through a share purchase plan.
on December 23 that it agreed to buy branches, China Minsheng Bank, Fubon Bank The company said it will use the proceeds
Broadspectrum, which operates airports Hong Kong, Hang Seng Bank, HSBC, Industrial to offer more products to more customers
and housing assets, from Spanish and Commercial Bank of China, Ping An Bank, and to enhance its operating model when
infrastructure company Ferrovial. Taipei Fubon Commercial Bank and United opportunities arise.
Ventia is a joint venture between Overseas Bank have joined in syndication. Canaccord Genuity and Royal Bank of Canada
Australian infrastructure contractor Cimic FEC MAY22 is the borrower. were the lead managers for the placement.
Group and private equity firm Apollo The borrowing is Far East Consortium’s
Global Management. second syndicated loan for the West Side
In June 2019, the company extended its Place property in Melbourne.
existing term loan B by four years to May In 2018, it raised an A$803m construction
2026. loan for the project comprising over 2,600 CAMBODIA
apartments, a 250-room Ritz Carlton Hotel,
› THIRTEEN COMMIT TO VODAFONE-TPG a Dorsett Hotel and extension of new
laneway connecting Lonsdale Street and SYNDICATED LOANS
Thirteen lenders have committed to a Little Londsdale Street with an array of
jumbo A$5.25bn loan supporting the restaurants and retail sites. › PRASAC LIFTS LOAN TO US$95M
proposed merger of VODAFONE HUTCHISON
AUSTRALIA and TPG TELECOM after pricing was › ALLIANCE AVIATION EXTENDS DEBT Cambodia’s PRASAC MICROFINANCE INSTITUTION
sweetened. has increased a dual-tranche loan to
Five banks from a A$4.75bn loan ALLIANCE AVIATION SERVICES has extended debt US$95m from US$75m after attracting
cancelled in 2019 have dropped out, while facilities totalling A$75.2m and is seeking eight banks in general syndication.
most of the remaining 11 banks scaled up additional equity to position the company Taishin International Bank was the original
their commitments. OCBC Bank and China to take advantage of growth opportunities mandated lead arranger and bookrunner
Construction Bank joined as new lenders. arising from the coronavirus pandemic. of the financing, while Bank SinoPac joined
Vodafone Hutchison Australia intends A revolving credit facility of A$70.2m and with the same title.
to draw down A$2.262bn following a court a A$5m working capital facility, of which The deal comprises a US$65m three-year
meeting scheduled on June 26, prior to the A$4.5m is undrawn, were both extended tranche A and a US$30m five-year tranche
implementation of the scheme in relation until January 2022, with existing lenders B with respective average lives of 2.28 years
to the merger. ANZ and Commonwealth Bank of Australia. and 3.98 years.
Proceeds from the first drawdown The company intends to undertake the Lenders were offered top-level all-in
will help repay outstanding amounts of refinancing process in 2021, according to its pricing of 406bp or 437.6bp via interest
Vodafone Hutchison Finance’s syndicated filing to the Australian Securities Exchange margins of 385bp and 425bp over Libor and
loans of US$3.5bn and A$1.7bn signed in last Thursday. a participation fee of 50bp for tranches A
2017 and 2019, respectively. The equity raising of up to A$121.9m and B, respectively.
The company intends to follow up with will support Alliance’s growth strategy, Funds will be used as general working
a second drawdown of A$2.5bn following including providing additional services to capital for business expansion.
the scheme implementation to repay TPG existing customers in response to changes Pricing on the loan is tighter than
Telecom’s existing debt. in air travel requirements because of Covid- Prasac Microfinance’s US$180m three-
The borrowing for the merged group 19. year borrowing completed in September
comprises a A$2.57bn three-year term loan The company is also looking to provide last year with 19 lenders. Cathay United
tranche A, a A$1.72bn five-year term loan services to entities that were not existing Bank and Taishin International Bank
tranche B and a A$960m five-year revolving long-term customers prior to the virus were the MLABs on that financing, which

18 International Financing Review Asia June 13 2020

 COUNTRY REPORT CHINA

was split into tranches of US$170m and at US-listed Luckin Coffee, which is also to yield 6.92%, 58bp tighter than initial
US$10m-equivalent in Cambodian riels. controlled by Lu. CAR operates separately guidance of 7.5% area.
Cathay United (Cambodia) provided the riel to the coffee chain, but its connection to Lu Final statistics were not available at the
tranche, which was not syndicated. led investors to dump its securities. Rating time of writing but orders were said to be
In general syndication, the US dollar agencies also slashed CAR’s credit ratings over US$3.1bn ahead of the release of final
tranche offered a top-level all-in pricing of in April over the Luckin scandal and its guidance, including US$730m from the leads.
416.3bp based on a margin of 400bp over potential effect on CAR’s access to capital CFLD (Cayman) Investment is the issuer
Libor and an average life of 2.45 years. markets and bank funding. and the Shanghai-listed parent company
The borrower – Cambodia’s largest CAR also said its lenders could call is the guarantor of the Reg S notes, which
microfinance institution – evolved from a for immediate repayment of US$168m have an expected Ba3 rating by Moody’s.
project sponsored by the European Union of outstanding loans if Lu ceases to be a Proceeds will be used for refinancing
and three ministries of the country’s director. The company’s management has offshore debt due within a year.
government in 1995. Its shareholders are not received any such demands, and is in BOC International, China Citic Bank
Bank of East Asia, Kookmin Bank, Lanka the process of obtaining waivers from the International, CMB International, Guotai Junan
Orix Leasing and Prasac Staff. lenders. International, Haitong International and JP
For full allocations, see www.ifre.com. CAR on June 1 announced that state- Morgan were joint global coordinators. They
owned Beijing Automotive Group (BAIC) were also joint bookrunners and joint lead
may acquire up to 450.79m shares or a managers with CCB International, CLSA, Credit
21.26% stake in the company from UCAR, Suisse, HSBC, Orient Securities (Hong Kong) and
based on a non-legally binding strategic UBS.
CHINA cooperation agreement entered into on The Shanghai-listed company, which is
May 31. active in new industry city development,
Research firm Lucror Analytics said its last tapped the offshore market with a
DEBT CAPITAL MARKETS fundamental credit bias on CAR remains US$1.2bn dual-tranche Reg S senior bond
“negative” as it expects further operational offering in January, comprising a US$500m
› BOCOM TO REDEEM OFFSHORE AT1S deterioration for the company, given “the 6.9% three-year and a US$700m 8.05% five-
pandemic, corporate governance concerns year tranche.
BANK OF COMMUNICATIONS said it will redeem and poor capital allocation”.
all its outstanding US$2.45bn 5% offshore › CHINA SOUTH CITY REPURCHASES BONDS
preference shares on July 29, the Additional › CCRE PRINTS US$400M BOND
Tier 1 securities’ first call date, according to CHINA SOUTH CITY HOLDINGShas made a further
a stock exchange filing. CENTRAL CHINA REAL ESTATE, rated Ba3/B+/BB–, on-market repurchase of its outstanding
The Hong Kong and Shanghai-listed drew final orders of over US$3.5bn from US dollar senior bonds to improve its debt
lender said the China Banking and 259 accounts for a US$400m Reg S bond structure, according to a stock exchange
Insurance Regulatory Commission had not offering, including US$340m from the filing on June 8.
raised any objection to the redemption leads. The Hong Kong-listed company bought
plan. The 7.65% 3.2-year non-call 2.2 senior US$12.3m in principal amount of the 7.25%
Chinese banks have issued capital bonds notes were priced at 99.543 to yield 7.8%, January 2021 bond and US$8m of the 6.75%
onshore because of lower funding costs inside initial guidance of 8.35% area. September 2021.
after regulators last year relaxed rules for The notes have an expected BB– rating This will leave the respective outstanding
perpetual bonds. by Fitch. principal amount of the bonds at
BoCom issued Rmb40bn (US$5.65bn) of The Hong Kong-listed real estate US$207.1m and US$332.7m.
4.2% perpetual bonds last September. Last company intends to use the proceeds to China South City Holdings, which
month, it issued Rmb40bn of 10-year non- refinance offshore debt which will become develops and runs logistics and trade
call five Tier 2 capital bonds at 3.24%. due within one year. centres, disclosed on May 4 that it had
Asia Pacific investors took 93% of the repurchased US$58m in principal amount
› CAR INC’S CHAIRMAN RESIGNS bonds, EMEA 6% and US offshore 1%. Fund of three of its US dollar bonds.
managers, asset managers and hedge funds The company said it may repurchase
CAR INC’s shares and bonds reacted were allocated a combined 77%, banks and other notes when appropriate.
differently on June 10 to the news that financial institutions 11%, private banks 7%,
founder Lu Zhengyao had resigned as the and insurers and corporates 5%. › EVERBRIGHT GREENTECH SELLS PANDA
company’s chairman and non-executive BNP Paribas, Bank of America, Citigroup,
director. China Citic Bank International, Credit Suisse, CHINA EVERBRIGHT GREENTECH last week revised
The Hong Kong-listed Chinese car rental Haitong International, Morgan Stanley the indicative price ranges and extended
company’s shares jumped as much as 21% and Standard Chartered Bank were joint the bookbuilding period for a Rmb1bn
before closing up 10% at HK$2.31. Its two bookrunners and joint lead managers. two-tranche Panda bond offering in China’s
US dollar bonds, however, slumped with its CCRE last tapped the dollar bond market interbank market.
6% bonds due 2021 down about 3 points to in February with a US$300m 6.875% 364- The indicative price ranges are now
73/76 and its 8.875% bonds due 2022 down day senior note priced at 99.883 to yield 7%. 2.00%–3.80% for a Rmb500m five-year non-
about 3.25 points to 64/67. put three tranche and 2.50%–4.30% for a
In a filing on June 10, CAR said Lu › CFLD PRICES TWO-YEAR Rmb500m five-year tranche, versus the
wanted to devote more of his time to UCAR 2.00%–3.50% and 2.50%–4.00% guidance that
and his other businesses. CHINA FORTUNE LAND DEVELOPMENT, rated Ba3/ the company announced earlier.
Lu’s resignation, effective June 9, comes BB– (Moody’s/Fitch), has priced a US$300m Bookbuilding has been extended to June
after a high-profile accounting scandal two-year senior unsecured bond at par 12 at 11:00am from June 11 at 5:00pm.

International Financing Review Asia June 13 2020 19

 Investors lap up Mengniu Dairy offering
„ Bonds Dairy company prints first 10-year bond since its US dollar debut in 2013

CHINA MENGNIU DAIRY, rated Baa1/BBB+ a result of the Covid-19 disruption, but said and fund managers received a combined
(Moody's/S&P), drew final orders of over revenues in April and May were up more 69%, banks 23%, insurers 5%, and private
US$5.7bn for a tightly priced US$800m Reg than 10% on 2019 as operations returned to banks, corporates and others 3%.
S dual-tranche senior unsecured bond that normal, sending the stock up 5.5%. The newly priced notes traded weak in the
extended its curve to 10 years. Mengniu last tapped the bond market in aftermarket with the five-year about 3bp wider
A US$500m 1.875% five-year tranche July 2019 with US$500m 3% five-year notes and the 10-year about 8bp wider, respectively
priced at 99.526 to yield 1.975%, or priced at Treasuries plus 125bp. at 164bp/162bp and 185bp/182bp over
Treasuries plus 160bp. A US$300m 2.5% Treasuries last Thursday morning.
10-year tranche priced at 99.587 to yield REAL MONEY BUYERS The notes have an expected Baa1 rating by
2.547%, or Treasuries plus 175bp. Excess demand spilled over into Mengniu's Moody's.
This is the Hong Kong-listed Chinese dairy existing 3% 2024s, which tightened by a Proceeds will be used for debt refinancing
products company's first 10-year bond since massive 40bp last Wednesday, the pricing and general corporate purposes.
its US dollar debut in 2013. Its three previous day, to around 160bp wide of Treasuries. Bank of China (Hong Kong), Barclays,
deals all had five-year tenors. However, there was considerable order Citigroup, DBS Bank, Goldman Sachs and
Final pricing for both tranches came 80bp attrition at final guidance, with the book JP Morgan were joint global coordinators.
inside initial guidance of 240bp area and shrinking from a peak of over US$14.5bn. They were also joint lead managers and joint
255bp area, and was about 40bp inside The banker said some fast money bookrunners with Mizuho, Societe Generale
Mengniu's pre-transaction curve, according accounts, such as proprietary trading desks, and Standard Chartered Bank.
to a banker on the deal. The 80bp revision is had withdrawn their orders as they saw little Moody's said Mengniu's strong liquidity
one of the biggest on an investment-grade upside after the aggressive tightening. But position and positive free cashflow will
offering from China so far this year. real money accounts remained in the book. continue to provide a buffer against potential
At reoffer spreads of Treasuries plus 160bp The new five-year notes drew final market volatility. It expects adjusted debt/
and 175bp, the two tranches also undercut orders of over US$3.7bn from 147 accounts, Ebitda to stay below 2.8 times in the coming
fair value estimates of 180bp and 192bp including US$495m from the leads. Asian 12-18 months, as Ebitda growth will outpace
(ANZ) and 185bp–190bp and 200bp–205bp investors took 91% of the bonds and EMEA an increase in debt.
(Nomura's trading desk). 9%. Asset managers and fund managers Moody's said Mengniu's Baa1 rating is
"Investors like the name. This is not a received a combined 70%, banks 26%, and supported by its three strategic shareholders:
frequent issuer and there is not much supply. private banks, corporates and others 4%. Cofco, Danone and Arla Foods. In particular,
Its results were also better than the market Final orders for the 10-year were over it has factored in strong support from Cofco
expected," said the banker. US$2bn from 102 accounts, including because the two "share joint responsibility for
Mengniu last Tuesday predicted first-half US$280m from the leads. Asia took 85% of developing a quality dairy business in China".
profit would fall 45%–60% year on year as the bonds and EMEA 15%. Asset managers CAROL CHAN

The issuer and underwriters may adjust 2020 under a tender offer on June 8. including US$350m from the leads, for its
the size of the tranches based on the The outstanding amount left of the US$500m Reg S bond offering.
bookbuilding result. bonds is US$188.71m, according to a stock The 6.25% 2.5-year non-put 1.5 senior
Final pricing was not yet announced at exchange filing. unsecured notes were priced at 99.718,
the time of writing. The Chinese brokerage had offered to giving a 6.45% yield to put, inside initial
The deal is the first batch of a Rmb3.5bn buy up to US$60m of the bonds at US$950 guidance of 7% area.
quota registered with Chinese financial per US$1,000 in principal amount plus Asian investors took 90% of the notes
regulators. accrued interest. But only US$5.7m in and Europe 10%. Fund managers and
The Hong Kong-listed, Cayman Islands- principal amount was validly tendered. asset managers received a combined 85%,
incorporated issuer is rated AAA by Lianhe The company last month completed a financial institutions 11%, and private
and focuses on biomass and hazardous tender offer under which it purchased and banks 4%.
waste treatment as well as solar energy and cancelled US$5.59m of bonds for US$900 Greenland Global Investment is the
wind power. per US$1,000 in principal amount. issuer and Greenland Holding Group is the
Proceeds from the bond offering will be The bonds were issued by First FZ guarantor.
used for working capital and to repay bank Bond in 2018 and guaranteed by Founder The notes will be issued off a US$8bn
loans. Securities (Hong Kong) Financial Holdings. MTN programme and have an expected Ba2
Everbright Securities is lead underwriter and Shanghai-listed parent company Founder rating by Moody’s. There is an investor put
bookrunner. ICBC is joint lead underwriter. Securities is the keepwell deed provider. option at par on December 16 2021.
Proceeds will be used to refinance
› FOUNDER SEC COMPLETES TENDER › GREENLAND DRAWS BIG ORDERS offshore debt and for general corporate
purposes.
FOUNDER SECURITIES said it has purchased and Chinese property developer GREENLAND BOC International, Haitong International
cancelled US$5.7m in principal amount of HOLDING GROUP,
rated Ba1/BB/BB–, drew over and Shenwan Hongyuan HK were joint global
its 6.9% guaranteed bonds due November US$4bn of final orders from 188 accounts, coordinators as well as joint lead managers

20 International Financing Review Asia June 13 2020

 COUNTRY REPORT CHINA

Hilong downgraded after exchange stalls

„ Bonds Rating agencies see elevated refinancing risks if bondholders reject proposal

Moody's and Fitch downgraded HILONG having already sweetened the terms of the amount of new 1.75-year US dollar senior
HOLDING on June 9, citing heightened exchange and pushed the deadline to June 5 Reg S notes due 2022 and US$100 in cash as
refinancing risks after the Chinese oil services from June 3. Settlement is now expected on an upfront consideration plus US$5 in cash
company warned it may default if investors June 22. as an early incentive for exchanging each
continue to reject an exchange offer for its US In the filing, the company warned that it US$1,000 of principal.
dollar bonds maturing this month. "may not have sufficient funds to repay the Before the revision, there was no upfront
Moody's lowered Hilong's issuer and existing notes upon maturity" if the exchange cash consideration, with holders set to
senior unsecured bond ratings to B3 from offer is not completed. receive the new 2022s on a par-to-par basis.
B2 and placed them on review for further Moody's said that Hilong's liquidity sources The new 2022s will have a minimum yield to
downgrade. and expected operating cashflows over maturity of 9.75%.
Fitch cut Hilong's issuer and senior the next 12 months are insufficient to cover As well as adding the upfront cash
unsecured bond ratings to CC from B and Rmb1.7bn (US$240m) of short-term debt. consideration and extending the deadline,
removed the ratings from negative rating Fitch cited the high refinancing risk Hilong increased the threshold for
watch. associated with Hilong's exchange offer, proceeding with the exchange offer to
In a June 8 filing, Hong Kong-listed Hilong given that so far it "has not met the minimum at least 80% in principal amount of the
said it had again extended the deadline for acceptance amount and there has been 2020s being tendered and accepted, up
an exchange offer on US$165.114m 7.25% limited progress in moving funds offshore". from 75%.
senior unsecured notes due June 22. It also Hilong on May 29 added a cash portion to Admiralty Harbour, CLSA, HSBC and
dropped a plan for a concurrent new money the exchange offer in order to attract more SPDB International are dealer managers
issue. bondholders. on the exchange offer and DF King is the
Hilong has extended the deadline by 10 Under the revised terms, eligible holders information and exchange agent.
days to June 15 at 4:00pm, London time, of the 2020s will receive US$900 in principal CAROL CHAN

and joint bookrunners with CLSA and Guotai non-call, non-put two-year bonds, drawing DBS and Dongxing were added to the
Junan International. orders of over US$1.1bn from 47 accounts, syndicate after the deal was launched.
including US$515.7m from the leads. The Beijing-based property developer,
› POWERLONG PRICES US$250M TAP Investors can exercise a put option at 100 which is not yet listed, ranks in the top
at the end of year two, and there is also an 50 for pre-sales nationwide, according
POWERLONG REAL ESTATE HOLDINGS has reopened issuer call option at 102.5 at any time on or to a Nomura analyst note. The company
its 6.95% US dollar bonds due July 23 2023 after two years. previously visited the international bond
for a tap of US$250m, bringing the total The notes priced with a coupon of 8.8% market in January after printing its debut
outstanding to US$420m. and issue price of 99.195, translating to dollar bond offering in October last year.
The tap drew final orders of over a yield to put of 9.25%, which was inside
US$1.6bn from 73 accounts, including initial guidance of 9.5% area. › RONSHINE PRICES US$250M BOND
US$130m from the leads. Asian investors The senior unsecured notes have
took 99% of the bonds and EMEA 1%. Fund expected ratings of B–/B/BB– (S&P/Fitch/ Chinese property developer RONSHINE CHINA
managers and asset managers received 88%, Lianhe Global). The issue size was capped at HOLDINGS has priced a US$250m 3.5-year
private banks 7%, and banks and financial US$250m. non-call 2.5 senior note at par to yield
institutions 5%. Radiance Capital Investments is the issuer 7.35%, inside initial guidance of 7.95%
The additional bonds were sold at 99.853 to and Radiance Group is the parent guarantor. area.
yield 7.0%, inside initial 7.5% area guidance. Asia Pacific took 96% of the Reg S notes The Reg S deal drew final orders of over
The issuer is rated B1/B+ (Moody’s/S&P) and EMEA 4%. Fund managers, asset US$1.3bn from 83 accounts, including
and the Reg S notes are rated B2 by Moody’s. managers and insurers booked 77%, private US$300m from the leads. The orders
Proceeds will be used to refinance banks and corporates 15%, and banks and dropped quite significantly at final price
offshore debt due within one year. financial institutions 8%. guidance, from a peak of over US$3.5bn.
Bank of America, Credit Suisse, Deutsche Proceeds will be used mainly for Final pricing was tighter than some
Bank, Guotai Junan International, Haitong refinancing onshore debt. estimates of fair value, which Nomura’s
International, JP Morgan, UBS, HSBC, China Citic Guotai Junan International, Haitong trading desk calculated at 7.4%–7.5%.
Bank International, BOC International, and Bank International, China International Capital Asian investors received 81% of the bonds
of East Asia were joint global coordinators, Corporation were joint global coordinators as and Europe 19%. Fund managers and asset
joint lead managers and joint bookrunners. well as bookrunners and lead managers with managers were allocated 87%, financial
ABC International, AMTD, BNP Paribas, Central institutions and banks 7%, and private
› RADIANCE GROUP PRINTS Wealth Securities Investment, CMB International, banks 6%.
CMBC Capital, CRIC Securities, DBS, Dongxing The issuer is rated B1/B+/BB–/BB+
Property developer RADIANCE GROUP, rated Securities (Hong Kong), GF Securities, HeungKong (Moody’s/S&P/Fitch/China Chengxin) and
B/B/BB– (S&P/Fitch/Lianhe Global), last Financial, UBS, Vision Capital International the notes have an expected rating of BB–/
Wednesday priced US$250m 3.25-year Holdings, Zhongtai International. BB+ (Fitch/China Chengxin).

International Financing Review Asia June 13 2020 21

 AIIB issues debut Panda bond
„ Bonds Sustainable development notes will contribute to the bank's Covid-19 pandemic response

The ASIAN INFRASTRUCTURE INVESTMENT BANK, and offshore investors with a very high quality Rmb5bn of three-year Panda bonds at
rated Aaa/AAA/AAA, has priced a Rmb3bn RMB investment. This successful transaction 2.43%, which was flat to the CDB curve at
(US$424m) three-year debut Panda bond serves as an important benchmark for our that time. The deal was the first coronavirus-
at 2.4%, near the tight end of the indicative future issues in the years ahead." themed Panda bond from a multilateral
range of 2.3%–2.9%. The AIIB is 31%-owned by China. financial institution.
The multilateral development bank is the Final orders reached Rmb8.34bn, or 2.78 Another person familiar with the deal
first issuer with international Triple A ratings times the issue size, from more than 20 expects more international issuers will visit
to tap the Panda market since Chinese investors. Domestic investors were allocated the Panda market after the AIIB's successful
regulators relaxed and streamlined the 35% of the notes and international investors print.
guidelines governing Panda bonds in 2018. 65%. "Some international Triple A issuers are
Final pricing was 23bp inside China The latter included central banks, said a planning to issue Panda bonds and are in
Development Bank's curve, the de facto person familiar with the deal. different stages of preparation. One may
benchmark for Panda bonds. Last month, AIIB issued US$3bn of 0.5% come out in the near future," said the person.
The sustainable development bonds will five-year sustainable development bonds to The AIIB is also highly likely to issue other
contribute to the AIIB's regular operations, help fund its Covid-19 Crisis Recovery Facility Panda bonds under its remaining quota to
including its response to the Covid-19 of up to US$10bn. establish a more complete curve.
pandemic. They were offered to onshore Chief financial officer Andrew Cross said The Triple A rated International Finance
investors as well as offshore institutional the Panda bond, the AIIB's first local currency Corp, International Bank for Reconstruction
investors via Bond Connect. bond, was another milestone in its diversified and Development (the World Bank), and
"The issuance will raise important capital funding strategy with access to investors Asian Development Bank have previously
to facilitate AIIB's response to Covid-19 in the globally. The bank has registered a Rmb10bn issued Panda bonds.
short term and maintain its commitment to quota with Chinese regulators. Bank of China was the lead underwriter
investing in sustainable infrastructure in the In April, the AIIB approved a Rmb2.485bn and bookrunner on AIIB's Panda bond
long term," the AIIB's president and chairman loan to upgrade China's public health transaction. BNP Paribas (China), China
of the board Jin Liqun said in a press release. infrastructure and provide emergency Construction Bank, China International Capital
"As an international organization equipment and supplies in response to the Corp and HSBC Bank (China) were joint lead
headquartered in Beijing, AIIB is also playing Covid-19 pandemic. underwriters. Credit Agricole CIB (China) was
a role in the internationalization of China's The New Development Bank, rated AA+ financial adviser.
capital markets by providing both onshore by both S&P and Fitch, in early April issued CAROL CHAN

Proceeds will be used for debt Wholly owned subsidiary Yongda The notes were issued as part of a
refinancing. Investment is the issuer and the Shanghai- restructuring plan that was conducted
Credit Suisse, China Citic Bank International, listed parent company will be the guarantor. with help from state-owned Shuifa Group
Citigroup, Haitong International, HSBC, Orient The bonds have an expected Baa2 rating after the issuer, which at the time was
Securities (Hong Kong) and UBS were joint by Moody’s. called China Singyes Solar Technologies
global coordinators, joint lead managers Haitong International and HSBC were Holdings, defaulted on its offshore bonds
and joint bookrunners. joint global coordinators as well as joint in October 2018. Creditors received a
bookrunners and joint lead managers with combination of cash and new bonds under
› SHANGHAI CONSTRUCTION PRINTS ANZ, Bank of China, Bank of Communications the scheme.
and BNP Paribas. In March unrated Shuifa Singyes
SHANGHAI CONSTRUCTION GROUP, rated Baa2/BBB/ Shanghai Construction Group Corp and repurchased US$18.4m in principal amount
BBB+, has raised US$600m from a bond Shanghai Guosheng (Group), both wholly in the secondary market, and last Monday
offering to fund refinancing, construction owned SOEs of the Shanghai municipal announced that it had bought back a
of offshore projects and general corporate government, owned 30.19% and 22.89% of further US$77.26m of bonds.
purposes. the guarantor as at end-2019. Shuifa Singyes is offering to buy back
The 2.25% five-year senior bonds were up to US$70m in principal amount of the
priced at 99.456 to yield 2.366%, or Treasuries › SHUIFA SINGYES LAUNCHES TENDER remaining US$319m of bonds at a cash
plus 195bp, inside initial 245bp area guidance. price of US$870 per US$1,000 in principal
The Reg S deal drew final orders of over has
CHINA SHUIFA SINGYES ENERGY HOLDINGS amount. The bonds were bid at a cash price
US$5.1bn from 203 accounts, including launched a tender offer at a discount for its of around 83 cents in the dollar in the
US$320m from the leads. US dollar bonds, months after completing a secondary market last Tuesday, according
Asian investors took 96% of the bonds company restructuring. to Refinitiv data.
and Europe 4%. Asset managers and fund In December, the curtain wall Admiralty Harbour Capital is dealer
managers were allocated 49%, banks and installation and solar engineering company manager, and Morrow Sodali is information
financial institutions 39%, sovereign and issued US$414.9m bonds which have a and tender agent.
insurance investors 11%, private banks and three-year tenor and pay a cash coupon of The offer ends on June 15 and will be
others 1%. 2% and payment-in-kind interest of 4%. financed with cash on hand.

22 International Financing Review Asia June 13 2020

 COUNTRY REPORT CHINA

› SINIC PRICES US$210M BOND The Henan provincial government firms Warburg Pincus Asia, General
directly supervises the Zhengzhou Airport Atlantic Singapore Fund, Ocean Link
Property developer SINIC HOLDINGS (GROUP), Economy Zone Management Committee, Partners, and Jinbo Yao, chairman and
rated B2/B/B+, last Thursday priced which owns the issuer. CEO of 58.com, is in talks with some
US$210m senior unsecured notes after relationship Chinese banks for the debt
drawing over US$1.5bn of final orders from › EVERBRIGHT WATER PANDA DRIES UP funding.
76 accounts, including US$295m from the On April 30, 58.com announced that the
leads. CHINA EVERBRIGHT WATER has cancelled a consortium proposed to acquire all of its
The 10.5% two-year bonds were priced proposed offering of Rmb1.2bn five-year outstanding ordinary shares for US$27.5 in
at 98.473 to yield 11.375%, inside initial Panda bonds in China’s interbank market cash per ordinary share, or US$55 in cash
guidance in the 11.875% area. because of volatile market conditions, per ADS.
Asia bought 98% of the bonds and Europe according to a stock exchange filing on The offer values the business at about
2%. Asset managers, fund managers and June 9. US$8.23bn, the Chinese firm said in a press
hedge funds received a combined 85%, The Bermuda-incorporated, Hong Kong release.
private banks 9%, and banks 6%. and Singapore-listed company had earlier In July 2015, 58.com obtained a US$400m
The Reg S notes have an expected B+ marketed five-year Panda bonds at 3.00%– five-month senior loan from Ohio River
rating by Fitch. 4.00%. Investment, according to Refinitiv LPC data.
Proceeds will be used for debt The issuer and the bonds are rated AAA
refinancing. by Shanghai Brilliance. › JINJIANG SEEKS LOAN ON TOP OF WAIVER
Guotai Junan International, BOC International The deal would have been the first
and UBS were joint global coordinators tranche to be issued from a Rmb3bn Singapore-listed ZHENENG JINJIANG ENVIRONMENT
as well as joint lead managers and joint quota registered with Chinese financial HOLDING, formerly named China Jinjiang
bookrunners with Credit Suisse, BNP Paribas, regulators. Environment Holding, is raising a loan of
Bank of America, CCB International, China Bank of China was lead underwriter and around US$270m to repay a US dollar bond
Minsheng Banking Corp Hong Kong branch, CMB bookrunner. Guosen Securities was joint lead due in July, even as it seeks a waiver for a
International, Haitong International, HSBC and underwriter. covenant breach on an existing borrowing.
Tianda Securities. Standard Chartered is the mandated lead
The Hong Kong-listed company in early › PANDA GETS TRADITIONAL TREATMENT arranger and bookrunner of the latest loan,
March issued US$280m of 11.75% 364-day which pays an all-in pricing of about 235bp.
senior unsecured notes priced at 98.641 to CHINA TRADITIONAL CHINESE MEDICINE HOLDINGS has The loan has been launched into limited
yield 13.25%. issued Rmb2.2bn three-year Panda bonds syndication.
in China’s interbank market at 3.28%, Proceeds will be used to repay a
› ZHENGZHOU AIRPORT ZONE ISSUES according to a stock exchange filing. US$200m 6% senior unsecured note
The issuer and the bonds are rated AAA maturing on July 27.
ZHENGZHOU AIRPORT ECONOMY ZONE XINGGANG by China Chengxin. Meanwhile the company is still seeking a
INVESTMENT GROUP last Wednesday priced The Hong Kong-incorporated and listed waiver for breaches of a financial covenant
US$300m of three-year senior unsecured company plans to use the proceeds to on a US$216m-equivalent syndicated loan
bonds at par to yield 3.4%, inside initial redeem bonds and replenish working signed in June 2018.
guidance in the 4% area. capital. Jinjiang’s interest coverage ratio had
Orders were over US$1.7bn when final China Merchants Bank was lead underwriter fallen below the minimum requirement of
guidance was announced, including and bookrunner. 3x for the 12-month periods ended June 30
US$850m from the leads. Final book 2019 and December 31 2019.
statistics had yet to be released. › SMBC SELLS RMB1BN PANDA BONDS The company said on May 28 it had
The benchmark Reg S notes are expected not received any notice for accelerated
to be rated BBB+ by Fitch, in line with the SUMITOMO MITSUI BANKING CORPhas sold Rmb1bn prepayment of the facility.
issuer. three-year Panda bonds at 3.2% via a private StanChart was also the sole MLAB of the
CICC was sole global coordinator. It was placement in China’s interbank market. June 2018 borrowing, which was Jinjiang’s
also joint bookrunner with Industrial Bank, The final pricing of the bonds was debut offshore syndicated loan and
Hong Kong branch, Bank of Communications, near the top end of an indicative range of attracted 10 other lenders.
CEB International, Standard Chartered, China 2.3%–3.3%. Last August, Jinjiang Environment
Securities International, BOC International, CMB The issuer is rated AAA by S&P Global obtained a waiver from majority lenders
Wing Lung, China Citic Bank International, China. for mandatory prepayment regarding a
Dongxing Securities (Hong Kong), Guotai Junan CCB, ICBC, BOC, Citic Securities and HSBC change in the controlling shareholder of
International, China Minsheng Banking Corp, were joint lead underwriters. the company. This followed the sale of a
Hong Kong branch and Shanghai Pudong combined 29.79% stake in the company
Development Bank. held by shareholders Dou Zhenggang, his
Proceeds will be used for domestic SYNDICATED LOANS wife, Wei Xuefeng, and daughter, Jennifer
projects and to refinance onshore debt. Wei, to state-owned Zhejiang Provincial
The company focuses on financing and › BANKS VIE FOR 58.COM MANDATE Energy Group.
construction to develop the Zhengzhou In its annual report released on June
Airport Economy Comprehensive Pilot Banks are bidding for the mandate to lead 9, the company said it will continue to
Zone. It develops land and infrastructure, a debt package of around US$3bn to back actively seek the support of the largest
and builds affordable housing in the zone, the proposed take-private of Nasdaq-listed controlling shareholder, state-owned
as well as trading in commodities and online classifieds marketplace 58.COM. Zhejiang Provincial Energy Group, to
electronics. A consortium comprising private equity improve the group’s financing channels

International Financing Review Asia June 13 2020 23

and reduce financing costs, so as to That facility offered top-level all-in coronavirus impact. Its offline business is
strengthen the working capital of the pricing of 390bp and 384bp, respectively, expected to maintain high growth while
group. for the term loan and revolver based on the the online business is also expanding.
same interest margin of 335bp over Libor/ New Oriental, a private education
› MIDEA OBTAINS US$168M LOAN Hibor. provider, saw its net income increase 41%
year on year to US$138m in the three
Shenzhen-listed home appliance maker months to February 29 2020.
Midea Group has raised a US$168m five- EQUITY CAPITAL MARKETS
year term loan from eight lenders. › BOHAI BANK WINS IPO APPROVAL
Credit Agricole CIB was the mandated › BOLE PLANS RMB2BN FOLLOW-ON
lead arranger and bookrunner of the CHINA BOHAI BANK won listing approval last
transaction, while seven other lenders plans to
BEIJING ORIENT LANDSCAPE & ENVIRONMENT Tuesday for a Hong Kong IPO of about
joined as MLAs. raise Rmb2bn (US$283m) from a proposed US$2bn, people close to the deal said.
Funds will be used to refinance debt and private share placement. The national joint-stock commercial
for general corporate purposes. The company will sell up to 806m shares, bank, which counts Standard Chartered
Midea Group is the guarantor, while equivalent to 30% of current shares, to up as its second-largest shareholder, will start
its subsidiary MIDEA INTERNATIONAL is the to 35 investors. pre-marketing in mid-June, said the people.
borrower. Proceeds will be used to fund seven waste ABC International, CCB International, CLSA
In May last year, the borrower raised a recovery and incineration projects and and Haitong International are the joint
US$634m five-year bullet term loan. CACIB replenish working capital. sponsors.
also led that deal, which offered a top-level The proposal still needs approval from Founded in 2005, Bohai Bank also counts
all-in pricing of 110bp based on an interest shareholders and regulators. Tianjin TEDA Investment, China Shipping
margin of 98bp over Libor. Investment and State Development &
For full allocations, see www.ifre.com. › DUO WEIGH HK LISTINGS Investment as shareholders. StanChart
owns a 19.99% stake, behind TEDA, which
› YANLORD LAND LAUNCHES US$1BN REFI NYSE-listed NEW ORIENTAL EDUCATION & holds 25%.
TECHNOLOGY GROUP and TAL EDUCATION are The Chinese lender posted a net profit
Chinese property developer YANLORD LAND talking to banks about potential secondary of Rmb6.5bn for the nine months ended
GROUP has launched an around US$1bn- listings in Hong Kong, joining the queue September 30, up 16% year on year. Its total
equivalent 3.5-year loan for refinancing. of US-listed Chinese companies seeking to assets stood at Rmb1.1trn as of September
CMB Wing Lung Bank, DBS Bank, Hang Seng list closer to home amid rising US-China 30, while its non-performing loan ratio
Bank, HSBC, Shanghai Pudong Development tensions. and core Tier 1 capital adequacy ratio were
Bank and Standard Chartered are the The two Chinese education companies 1.77% and 8.17%, respectively.
mandated lead arrangers and bookrunners are discussing the possibility of selling
of the transaction, which offers an interest shares in Hong Kong with internal › CIFI MAKES PRIVATE PLACEMENT
margin of 335bp over Libor/Hibor. stakeholders and external advisers, said
The facility comprises a term loan people familiar with the matter, adding Real estate developer CIFI HOLDINGS (GROUP) has
with an average life of 3.275 years and a that no decision has yet been made. raised HK$1.16bn (US$150m) from a private
revolving credit facility. The companies have not yet picked institutional placement.
Banks can choose to participate in either banks for the transactions, which could It issued 185m new shares, or 2.28% of
US or Hong Kong dollars, and either the come as early as this year, said two of the the enlarged share capital, at HK$6.28 each,
term loan or the revolver, or a combination people. or a 1.3% discount to the market close of
of both tranches. It is unclear how much the two HK$6.36 on June 5.
MLAs committing US$50m-equivalent or companies are looking to raise. At current The buyers were international
more will earn a top-level all-in pricing of valuations a 5% float in Hong Kong – in line institutional investors and long-term funds.
419bp based on upfront fees of 275bp and with other secondary listing candidates – The majority of the shares were allocated to
294bp, respectively, for the term loan and would raise about US$1bn in each case. a global institution.
the revolver. As of last Tuesday, shares of TAL are Proceeds will be used to develop projects
Lead arrangers taking US$35m–$49m up 36% this year at US$65.73, giving it a and for working capital and general
earn 410bp all-in based on upfront fees market capitalisation of US$25bn. New corporate purposes.
of 245bp and 262bp for the two tranches, Oriental, meanwhile, has seen its shares Credit Suisse was the placing agent.
while arrangers taking US$15m–$34m rise 7% this year. The stock closed at
receive an all-in pricing of 400bp based on US$129.66 last Tuesday with a market cap › CPIC LAUNCHES GDR SALE
fees of 212bp and 228bp. of US$20bn.
In April 2019, Yanlord obtained a New Oriental declined to comment while CHINA PACIFIC INSURANCE (GROUP) CO has started
US$362m-equivalent 3.5-year club loan TAL did not reply to requests for comment. bookbuilding for a sale of global depositary
from six banks, according to Refinitiv LPC Investors have raised concerns over TAL’s receipts of up to US$2.15bn in London,
data. Proceeds were for general corporate corporate governance standards after the after a year-long issuance drought through
purposes. tutoring services provider said in early April the Shanghai-London Stock Connect.
The borrower’s previous syndicated that it had caught one employee allegedly Shanghai and Hong Kong-listed CPIC is
facility was a US$1.051bn-equivalent 3.5- fabricating sales figures in its newly selling up to 113m GDRs, including the
year loan obtained in April 2017 from 26 introduced “Light Class” business. greenshoe, in an indicative price range
lenders, including CMB Wing Lung Bank, The incident briefly weighed on the of US$17.60–$19 per share through the
DBS, Hang Seng Bank, HSBC and StanChart stock, which bounced back on signs Shanghai-London Stock Connect.
as the MLABs. the company is recovering from the With each GDR representing five

24 International Financing Review Asia June 13 2020

 COUNTRY REPORT CHINA

A-shares, the price range represents a buyers were GIC (Rmb1.99bn), Bosera › NANJING SEC PLACEMENT APPROVED
discount of 3.2% to 10.3% to CPIC’s A-share Funds (Rmb145m), state-owned Qingdao
close of Rmb27.75 last Friday. City Construction Investment (Group) NANJING SECURITIEShas won final written
The offering represents up to about (Rmb125m), and retail investors Ge approval from the China Securities
566m A-shares or 9% of the total A-shares Weidong (Rmb1.5bn) and Bi Yongsheng Regulatory Commission for a Rmb6bn
outstanding. (Rmb560m). Ge is the chairman of Chaos private share placement.
CPIC said earlier Swiss Re will be a Investment. The brokerage plans to sell up to 660m
cornerstone investor for the offer, taking GIC will hold a 2.17% stake in the shares to up to 35 investors, including
up to 1.5% of the company’s enlarged share company, while Ge Weidong’s stake will shareholders Zijin Investment Group,
capital subject to a three-year lock-up. rise from 3.06% to 4.48%. Nanjing New Industry Investment Group,
The deal will price on June 16 and the There is a six-month lock-up. and Nanjing Communication Group. The
shares will start trading on June 17. Proceeds will be used to fund a DRAM three shareholders have committed to buy
Huatai Financial and UBS are global chip project and replenish working capital. Rmb300m, Rmb100m and Rmb350m of the
coordinators, and bookrunners with CICC, The company posted a 2019 net profit offering, respectively.
HSBC, Morgan Stanley and JP Morgan. of Rmb607m, up 49.8%, on revenue of Proceeds will be used to replenish capital
In June 2019, Huatai Securities raised Rmb3.2bn, an increase of 42.6%. and working capital.
US$1.7bn from a landmark sale of GDRs in Its shares surged 10% to Rmb226.23 on Northeast Securities is the sponsor and joint
London, marking the launch of the long- June 5 on news of the investment, hitting bookrunner with Soochow securities.
awaited trading link between Shanghai and the daily cap.
London that deepened ties between the two CICC was the sponsor. › NIO UPSIZES FOLLOW-ON
financial centres and opened a new channel
for Chinese companies to raise funds. › KAISA PROSPERITY BUILDS WAR CHEST Chinese electric-vehicle maker NIO has
Last December, Shanghai-listed SDIC upsized a primary follow-on to raise
Power Holdings was ready to bring a KAISA PROSPERITY HOLDINGS has raised HK$456m US$428m after pricing the deal at US$5.95
US$700m–$800m GDR sale to London from a top-up share placement. per share.
it but postponed it at the last minute, The Chinese property management The New York-listed company sold 72m
citing market conditions. The deal is now company sold 14m shares or 9.09% of its American depository shares, instead of
expected as early as September. enlarged share capital at HK$32.55 each, 60m at launch, at a 5.9% discount to last
IFR also reported in April that Shanghai- near the bottom of a HK$32.50–$33.45 Wednesday’s close of US$6.30.
listed China Yangtze Power picked CLSA, range. The final price represents a discount There is a 15% greenshoe.
Goldman Sachs, Huatai Financial and UBS of 10% to last Monday’s closing price of Morgan Stanley, Credit Suisse and CICC are
to lead a GDR sale in London, which HK$36.15. the bookrunners.
could involve the sale of up to 10% of the The books were well oversubscribed with The company plans to use the proceeds
company. Yangtze Power’s A-shares closed about 20 investors participating including to fund cash investments in Nio China,
at Rmb17.53 Friday, giving it a market long-only funds, sovereign wealth funds as well as other working capital needs.
capitalisation of Rmb386bn. and hedge funds. The top five investors Nio China plans to invest in research and
took about 80% of the deal. development, manufacturing facilities,
› GAN & LEE PHARMA KICKS OFF IPO The company plans to use the proceeds for improve its supply chain and enhance its
future M&A, strategic investments, working sales and service network.
GAN & LEE PHARMACEUTICALS will price on June capital and general corporate purposes. Nio’s shares fell 5.7% last Wednesday and
12 for a Rmb2.54bn Shanghai IPO. There is a 90-day lock-up period. 6.2% last Thursday, to US$5.91, but are still
Books will open for a day on June 16. ABC International and Haitong International up 47% year to date.
The biopharmaceutical company plans to were the bookrunners.
offer 40.2m A-shares, or 10% of the enlarged › SHANXI SEC PRICES RIGHTS ISSUE
capital. › LITIAN PICTURES PREMIERES HK IPO
The insulin manufacturer will use the Shenzhen-listed SHANXI SECURITIES has set the
proceeds for insulin mass production, Chinese TV drama producer and distributor issue price at Rmb5.00 each for a proposed
research, marketing, and working capital, LITIAN PICTURES HOLDINGS has launched a Hong Rmb6bn rights issue.
to register insulin products in the US and to Kong IPO of up to HK$288m. The brokerage will offer 849m shares on
build an R&D centre. It is marketing 75m primary shares, or June 16 on a 3-for-10 basis. Trading in its
It posted a net profit of Rmb1.17bn on 25% of the enlarged share capital, in an shares will be halted from June 17–24.
revenue of Rmb2.89bn in 2019. indicative price range of HK$2.56–$3.84, Shanxi Financial Investment Holdings,
Citic Securities is the sponsor and joint valuing the company at HK$768m–$1.15bn. the biggest shareholder in the company
bookrunner with Orient Securities. There is an overallotment option of 15% with a 30.6% stake and which is owned by
of the base deal. Shanxi Provincial Finance Department, has
› GIGADEVICE SEMI SEALS FOLLOW-ON Proceeds will be used to produce drama committed to take up its full entitlement.
series, purchase broadcasting rights, hire Proceeds will be used to expand the
Flash memory chipmaker GIGADEVICE more professionals, and for working capital broker’s intermediary capital, fixed income
has raised Rmb4.32bn
SEMICONDUCTOR (BEIJING) and general corporate purposes. and bill investment businesses and increase
from a private A-share placement to five There is a six-month lock-up period for the capital of a subsidiary.
investors, including Singapore sovereign the company. The company posted revenue of
wealth fund GIC. The deal will price on June 15 and the Rmb5.08bn in 2019, down 26%. It is the
The Shanghai-listed company sold 21.2m shares are due to be listed on June 22. biggest shareholder in the Zhong De
shares at Rmb203.78 each, or a 1% discount Founder Securities (Hong Kong) Capital Securities JV with Deutsche Bank with a
to the pre-deal close of Rmb205.66. The Company is the sole sponsor. 66.7% stake.

International Financing Review Asia June 13 2020 25

 Citic Securities is the sponsor and joint capital. It is selling 4% of the shares to the research and development centre, and to
bookrunner with Zhong De securities. sponsor, with the remainder of the deal replenish working capital.
split 80.2%/19.8% between institutional and Sole sponsor Huatai United Securities is
› SICHUAN LANGJIU SAYS CHEERS TO IPO retail investors. charging Rmb158m as a service fee and
The implied market capitalisation of investing Rmb75.8m, or 3% of the offering.
Clear spirits producer SICHUAN LANGJIU has Rmb11.2bn meets the minimum Rmb4bn
filed to the China Securities Regulatory requirement for pre-profit candidates on › TRIO PRE-MARKET FLOATS
Commission for a Rmb7.45bn Shenzhen the Star market.
IPO. Companies in the pharmaceutical Three companies from the healthcare sector
The company plans to offer up to 70m industry must have at least one core started pre-marketing last Monday for Hong
shares, or 11% of the enlarged capital. product at the Phase II clinical trial stage. Kong IPOs of a combined US$800m.
It will use Rmb6.32bn of the proceeds to Sinocelltech, which manufactures Chinese medical equipment maker KANGJI
upgrade and build four production bases, recombinant proteins, monoclonal MEDICAL is planning to raise about US$400m
and fund warehousing, packing and liquor antibodies and vaccines, will use the from its float. Bank of America, CLSA and
fermentation bacteria projects. The rest of proceeds for clinical research and working Goldman Sachs are sponsors.
the proceeds will be used for IT services, capital. Kangji, which makes equipment for
to build an R&D centre, and for working Its net loss widened to Rmb798m in 2019 minimally invasive surgery, posted a net
capital. from Rmb459m in 2018, on revenue of profit of Rmb327m for 2019, up 46% from
The company’s chairman, Wang Junlin, Rmb2.6m and Rmb2.9m respectively. 2018.
holds a 76.7% stake directly and indirectly CICC is the sponsor, and Citic Securities is HYGEIA HEALTHCARE, a Warburg Pincus-
through biggest shareholder, Sichuan the financial adviser. backed Chinese hospital operator and
Langjiu Group. radiotherapy equipment maker, intends to
Crystal Glitter, which was registered in › SMOORE GETS READY TO IGNITE raise about US$300m from its listing.
Hong Kong in 2016 and is 100% held by PE Books are tentatively scheduled to open
firm Boyu Capital, bought a strategic stake SMOORE INTERNATIONAL, one of the world’s on June 16 and close on June 19 ahead of
of 11.2% in 2017. largest e-cigarette makers, sought listing the listing on June 29.
The chairman’s brother, Wang Jungang, approval last week for a Hong Kong IPO of The company posted an adjusted net
holds a 5% stake. US$600m–$900m. profit of Rmb136m for the 10 months
Boyu Capital was founded in 2010 and Pre-marketing will start this week once ended October 31 2019, up 82% from the
counts as partners former TPG Capital approval is granted. same period in 2018.
senior executive Mary Ma and Alvin Jiang, CLSA is the sponsor. Warburg Pincus owns a 17.2% stake in
also known by his Chinese name Jiang IFR reported last August the company the company.
Zhicheng, who is the grandson of former planned to raise about US$400m from the Haitong International and Morgan Stanley
Chinese president Jiang Zemin. float in the first half of 2020. The deal size are joint sponsors.
The company posted a net profit of has since become much bigger as investors IMMUNOTECH BIOPHARM is working with
Rmb2.44bn in 2019, up from Rmb726m in have shown strong interest, said people joint sponsors CCB International and Guosen
2018, on revenue of Rmb8.35bn. close to the deal. Securities on a float of at least US$100m.
GF Securities is the sponsor. Smoore was listed on the China National Books are scheduled to open in the
Equities Exchange and Quotations and second half of June and the deal will price
› SIMCERE FILES FOR HONG KONG IPO delisted from the over-the-counter in late June.
exchange in June last year. The biopharmaceutical company has a
SIMCERE PHARMACEUTICAL GROUPis looking to Smoore posted profit and total portfolio of 10 drug candidates focusing
raise around US$500m through a Hong Kong comprehensive income of Rmb921m for the on cancer treatment. It posted a loss of
IPO, according to people close to the deal. first half of 2019, more than five times the Rmb109m for 2019, wider than a Rmb35m
The company filed for the proposed Rmb181m earned in the same period of 2018. loss for 2018.
listing on June 10. Its clients include Japan Tobacco,
Simcere listed on the NYSE in 2007 and Reynolds Asia-Pacific, British American › THREE SEEK IPO APPROVALS
delisted in 2013. Tobacco, RELX and NJOY.
It has a range of 50 product candidates SHENZHEN HEPALINK PHARMACEUTICAL,REDSUN
in different stages of development to treat › TRINA SOLAR SOARS 136% ON DEBUT SERVICES and ZHENRO SERVICES GROUP sought
cancer as well as central nervous system listing approvals last week for their
and autoimmune-related diseases. TRINA SOLAR’sA-shares soared as high as 136% respective US$300m–$400m, US$70m–
It posted an annual profit of Rmb1bn last above their IPO price when they made their $80m and US$150m Hong Kong IPOs.
year, up 37% from Rmb734m a year earlier. trading debut on June 10. The stock climbed Pre-marketing of the deals will start this
CICC and Morgan Stanley are the joint to Rmb19.26 from the Rmb8.16 issue price week if approvals are granted.
sponsors. before closing at Rmb17.21, up 110.9%. Shenzhen-listed Hepalink has a portfolio
The photovoltaic equipment producer, of drugs to treat blood clots and immune
› SINOCELLTECH GROUP PRICES STAR IPO which was delisted in the US in 2017, raised system disorders. For the first nine months
Rmb2.53bn from its Star IPO of 310.2m of 2019, it posted a profit of Rmb749m , up
SINOCELLTECH GROUP has set the issue price at shares, or a 15% free float. It initially 60% from the same period a year earlier.
Rmb25.64 per share for a Shanghai Star IPO planned to issue 439m shares with a Goldman Sachs and Morgan Stanley are the
of Rmb1.28bn (US$181m), downsized from fundraising target of Rmb3bn. joint sponsors.
a proposed Rmb1.98bn. Proceeds will be used to fund a Redsun, a Chinese property management
The pre-profit company plans to offer photovoltaic power generation project, company, posted a net profit of Rmb57m
50m shares, or 11.5% of the enlarged to upgrade photovoltaic modules and a for 2019, up 73% from 2018.

26 International Financing Review Asia June 13 2020

 COUNTRY REPORT HONG KONG

The company is wholly owned by Zeng Shanghai Star market. › CHAMPION TRIUMPHS ON PRICING
Huansha, the chairman of Hong Kong-listed Weigao Ortho will sell 5%–20% of the
Redsun Properties. enlarged capital in the IPO. Hong Kong real estate investment trust
ABC International is the sponsor. The spin-off manufactures orthopaedic CHAMPION REIT last Monday sold a US$300m
Zhenro Services, which provides property medical implants including spinal, trauma 10-year Reg S bond in an offering that was
management services to Hong Kong-listed and joints products. It also produces surgical six times subscribed.
Zhenro Properties Group, posted a net instruments and tools for implant surgery. The 2.95% bond priced at 98.6 to yield
profit of Rmb74m for the nine months to The parent company holds around 80.5% 3.114%, or Treasuries plus 220bp, inside
September 30 2019, up 160% from the same of Weigao Ortho. Its shares changed hands at initial guidance of 260bp area.
period of 2018. HK$16.36 in the morning of June 12, up 2.3%. The Hong Kong-listed issuer previously
Zonrong Ou, the controlling shareholder The proposal still needs approval from visited the international bond market in
of Zhenro Properties Group, owns 87.3% of shareholders and regulators. 2013 with a debut US$400m 10-year bond.
Zhenro Services. That bond is fairly illiquid, but Nomura’s
CCB International is the sponsor. › YONGDA AUTO SELL SHARES VIA TOP-UP credit sales and trading desk saw fair value
for the new issue at Treasuries plus 225bp,
› INSTO HOLDERS SELL DOWN ESR CAYMAN CHINA YONGDA AUTOMOBILES SERVICEShas raised based on bonds from other Hong Kong
HK$995m through a top-up placement at landlords such as Swire Properties and
Three institutional shareholders have raised HK$8.29 per share, or a 7.5% discount to the Hysan Development.
a combined HK$1.95bn from a sell-down in pre-deal close. A source close the deal estimated that
ESR CAYMAN. The company marketed 120m shares, Champion REIT had priced inside fair value,
The block was upsized to 116m shares, representing 6.1% of the enlarged share as 2027 and 2029 bonds from Hysan, which
from 80.7m shares at launch, and priced at capital, at an indicative range of HK$8.22– is rated a notch higher at A3/BBB+/A–, were
the bottom of the HK$16.80–$17 marketed $8.42 each. seen at G spreads of 225bp and 231bp,
price range, or a 4.3% discount to the pre- Proceeds are for general corporate respectively.
deal close of HK$17.56 on June 5. purposes. There is a 90-day lock-up. Some key accounts were initially
The selling shareholders are WP OCIM Goldman Sachs, HSBC and Morgan Stanley deterred by the tight price guidance but
One, a Warburg Pincus unit, Montsoreau were the bookrunners. came in later, said the source.
Investment and Mercer Investments Final orders were over US$1.8bn from
(Singapore). 124 accounts, including US$130m from
There is a 90-day lock-up for WP OCIM the leads. The issue size was capped at
One and Montsoreau Investment. Mercer US$300m.
sold its entire stake. HONG KONG Asia took 96% of the Reg S bonds and
Concurrently, certain ESR employees EMEA 4%. Asset managers and fund
exercised stock options and sold 8.7m managers booked 78%, banks 13%, and
shares at the same price in an off-market DEBT CAPITAL MARKETS private banks, corporates and others 9%.
transaction. Champion MTN is the issuer and HSBC
WP OCIM One nows owns about 16.1% of › ASIA ORIENT EXCHANGES MINGFA BONDS Institutional Trust (Services) Asia is the
ESR’s enlarged share capital. guarantor with recourse limited to the
CLSA, Goldman Sachs and Morgan Stanley ASIA ORIENT HOLDINGS and its two listed assets of Champion REIT.
handled the sale. units have disclosed that they exchanged The senior unsecured notes have an
US$112m in principal amount of 11% bonds expected rating of Baa1 by Moody’s, in
› ALPHAMAB BLOCK TRADE PRICED AT TOP due May 18 2020 issued by MINGFA GROUP line with the issuer’s parent company
(INTERNATIONAL) CO for newly issued 22% bonds Champion REIT.
Three shareholders have raised a combined due December 5 2020 on a par-to-par basis. The bonds will be drawn under
HK$440m through a sell-down in ALPHAMAB The bonds owned by the three the issuer’s US$2bn guaranteed MTN
ONCOLOGY. companies account for 63.6% of the total programme.
The block trade of 26.7m shares, or 2.9% outstanding amount of Hong Kong-listed Mizuho Securities, SMBC Nikko, UBS,
of outstanding, was priced at the top of the Mingfa’s US$176m 22% 2020s. BNP Paribas, Citigroup, HSBC, JP Morgan,
HK$16.28–$16.50 range, representing a 4.1% In a stock exchange filing on June Standard Chartered Bank, DBS Bank, ICBC
discount to the pre-deal close of HK$17.20 10, Asia Orient said the exchange was International and CMB International were
last Thursday. completed on June 5. Asia Orient now holds joint global coordinators and bookrunners.
Controlling shareholder Rubymab sold US$16m of the 22% 2020s, ASIA STANDARD CommerzBank was a joint lead manager.
14.5m shares, according to a company INTERNATIONAL US$73.6m and ASIA STANDARD The company owns and manages Three
announcement and faces a 12-month HOTEL GROUP US$22.4m. Garden Road and Langham Place in Hong
lock-up. The shares of embattled Chinese Kong.
The other vendors are PAG Growth and property developer Mingfa have been
Classic Insight Project Company, which suspended from trading since April 1 2016.
have a 90-day lock-up. The 11% 2020s were issued in May 2017. SYNDICATED LOANS
Morgan Stanley was the bookrunner. Asia Orient, together with its two listed
units, are regular buyers of high-yield › FAR EAST HORIZON RETURNS WITH REFI
› WEIGAO GROUP READIES STAR SPIN-OFF Chinese property bonds. Asia Orient said in
the filing that the bond exchange “forms FAR EAST HORIZONhas approached relationship
Hong Kong-listed SHANDONG WEIGAO GROUP part of the investing activities” of the three banks for a US$1.4bn three-year
MEDICAL POLYMER plans to spin off subsidiary companies and “were conducted in their refinancing, larger than the borrowing it
SHANDONG WEIGAO ORTHOPEDIC DEVICE on the ordinary and usual course of business”. completed a year ago.

International Financing Review Asia June 13 2020 27

 The Hong Kong-listed financial services &ARû%ASTû(ORIZONûTOû""ûFROMû"""¦ûWITHûAû unencumbered assets, which could be used
company is offering an interest margin negative outlook, over expectations that the for asset-backed securitisation, and a large
of 140bp over Libor for the latest facility company’s asset quality and profitability amount of unused credit lines to support
– same as that on its US$1bn-equivalent will deteriorate, which will lead to higher its funding needs and reduce short-term
three-year loan signed in May last year. leverage as the operating environment has refinancing risks.”
Relationship banks are working on significantly weakened. Sinochem Group owns about 23% of the
credit approvals to form the arranger The negative outlook reflects the borrower.
group. potential for further pressure on Far
The US$1bn-equivalent three-year loan East Horizon’s credit profile from the › DP WORLD’S LOAN IN SECONDARY
closed in May last year had 16 lenders significant slowdown in economic activity
participating, including China Everbright if the Covid-19 pandemic lasts longer than Pieces of a US$9bn financing backing the
Bank Hong Kong branch, CMB Wing Lung expected. buyout of UAE global port operator DP
Bank, CTBC Bank, Hang Seng Bank, MUFG Fitch added that “Far East Horizon’s World are being offered in secondary in
and Westpac Banking Corp as MLABs. funding and liquidity profile remains Asia.
The facility paid a top-level all-in pricing adequate, supported by its established The deal comprises three acquisition
of 160.18bp based on the margin of 140bp franchise and market position, although finance facilities with tenors of up to three
over Libor or Hibor and an average life of funding conditions could become more years, as well as a US$3bn five-year term
2.775 years. challenging for the sector as a whole. loan that pays an interest margin of 175bp
In April this year, Fitch downgraded The company also has a high level of over Libor.

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28 International Financing Review Asia June 13 2020

 COUNTRY REPORT HONG KONG

PORTS AND FREE ZONE WORLD FZE is the while lead arrangers get an all-in pricing of The borrowing offers an all-in pricing of
borrower. 170.5bp for US$15m–$24m via a 30bp fee. around 125bp and will refinance a bridge
Proceeds raised will finance the Commitments are due by July 17. loan that backed the acquisition of a land
acquisition of a 19.55% stake of DP World The guarantor is parent company Lei parcel in Kai Tak last year.
by Port and Free Zone World, provide a Shing Hong. Funds are for working capital Proceeds from the new loan will also go
one-time dividend distribution to Dubai and refinancing purposes. towards residential development of the site.
World, and refinance debt at the PFZW and The borrower last tapped the loan CR Land and Poly Property are
DP World level. market for a US$310m-equivalent guaranteeing the loan, and the land parcel
Citigroup and Deutsche Bank have fully borrowing in December 2018. will serve as security.
underwritten the facility. Far Eastern International Bank also led FAME WELL CREATION, a 65:35 joint venture
In senior syndication, Emirates NBD that deal, which offered a top-level all-in between CR Land and Poly Property,
and First Abu Dhabi Bank joined as active pricing of 180bp via a margin of 160bp over won the Kai Tak site in June 2019 with
bookrunners and mandated lead arrangers, Libor or Hibor and a 57bp fee. a HK$12.91bn bid. The site has an area
while Abu Dhabi Islamic Bank, Bank of The borrower provides mortgage loans of about 9,481 square metres and is
Nova Scotia, Credit Agricole CIB, Dubai against various collateral bases including designated for non-industrial purposes.
Islamic Bank, HSBC, Emirates Islamic Bank, homes, shops, industrial facilities, car CR Land’s last visit to the loan market
JP Morgan, Samba and Standard Chartered parks, advertisement spaces and marine was in November for a HK$8.6bn five-
came in as MLABs. vessels. year club loan from eight lenders for
Last month, the loan was launched into a refinancing and general corporate
targeted general syndication involving less › CMB LENDS TO TAKE BBI LIFE PRIVATE purposes.
than 10 relationship banks. In May, Poly Property obtained a
In February, Dubai announced that China Merchants Bank is providing a HK$3.9bn 364-day term loan from three
Port and Free Zone World, a wholly HK$900m bilateral loan to back the banks, with China Citic Bank International
owned subsidiary of state investment privatisation of BBI LIFE SCIENCE, which was as the mandated lead arranger and
vehicle Dubai World, would buy publicly completed last Monday. bookrunner.
listed shares of DP World at a US$13.9bn The company was delisted from the Hong
valuation. Kong stock exchange after a consortium › LINK REIT BANKS ON SUSTAINABILITY
comprising LJ Future and BBI Life Science
› LEI SHING HONG REFI LAUNCHES completed the privatisation, which was LINK FINANCE, a wholly owned special purpose
announced in late April. vehicle of Hong Kong-listed Link REIT, has
Hong Kong-based LEI SHING HONG CREDIT has The deal offered HK$3.50 per share, signed a HK$1bn five-year sustainability-
launched a US$320m-equivalent three-year valuing BBI Life Science at HK$1.96bn, linked loan with OCBC Bank, the company
term loan into general syndication after according to a stock exchange filing. said last Thursday.
attracting four Taiwanese lenders in the Haitong International Capital Ltd was Proceeds will be used for general
senior syndication phase. the financial adviser to LJ Future, a wholly- working capital and corporate funding
Far Eastern International Bank is the original owned unit of LJ Family. purposes.
mandated lead arranger and bookrunner of Incorporated in the British Virgin Islands The interest margin on the facility will
the facility, which can be increased to up to in January, LJ Family is owned by Wang Jin be reduced on a tiered basis subject to
US$400m-equivalent. (41.13%), Wang Luojia (25.32%), Benjamin Link REIT’s environmental, social and
KGI Bank, Mega International Commercial Mai (25.32%) and Claire Si-Jia Lu (8.23%). governance performance.
Bank, Taishin International Bank and Yuanta Both Wang Jin and Wang Luojia are Link REIT’s ESG metrics will be
Commercial Bank joined in senior syndication daughters of BBI Life Science founder and measured by its continued inclusion in
with the same title. chairman Wang Qisong. leading global sustainability indices as
The deal, which can be drawn in Hong Shanghai-headquartered BBI Life Sciences well as improvements in its Global Real
Kong or US dollars, offers identical pricing is an investment holding company engaged Estate Sustainability Benchmark (GRESB)
as the company’s previous loan, paying in the development, manufacture and sales score.
an interest margin of 160bp over Libor or of various life science products used in Link REIT raised a debut A$212m
Hibor, and has a 2.85-year average life. research, and the provision of life science- (US$145m) sustainability-linked loan
The borrower will pay any excess interest related services. in March from DBS Bank. The facility
rate beyond a 50bp difference between was used for general corporate funding
TAIFX and Libor. › KAI TAK SITE JV SEEKS HK$9BN purposes including sustainability
Banks are invited to join at three ticket initiatives.
levels. MLABs receive a top-level all-in A joint venture between China Resources In April, the company obtained a
pricing of 180bp for commitments of Land and Poly Property Group is seeking A$443.95m five-year bilateral loan from
US$40m or more via a 57bp management about HK$9bn through a five-year club loan ANZ that backed its acquisition of a
fee, MLAs earn an all-in pricing of 173.7bp for a residential development in the Kai Tak 10-storey office tower in Sydney’s central
for tickets of US$25m–$39m via a 39bp fee, district in Hong Kong. business district.

www.ifre.com
International Financing Review Asia June 13 2020 29
 of 2019. The potential “fallen angels” have would wind up six Indian debt funds worth
around US$12.3bn of rated and unrated a total of US$4bn due to a drop in bond
INDIA bonds maturing through 2021. market liquidity and a sharp rise in investor
Six companies – all government-related redemptions following a nationwide
issuers from India’s oil and gas sector – lockdown to rein in the coronavirus
DEBT CAPITAL MARKETS joined the list following the downgrade of pandemic.
India’s sovereign rating to Baa3 negative The announcement sparked panic in
› SBI GETS NOD FOR DOLLAR BONDS on June 1 from Baa2, although their the Indian debt market, exacerbating
fundamental credit profiles remain intact, redemptions from credit funds.
STATE BANK OF INDIA has received board Moody’s said. Investors filed petitions in various courts
approval to raise up to US$1.5bn from “The rapid and wide spread of the against the winding up of schemes without
offshore bonds in one or more tranches, coronavirus pandemic, deteriorating global their permission, arguing that the asset
according to an exchange filing. economic outlook, falling oil prices and manager had engaged in excessively risky
The notes will be issued in Reg S/144A asset price declines are creating a severe investment practices.
format via public or private placement in and extensive credit shock across many Separately, India’s market regulator said
US dollars or another convertible currency sectors, regions and markets,” Moody’s said. on May 20 that the units of mutual fund
before the end of the fiscal year on March “If the number of fallen angels were schemes that are being wound up can be
31 2021. to rise, their refinancing needs have the listed on a stock exchange, giving investors
Credit Suisse estimates that Indian banks potential to crowd out lower-rated companies an alternative option for exiting their
must raise US$20bn of capital, including and increase their refinancing costs.” investments.
US$10bn–$13bn among public sector banks, Moody’s said the list of 21 companies
as they look to shore up capital buffers. represented about 10% of the Asian › HDFC TARGETS 10-YEAR BONDS AT 7.25%
investment-grade market, still below the
› PFC SENDS RFP FOR DOLLAR BONDS record 16% in May 2009. HOUSING DEVELOPMENT FINANCE CORP is planning
Asian issuers that have slid into the to raise up to Rs40bn from 10-year bonds at
POWER FINANCE CORP has sent banks a request for crossover zone this year include property 7.25%, according to a market source.
proposals for a potential Reg S/144A US dollar owners Yuexiu REIT, Ascott Residence India’s largest private non-bank lender
bond issue, according to market sources. Trust, Frasers Hospitality Trust and has asked investors to place bids on NSE’s
The tenor and size will be decided after Mapletree North Asia Commercial Trust. electronic platform on June 15 from
the appointment of banks. Moody’s also put Geely Automobile 11:00am to 12:00pm India time.
Spreads for Indian investment-grade Holdings, Nexteer Automotive Group, It is targeting Rs21bn plus a greenshoe
issuers have tightened after an initial knee- Yanfeng Global Automotive Interior System amount of Rs19bn.
jerk reaction to Moody’s downgrade this and GLP on review for a downgrade to Axis Bank, Barclays Bank and ICICI Bank are
month of India to Baa3 from Baa2, with an junk, while it has a negative outlook on said to be the arrangers.
unchanged negative outlook. Hong Kong trading company Li & Fung and HDFC is yet to make an official
PFC is rated Baa3/BBB–/BBB–, according Korea’s Hyundai Steel. announcement on the planned bond sale.
to Refinitiv data. On June 10, it raised Rs50bn from 18-
“Although growth concerns remain for › FRANKLIN DELAYS VOTE ON INDIA FUNDS month bonds at 6.22%.
India for the next few months because
of the lockdown, some investment-grade FRANKLIN TEMPLETON has put its plans to wind › SIKKA PORTS TO SELL RS20BN BONDS
issuers may come back to the dollar bond up six funds on hold following an Indian
market because of lack of supply and court order last week to suspend the SIKKA PORTS & TERMINALS is planning to raise up
tightening of spreads,” said a DCM banker. procedure until the results of a forensic to Rs20bn from three-year bonds at 7.2%,
The spread on PFC’s 3.95% April 2030 audit are ready. according to a market source.
bonds tightened by 44bp to 367bp since The asset manager said that, pursuant The issuer has asked investors to place
June 2, according to Refinitiv data. to the Gujarat High Court order dated bids on BSE’s electronic platform on June
In the domestic market, PFC raised June 8, the electronic voting scheduled for 15 from 9am to 10am India time. It is
Rs55.24bn (US$731m) from two-tranche June 9 to June 11 on the winding up of the targeting Rs15bn plus a greenshoe amount
bonds, according to a BSE filing. schemes has been suspended, according to of Rs5bn.
It has fixed the yield at 6.72% for a three- the circular on its website. The bonds are rated AAA by Crisil and
year tranche of Rs22.06bn and 7.75% for a The court order said, “amidst the Care.
10-year piece of Rs33.18bn. allegation of mismanagement of funds Separately, IRB INFRASTRUCTURE DEVELOPERS
and fraud, the unit-holders would not is targeting Rs3bn from five-year bonds
› MOODY’S SEES FALLEN ANGEL RISKS be having the opportunity of informed at 9.55%. India Ratings has assigned a A+
decision making while casting the e-votes rating to the notes.
The number of Asian companies most for the option given by the applicants.” Both issuers are yet to make an official
at risk of losing their investment-grade No winding up process can be concluded announcement on their planned bond sales.
ratings has climbed to a record, according without the consent of the unitholders,
to Moody’s, as a result of the coronavirus according to the order. › NEEPCO SETS YIELD ON EIGHT-YEAR BONDS
pandemic and the agency’s recent The asset manager had planned to
downgrade of India’s sovereign rating. conduct electronic voting among 300,000 NORTH EASTERN ELECTRIC POWER CORP has fixed
Moody’s now rates 21 Asian non-financial unit holders, asking them if the winding up the yield at 7.55% for a Rs5bn offering of
companies at Baa3 with a negative outlook process should be managed by the funds’ eight-year bonds, according to a BSE filing.
or under review for a downgrade, up from trustees or a third party. It was targeting Rs500m plus a greenshoe
15 at the end of May and eight at the end On April 24, Franklin Templeton said it option of Rs4.5bn.

30 International Financing Review Asia June 13 2020

 COUNTRY REPORT INDONESIA

The bonds are rated AA by Icra and Care 16. Icra has assigned a AA+ rating to the ICICI Securities and Nomura are the lead
Ratings. bonds. managers.
The notes have a call option at the end of Meanwhile INDIABULLS HOUSING FINANCE raised Happiest Minds provides information
the fifth year and a staggered redemption Rs2bn from December 10 2021 bonds at technology services for clients in the retail,
of 25% from year 5.5 onwards. 9.00%. They are rated AA by Crisil and Care. consumer packaged goods, e-commerce,
The interest on the bonds will be paid TATA MOTORS FINANCE printed Rs5bn two- banking, insurance, transportation and
semi-annually. year nine-month notes at 8.65%, the hospitality sectors.
bonds are rated AA by Icra and Care. AK
› NABHA POWER TO ISSUE BONDS AGAIN Capital Services, SBI Capital Markets, Trust › MAHINDRA FINANCE HIRES BANKS
Investment Advisor, SPA Securities, HDFC Bank,
NABHA POWER is seeking bids to raise up to Derivium Tradition Securities, ICICI Securities MAHINDRA & MAHINDRA FINANCIAL SERVICES has
Rs5bn from three-year bonds at 7.35% after Primary Dealership and LKP Securities are the hired Axis, BNP Paribas, HDFC Securities, HSBC,
it printed Rs3bn two-year bonds at 7.15% arrangers. ICICI Securities, Kotak, Nomura and SBI Capital
last week, according to a market source. SUNDARAM FINANCE printed Rs9.5bn from Markets to work on an up to Rs35bn rights
It is targeting Rs2.5bn plus a greenshoe two-tranche bonds. It raised Rs5bn from issue targeted for next month.
option of the same amount. The issuer has three-year bonds at 6.92% and Rs4.5bn from Details on the record date, timing,
asked investors to place bids on the BSE’s one-year 10-month piece at 7.33%. The entitlement ratio and pricing will be
electronic platform on June 15 from 9:30am bonds are rated AAA by Crisil. provided later.
to 10:30am. L&T FINANCE sold Rs3bn June 12 2023 notes, It is raising capital to strengthen its
The bonds are rated AAA by Icra. rated AAA by Crisil, at 7.70%. balance sheet as the Covid-19 pandemic
The issuer is yet to make an official MANAPPURAM FINANCE, which lends mainly is likely to increase loan defaults by
announcement on the planned bond sale. against gold, issued Rs2.5bn 8.75% 18- customers.
month bonds rated AA by Care. Mahindra Finance shares are down 52%
› NABARD NABS RS20BN WITH TAP Mahindra Finance and Cholamandalam year to date.
are yet to make an official announcement
NATIONAL BANK FOR AGRICULTURE AND RURAL on the bond sales. › DCB BANK PLANS QIP SHARE SALE
DEVELOPMENT has raised Rs20bn from a tap of
July 2023 bonds at a clean price of 102.9644 DCB BANK is planning a qualified institutional
to yield 5.35%. EQUITY CAPITAL MARKETS placement of up to Rs5bn, subject to
The state-owned issuer was targeting shareholder approval.
Rs5bn plus a greenshoe amount of Rs15bn. › SHRIRAM TRANSPORT EYES RIGHTS ISSUE Details on the timing and syndicate will
India Ratings and Icra have assigned a be disclosed later.
AAA rating to the bonds. Commercial vehicle financier SHRIRAM The private sector bank is raising the
The issuer is yet to make an official TRANSPORT FINANCE is planning a rights issue funds to strengthen its balance sheet.
announcement on the bond sale. of up to Rs20bn (US$264m) in the second DCB Bank’s net profit fell to Rs688m in
half of the year, people with knowledge of the quarter to March 31, down 29% from
› INDIAN NBFCS LINE UP BONDS the transaction said. Rs963m a year earlier.
The company is raising funds to The bank raised Rs3.78bn via a QIP in
Indian non-bank lenders are raising a strengthen its balance sheet amid the 2017 at Rs174 per share.
total of Rs43.5bn from the domestic bond Covid-19 pandemic and India’s nationwide DCB Bank shares are down 57% year to
market. lockdown since March. date.
MAHINDRA AND MAHINDRA FINANCIAL SERVICES ICICI Securities is working on the
aims to raise Rs15.5bn from two-part transaction and other banks are likely to
bonds, according to a market source. The join.
non-bank lender is targeting Rs500m plus The company last raised Rs5.84bn
a greenshoe amount of Rs5bn from a two- through a qualified institutional placement INDONESIA
year tranche at 6.95% and Rs2.5bn plus a in 2010.
greenshoe amount of Rs7.5bn from a three- Shriram Transport shares are down 47%
year piece at 7.25%. year to date. DEBT CAPITAL MARKETS
The issuer has asked investors to place
bids on the BSE’s electronic platform on › HAPPIEST MINDS SEEKS US$100M IPO › PEGADAIAN TO ISSUE THREE-TRANCHER
June 15 from 10:00am to 11:30am India
time. India Ratings has assigned a AAA HAPPIEST MINDS TECHNOLOGIEShas filed a draft Indonesian state-owned auction house
rating to the bonds. prospectus for an IPO of around US$100m PEGADAIAN plans to raise Rp1.125trn
CHOLAMANDALAM INVESTMENT AND FINANCE plans and is targeting a launch in the fourth (US$81m) from three-tranche bonds,
to raise Rs6bn from triple-tranche bonds. quarter. according to the offer document.
The non-banking financial company is Primary shares totalling Rs1.1bn and The deal includes a Rp375bn sukuk
targeting Rs1bn plus a greenshoe of the 35.7m secondary shares will be sold in the mudaraba portion. The indicative price
same amount for each tranche. It has set IPO, according to a term-sheet. Controlling ranges are 6.25%–7.25% for a 370-day
the yields at 6.74%, 6.93% and 7.2% for shareholder Ashok Soota and JP Morgan tranche, 7.15%–8.15% for a three-year piece,
the notes maturing on August 17 2021, Asset Management are the vendors of the and 7.50%–8.60% for a five-year portion
December 17 2021 and June 17 2022 secondary shares. with conventional and sukuk parts.
respectively. Institutional buyers will be allocated 75% Bookbuilding will close on June 16. The
The issuer has asked investors to place of the offer, high-net-worth investors 15% pay-in will take place on July 7.
bids on NSE’s electronic platform on June and retail investors 10%. Pegadaian has appointed Bahana, BNI,

International Financing Review Asia June 13 2020 31

Danareksa, IndoPremier and Mandiri Sekuritas have agreed to amend the terms, giving it NUSANTARA CITRA shares at Rp920 each to a
as lead arrangers. breathing room as travel restrictions weigh group of foreign investors, a person with
The funds will be used for working on the airline industry. knowledge of the transaction said.
capital. Following the approval, the carrier will Around 533.2m shares or 4.3% of the
Pefindo has assigned a AAA rating to the extend the maturity by three years and waive existing capital were sold in the block deal
secured bonds. covenants until operations return to normal. at an 8.9% discount to the pre-deal close of
Holders of 89% of the sukuk had Rp1,010.
› SMF TARGETS THREE-PART BONDS approved the proposal as of the early-bird Global Mediacom owned a 53.55% stake
deadline of June 1. before the transaction.
SARANA MULTIGRIYA FINANSIAL aims to raise The airline offered to pay 1.25% of CLSA was the sole placement agent.
Rp1.15trn from three-tranche bonds, principal amount to sukuk holders who
according to a source close to the plan. gave consent to the proposal by June 1. This
The issuance includes a Rp150bn sukuk payment dropped to 0.5% for those who
portion. gave approval after June 1 but by June 8.
The Indonesian state-owned mortgage Garuda, which is 60% state-owned, is in JAPAN
provider has put out indicative yield ranges discussions with the government about a
of 6.25%–7.5% for a one-year piece and possible bridge loan, but nothing has been
7.75%–9% for a five-year tranche for both officially confirmed. SYNDICATED LOANS
the conventional and sukuk portions. PJT Partners was financial adviser to
The books will close on June 24. Garuda and Allen & Overy was legal adviser. › ARCLAND SAKAMOTO FUNDS M&A
The notes are rated AAA by Pefindo. Clifford Chance was legal adviser to an ad
Bahana, BNI, Danareksa, IndoPremier, RHB hoc committee of investors that holds 28% ARCLAND SAKAMOTO is set to raise a one-year
and Trimegah Sekuritas are the lead arrangers of the sukuk. bridge loan of up to ¥143.6bn (US$1.34bn)
for the offering. The measures required approval by 75% to back its planned acquisition of Lixil Viva,
The issuer is yet to make an official of those present at a meeting comprised of the Niigata-based home improvement store
announcement on the planned bond sale. holders of at least 75% of the sukuk. operator said in statements last week.
Sumitomo Mitsui Banking Corp is the sole
lender of the loan, which is secured with
RESTRUCTURING EQUITY CAPITAL MARKETS Lixil Viva shares.
The borrowing is spit into a ¥109.6bn
› GARUDA EXTENSION APPROVED › GLOBAL MEDIACOM SELLS MNC BLOCK term loan for the acquisition and a ¥34bn
term loan B for refinancing existing debt at
said holders of 90.88% of
GARUDA INDONESIA Controlling shareholder Global Mediacom the target.
its US$500m 5.95% sukuk due on June 3 has sold Rp491bn (US$35m) of MEDIA Arcland Sakamoto launched a ¥2,600 per

Geo Energy strikes it lucky

„ Bonds Indonesian miner says new coal discovery might meet reserves target, allowing put option to lapse

GEO ENERGY RESOURCES said that holders of Holders of US$20.86m of the bonds had Energy acquisition, but the collapse of the
its US dollar bonds had not consented to a tendered them by the early-bird deadline of agreement left it looking to either make
proposal intended to remove a put option, June 4. another acquisition or change the terms of
but that a new discovery might mean it does Deutsche Bank was dealer manager for the notes.
not need to redeem the bonds early anyway. the consent solicitation and holds the same Geo Energy had 74.5 million tons of
The coal miner had offered holders of its role for the tender offer. Morrow Sodali is reserves at the end of March, and the leases
US$154.017m 8% bonds due 2022 a cash information and tender agent. on its two biggest mines, run by subsidiaries
payment of US$10 per US$1,000 of principal When the company issued the dollar Sungai Danau Jaya and Tanah Bumbu
amount if they consented to amend the bonds, it had agreed to acquire two mines Resources, expire in 2022.
terms. The proposed amendments would from Titan Global Energy, but the transaction Fortuitously, the company said in an
have allowed Geo to take on new debt and was terminated on April 1 after being on hold announcement on June 5 that preliminary
removed a clause that gives investors the for months. exploration carried out in May by SMG
option to redeem the bonds in April 2021. Geo Energy needs to have 80 million Consultants at one of its mines in Kalimantan
The company needed holders of 75% of the tons of coal reserves by April 4 2021, as had revealed reserves of a further 29 million
bonds to give their consent in order to make well as a production operations permit that tons. It is also in talks with the Indonesian
the changes. expires no earlier than October 4 2025, authorities to extend its permits for the
The consent solicitation ran alongside a otherwise bondholders have the right to SDJ and TBR mines by five and six years,
tender offer for the bonds, which expires on trigger a put option. If its reserves reach respectively.
June 18. Geo offered US$430 per US$1,000 120 million tons, the put option will be As a result, Geo said the put option on the
of face value for holders who tendered by removed. bonds may fall away whether or not it makes
June 4, and U$$400 for those who tendered The company would have met these another acquisition by April 2021.
after that date but by June 18. targets if it had completed the Titan Global DANIEL STANTON

32 International Financing Review Asia June 13 2020

 COUNTRY REPORT MYANMAR

The Malaysian financial institution owns

MGM chips in to comeback CIMB Bank, one of the three largest banks
in the country.

„ Bonds Macau casino operators test waters with high-yield bonds › PRASARANA PLANS SUKUK RETURN
MGM CHINA last Thursday priced a US$500m MGM China’s casinos resumed full operations State-owned PRASARANA MALAYSIA plans to sell
five-year non-call two bond at par to yield on March 20 with additional safety measures long-dated sukuk of 15 and/or 25 years to
5.25%, inside initial guidance of 5.625% area, such as fewer seats at gaming tables and a raise up to M$1.5bn.
just as a rival casino operator announced a greater distance between slot machines. Affin Hwang Investment Bank, AmInvestment
new deal. In the two months ended May 31, MGM Bank, CIMB, Kenanga Investment Bank and
The 144A/Reg S deal has expected ratings China lost an average of US$61.2m per Maybank are joint lead managers for the
of Ba3/BB– (Moody’s/S&P), in line with the month, measured in property Ebitda terms, deal.
issuer, making it the first high yield deal of the compared with an average monthly profit of The unrated sukuk will be guaranteed
year from the Macau casino sector. US$107.6m in the same period in 2019. It had by the Government of Malaysia and will
Nomura put fair value at around 5%, based cash of US$265m and US$676m of undrawn be issued off a M$10bn sukuk murabaha
on the outstanding MGM China 2024 and loans at the end of March. programme.
2026 bonds, which were quoted at yields of Proceeds from the offering will be used to The road and highway construction
4.76% and 5.26% mid. repay part of its revolving credit facility and services provider is planning to open the
Final guidance had already been set when for general corporate purposes. books as early as the week of June 22.
peer WYNN MACAU, rated B1/B+ (Moody’s/ Bank of America was sole global In February, Prasarana sold M$3.5bn of
Fitch), announced price talk of 5.5% area for coordinator for the MGM China trade. ICBC seven to 30-year sukuk.
a US$750m 5.5-year non-call two, which was (Macau), Bank of Communications, Macau
set to price in New York hours on Friday. branch, Bank of China, Macau branch,
Triple B rated SANDS CHINA had reopened Barclays, BNP Paribas, JP Morgan, SMBC SYNDICATED LOANS
the US dollar market for Macau casino credits Nikko and UBS were joint bookrunners. Scotia
with a US$1.5bn dual-tranche Yankee trade Capital and Union Gaming Securities Asia › IGB COMMERCIAL REIT PLANS LISTING
on June 2 that repriced its curve. were co-managers.
MGM China owns and operates the MGM The new bonds were quoted at a cash price IGB COMMERCIAL REITwill list 1.23bn new units
Macau and MGM Cotai casino, hotel and of 100.1 on Friday, according to MarketAxess. on Bursa Malaysia at an illustrative price
entertainment resorts in Macau. New York- Deutsche Bank is sole global coordinator of M$1 each to raise M$1.23bn (US$289m),
listed MGM Resorts International holds a and lead left bookrunner for the Wynn Macau parent IGB said in a stock exchange filing.
majority stake in MGM China, and investors deal. Banco Nacional Ultramarino, Bank of The IPO will be completed by the fourth
can put the bonds at a cash price of 101 if China Macau branch, Bank of Communications quarter.
there is a change of control. There is also Macau branch, BNP Paribas, BOCI Asia, Bank Up to 945m units will be reserved for
a put option at par if MGM China loses its of America, DBS, ICBC (Macau), JP Morgan, IGB shareholders and 282m will be sold to
gaming licence. Scotia Capital, SMBC Nikko and UOB are the institutional and retail investors.
Macau closed casinos for a 15-day period in other joint bookrunners. Existing shareholders are entitled to two
February to prevent the spread of coronavirus. DANIEL STANTON shares of IGB Commercial REIT for every
five IGB shares.
Ten office blocks and retail space worth
M$3.15bn will be injected into the REIT.
share offer for Lixil Viva on Wednesday. JAL’s previous aircraft financing was Most of these properties are located in
The offer ends on July 21. a ¥12bn borrowing, also with a JBIC Kuala Lumpur’s Mid Valley City.
Luxury toilet maker LIXIL Group has guarantee, in February. Hong Leong is the adviser to the listing.
agreed to sell its entire 53% interest in its
Saitama-based home improvement store unit.
Last month, Lixil Group announced it
would sell Italian maker of curtain walls
Permasteelisa, which it bought for about MALAYSIA MYANMAR
¥60bn in 2011, to US construction group
Atlas Holdings for an undisclosed amount.
DEBT CAPITAL MARKETS SYNDICATED LOANS
› JAL LANDS ¥88BN AIRCRAFT FINANCING
› CIMB GROUP COMES IN THREES › EMERGING TOWNS & CITIES SIGNS LOAN
JAPAN AIRLINEShas signed a ¥88.479bn 10-year
aircraft financing, its second of the year. CIMB GROUP HOLDINGS has raised M$350m Real estate developer EMERGING TOWNS & CITIES
Japan Bank for International Cooperation (US$82m) from a private placement of three- SINGAPORE has obtained a US$50m dual-
is providing a guarantee for the borrowing, year bonds priced at par to yield 3.12%. currency syndicated financing backing the
which finances JAL’s purchase of eight The notes, rated AA1 by RAM, settled last development of the Golden City project in
aircraft from Airbus. Friday via sole lead manager CIMB Investment Myanmar, according to a company filing on
MUFG and Mizuho Bank were the Bank. Proceeds will be used to refinance June 8.
mandated lead arrangers, while Bank of debt and fund asset acquisitions, as well as Industrial and Commercial Bank of China
Kyoto and Sumitomo Mitsui Banking Corp for capital expenditure and working capital Yangon branch and Myanmar’s Kanbawza
joined in syndication. needs. Bank led the secured deal, which comprises

International Financing Review Asia June 13 2020 33

a US$47m five-year term loan and a › MUNIFIN KAURI NETS NZ$150M The company expects to be in
MMK4.5bn (US$3m) three-year facility. compliance with its normal covenant levels
The tranches pay interest margins of Finland’s MUNICIPALITY FINANCE, rated Aa1/AA+ at June.
100bp over Libor and CBM (Central Bank of (Moody’s/S&P), raised NZ$150m last Friday Should Fletcher Building need to rely on
Myanmar) reference rate, respectively. from a three-year Kauri bond sale arranged the more favourable covenant levels, it will
Golden Land Real Estate Development by BNZ. not pay a dividend until it is in compliance
and Uni Global Power are the borrowers of The 0.625% June 26 2023s priced at with and agrees to be tested at normal
the financing, which will also be used for 99.70968427 to yield 0.723%, in line with levels.
refinancing purposes. mid-swaps plus 46bp guidance and 39bp The company has around NZ$1.5bn in
Security for the loan comprises certain over the April 2023 NZGB. available liquidity and a leverage ratio of
assets relating to the Golden City project The deal takes year-to-date Kauri issuance about 0.8x, below its target of 1x–2x.
located in the Yankin township of Yangon up to NZ$2.365bn from six SSAs over eight
and all the shares held by UGP in Golden transactions.
Land, representing 70% of the entire issued This compares with NZ$3.325bn of Kauri EQUITY CAPITAL MARKETS
and paid-up share capital of the latter. supply from nine transactions in the whole
Singapore-listed ET&CS will provide a of 2019, which was well down from 2018’s › INFRATIL COMPLETES SHARE PLACEMENT
corporate guarantee. issuance total of NZ$6.15bn.
The facility agreement is not expected to The annual record of NZ$6.3bn was set in INFRATIL has raised NZ$250m (US$161m)
have any material impact on the company’s 2014 and repeated in 2015. from a share placement priced at NZ$4.76
earnings or net tangible assets for the per share.
current financial year ending December 31 The infrastructure investment company
2020. SYNDICATED LOANS sold 52.5m new shares, or 8% of existing
Incorporated in October 1980 and issued capital, at a discount of 8% to the
formerly known as China Titanium, ET&CS › RYMAN HEALTHCARE CLOSES LOAN pre-deal close of NZ$5.175.
focuses on developing real estate assets in The placement was supported by existing
emerging markets, primarily in Myanmar. New Zealand-listed age care and retirement and new institutional investors in local
village operator RYMAN HEALTHCARE has closed and offshore markets, as well as clients of
a A$200m (US$140m) five-year dual-tranche brokerage firms.
loan. Infratil is raising an extra NZ$50m from
Sole mandated lead arranger and retail investors through a share purchase
NEW ZEALAND bookrunner Commonwealth Bank of Australia plan.
ended up with A$160m after Bank of Proceeds will provide additional balance
Baroda joined with a A$40m commitment, sheet flexibility to fund growth investments
DEBT CAPITAL MARKETS according to Refinitiv LPC data. across Infratil’s portfolio companies and
The loan, split into a A$150m piece and a take advantage of new opportunities.
› TREASURY TO OPEN 2024 BENCHMARK A$50m-equivalent portion, was launched in UBS is the sole lead manager and
March offering an interest margin of 185bp underwriter.
The NEW ZEALAND TREASURY (Aaa/AA+/AA+) has over BBSY. It can be drawn in Australian
mandated ANZ, Deutsche Bank, JP Morgan and and New Zealand dollars.
Westpac for a syndicated sale of new May 15 In March, the company also amended
2024 nominal bonds, expected to launch and increased existing revolving credit
this week. facilities totalling A$471m and NZ$1.8bn PHILIPPINES
The Treasury broke its own domestic (US$1.18bn) maturing from January 2021 to
issuance record on April 7, with a NZ$3.5bn April 2025, according to Refinitiv LPC data.
(US$2.28bn) syndicated tap of the 1.5% May DEBT CAPITAL MARKETS
15 2031s which secured an order book in › FLETCHER BUILDING WINS COVENANT
excess of NZ$5bn. › ROBINSONS LAND EYES PESO BONDS
Government bond issuance projections FLETCHER BUILDING’s lenders have agreed
have been ramped up because of the to amend financial covenants through ROBINSONS LAND plans to issue up to Ps20bn
economic impact of the coronavirus. to the end of 2021 if needed as the (US$400m) of fixed-rate bonds, according to
In May gross bond supply forecasts for company experiences an uncertain trading a filing on the Philippine Stock Exchange.
the fiscal years of 2020-21, 2021-22, 2022- environment as a result of the coronavirus The Philippine property developer is
23 and 2023-24 were significantly raised to pandemic. eyeing Ps10bn with an oversubscription
NZ$60bn, NZ$40bn, NZ$35bn and NZ$30bn Under the agreements, Fletcher Building option of Ps10bn for tenors of three and
from NZ$10bn, NZ$8bn, NZ$8bn and may opt to rely on more favourable levels five years.
NZ$6bn previously. for its financial covenants from June 2020 to BDO Capital and Investment Corp, BPI
In addition to next week’s sale, the December 2021, according to filings to the Capital Corp, China Bank Capital Corp, First
Treasury intends to issue a new nominal New Zealand Exchange and the Australian Metro Investment Corp and Standard Chartered
NZGB by syndication between June 30 and Securities Exchange on Wednesday. Bank are joint lead underwriters and
September 30 2020 with a syndicated tap Total interest cover ratio may be lowered bookrunners.
of an existing nominal bond planned in the to 1.5x from the normal level of 2x and The proceeds will be used to partially
same period. senior interest cover ratio to 2.25x from 3x, fund capital expenditure for the next two
Meanwhile size caps for individual with earnings before interest and taxes in years, repay short-term loans maturing
nominal NZGB tranches have been Q4 2020 set at NZ$231m for testing these in the second half of this year and the
increased to NZ$18bn from NZ$12bn. ratios. remainder for general corporate purposes.

34 International Financing Review Asia June 13 2020

 COUNTRY REPORT SINGAPORE

ADB lends US$1bn to Asian sovereigns

„ Loans Pakistan, Philippines received US$500m apiece

The Asian Development Bank has approved appropriately sized personal protective conditional cash transfer program that aims
US$1bn in loans to the governments of THE equipment for women. to help keep children healthy and in school.
ISLAMIC REPUBLIC OF PAKISTAN and THE REPUBLIC The loan will support young entrepreneurs, The Expanded Social Assistance Project
OF THE PHILIPPINES, according to press releases including at least 25% of whom must be will help families maintain health and
last Wednesday. women, through the government’s youth educational gains for their children achieved
The multilateral agency approved a entrepreneur scheme, Kamyab Jawan. under the country’s Pantawid Pamilyang
US$500m loan for Pakistan to help it fight The ADB’s Cares Program will facilitate Pilipino Program (4Ps).
the coronavirus pandemic through the parallel financing of US$500m from the Introduced in 2008, the 4Ps program
delivery of social protection programmes Asian Infrastructure Investment Bank provides cash payments every two months to
to the poor and vulnerable, and a pro-poor and another US$500m from the World about 4.3 million households – as long as the
fiscal stimulus to boost growth and create Bank’s development policy credit program, children meet school attendance targets and
jobs. Securing Human Investments to Foster go for regular health checkups, women avail
The ADB’s Covid-19 Active Response Transformation. of pre and post-natal care, and the parents
and Expenditure Support Program will This follows a US$300m emergency participate in family development sessions.
support Pakistan’s initiatives, including assistance loan from the ADB to Pakistan With this loan, the ADB’s total lending to
cash assistance payments to 3 million daily announced in May to tackle the virus the Philippines so far this year is US$2.6bn,
wage workers, of whom approximately 23% outbreak. already exceeding its record lending of
are women, and cash grants to 7.5 million The Cares Program, totalling a US$20bn US$2.5bn in 2019.
families under the Kifalat social protection package, has also assisted ADB developing This follows a US$750m loan to the
program. member countries such as Afghanistan, country from the Asian Infrastructure
The program will also help fund Bangladesh, Bhutan and Mongolia. Investment Bank to tackle the impact of the
additional ventilators and Covid-19 The ADB has also approved a US$500m coronavirus pandemic announced in May.
protective kits for medical staff, including loan to support the Philippine government’s MARIKO ISHIKAWA

of previous deals, banks will have to submit FKS Food & Agri sources agricultural
bids by Monday with a mandate expected commodities including soybeans, soybean
SINGAPORE on Tuesday. meal, wheat, corn and sugar from around
HDB made its first foray to the markets the world, and ships them to South-East
this year when it increased a seven-year Asia.
DEBT CAPITAL MARKETS 1.76% bond to S$700m from S$600m in It is engaged in a diverse range of
February. business in Indonesia and across the
› OUE COMMERCIAL REIT LINES UP BOND region, including grain importing and sales,
port facility operations, sugar and flour
OUE COMMERCIAL REIT held fixed income SYNDICATED LOANS manufacturing, and the starch business.
investor calls last Tuesday ahead of a
potential Singapore dollar bond offering. › FKS FOOD & AGRI TO LAUNCH US$250M REFI › SEMBCORP MARINE UNIT BAGS LOAN
OCBC and Standard Chartered Bank
arranged the calls. Both are arrangers and Singapore-headquartered FKS FOOD & AGRI A subsidiary of offshore engineering
dealers for a S$200m (US$144m) multi- plans to launch a US$250m five-year company Sembcorp Marine has entered
currency debt issuance programme set up borrowing into general syndication this into a bilateral revolving facility for up to
in March. month with two banks at the top. US$500m.
No bond was launched late last week in The agricultural commodities supplier Sembcorp Marine is providing a
view of unfavourable market conditions. has appointed BNP Paribas and Rabobank guarantee for the loan for ESTALEIRO JURONG
DBS Trustee, the trustee of the REIT, and as the mandated lead arrangers and ARACRUZ, which owns an integrated shipyard
OUE CT Treasury are the issuers under the bookrunners of the loan, which will be in Brazil, the company said on June 5.
programme. used for capital expenditure and general Standard Chartered is the sole lender,
The Singapore-listed REIT owns corporate and refinancing purposes. arranger and agent.
seven properties in the commercial and The two banks were also MLABs on the Under the facility agreement, a
hospitality sectors in Singapore and company’s previous offshore loan in 2017. prepayment will be triggered if Sembcorp
Shanghai. The facility size was increased to US$240m Industries’ ownership in Sembcorp Marine
from US$200m with four banks joining in drops below 50%.
› HDB PLANS RETURN syndication. If this happens, loans and trade
In July 2018, Japan’s Mitsui & Co and facilities totalling approximately S$6.02bn
HOUSING AND DEVELOPMENT BOARD, rated Aaa the Development Bank of Japan jointly (US$4.3bn) as of June 5 may be affected.
by Moody’s, has asked banks to bid on a acquired shares in FKS Food & Agri with Singapore-listed Sembcorp Industries
potential 10-year S$500m bond. a total investment of approximately owned 61% of Sembcorp Marine as at
If the statutory board sticks to the timing US$100m for an equity stake of 8.5%. December 31 2019.

International Financing Review Asia June 13 2020 35

 In September 2018 Frasers Property

ICTSI shrugs off trade slump completed South-East Asia’s first syndicated
green loan, a S$1.2bn five-year borrowing
for the refinancing of Frasers Tower in
„ Bonds Philippine port operator’s 10-year note covered 4.5 times Singapore.
Last September, its unit Frasers Property
Philippine port operator INTERNATIONAL The investor demand came despite Treasury, raised a A$750m (US$520m) five-
CONTAINER TERMINAL SERVICES has printed a the deal being unrated and the negative year term loan that includes a A$500m
US$400m 4.75% 10-year bond that was headlines about port operators in green portion.
more than 4.5 times covered, shrugging off connection with virus containment ANZ, Barclays, First Abu Dhabi Bank,
forecasts of a slump in global trade due to measures. Unctad, the United Nations Mizuho Bank, OCBC Bank and Scotiabank
the coronavirus outbreak. organisation that tracks trade flows, were the mandated lead arrangers,
The senior unsecured notes priced at expects world trade to fall by 27% in the bookrunners and underwriters of the bullet
99.607 to yield 4.8%, which was at the tight second quarter from the first because of the transaction. Barclays was the sole green
end of final guidance and well inside initial pandemic that had already led to a 3% drop coordinator of the deal.
guidance in the 5.25% area. in the first three months of this year.
The Reg S deal drew final orders of over Nomura’s trading desk saw fair value for › PERENNIAL REAL ESTATE RAISES REFI
US$1.85bn from 111 accounts. It also paid a the new 2030s at 4.75%, calling the issuer
negative new issue concession of 5bp–10bp a cross-over candidate if rated, for example, Perennial Real Estate Holdings has raised
compared with similar credits from the between BBB– and BB+. It added that the loans totalling S$425m for refinancing as
Philippines, although there was a new issue bonds should trade about flat to the 2029s well as for working capital needs.
premium of 10bp–15bp compared to its own of Adani Ports and Special Economic Zone, Subsidiary PERENNIAL TREASURY is the
curve. This was calculated by looking at the rated Baa3 by Moody’s, because of ICTSI’s borrower of the two-year secured
40bp difference between five-year and 10- diversified port operations and lower reliance borrowings, the company said on
year Treasury yields then applying this to on the coal supply chain. Nomura also cited Monday.
ICTSI’s 2025 bonds and adding 10bp for the strong domestic technicals in the Philippine According to the Singapore-listed
extra credit risk, according to a banker on the corporate sector. developer’s 2019 annual report, its
deal. The Philippines’ credit profile has borrowings due in 2020 comprised retail
“The bond offered an attractive headline been characterised by a robust economic bonds of S$280m due in April, medium
spread and it was the first non-sovereign performance, strengthening fiscal position term notes of S$100m maturing in July
Philippines dollar credit post Covid-19,” said and limited vulnerability to external shocks and S$180m due in August, secured
the banker. in recent years, according to a Moody’s report loans of S$106m and unsecured loans of
While the new bonds were also priced amid in May, although the virus outbreak presents S$634m.
an overall credit rally, a ICTSI funding official near-term challenges. In April it raised a S$250m bank loan to
said the company’s healthy balance sheet Proceeds of the new bonds will be used partly repay the S$280m 4.55% retail bond
and defensive business structure contributed to refinance and extend the maturity of the maturing that month.
to the strong demand. group’s liabilities, and for general corporate As at December 31 2019, Perennial’s
“There was a reduction in trade volumes purposes. gross borrowings stood at S$3bn, of which
from the lockdown but we were able to retain Asia bought 80%, EMEA 19% and offshore 93.9% were denominated in Singapore
our margin,” the official said. US accounts 1%. Fund managers and asset dollars and the rest in renminbi.
ICTSI’s Ebitda was US$830m in FY19 and managers took 65% of the notes, private The weighted average interest rate on
US$212m in the first quarter of this year, banks and banks 21% and insurers and its borrowings for the financial year was
with a relatively stable margin at 53%–57%, pensions 14%. about 4%, while the weighted average debt
thanks to continued cost improvements, ICTSI develops, manages and operates maturity profile as at end December 2019
according to a note from Nomura analysts. ports in Asia Pacific, the Americas, Europe, was 1.55 years.
The new bonds were quoted 15bp tighter the Middle East and Africa. The real estate owner, developer and
in secondary on their first trading day last Citigroup, Credit Suisse and JP Morgan were manager focuses on large-scale mixed-use
Thursday at 4.65% but were trading weaker joint bookrunners. developments and has a presence in China,
at 4.71% last Friday, according to Tradeweb. JIHYE HWANG Singapore, Malaysia, Indonesia, Myanmar,
Sri Lanka and Ghana.

› FRASERS PROPERTY UNIT GOES GREEN DBS is facility agent, while Maybank and RESTRUCTURING
OCBC are respectively security agent and
A subsidiary of Frasers Property has green loan coordinator, the company said › EZION TRIGGERS EVENT OF DEFAULT
raised a S$350m green loan to finance the in a press release on Tuesday.
development of a condominium in Singapore. The loan follows the Green Loan EZION HOLDINGS’ auditor KPMG has issued a
The borrower is FERNVALE LANE, in which Principles established by the Loan Market disclaimer of opinion on the Singaporean
Frasers Property owns an 80% indirect Association and the Asia Pacific Loan oilfield services provider’s 2019 results,
stake. Market Association on use of proceeds, thereby triggering an event of default on
CSC Land Group (Singapore), a subsidiary project selection, evaluation and reporting. restructured bonds.
of China State Construction Engineering Including the latest financing, the Frasers Ezion gave the warning ahead of
Corp, owns the remaining 20%. Property group has raised around S$4bn in the release of its financial results on
DBS Bank, Maybank and OCBC are the green loans to date, according to the press Wednesday. The company said the auditor’s
lenders. release. disclaimer of opinion was a breach of the

36 International Financing Review Asia June 13 2020

 COUNTRY REPORT SINGAPORE

trust deed for its S$150m (US$108m) 7% declining oil prices and disruptions from time to file restructuring documents under
subordinated perpetual bond and the trust the Covid-19 outbreak will hit cashflows, a scheme of arrangement.
deed for three restructured bond issues. and whether lenders will continue to No updates were available by Friday
The breach is an event of default. support the company. afternoon.
The company said it was confident it was KPMG said that the Ezion group made The cash-strapped Singaporean oil-and-
a going concern as negotiations continue a net loss of US$614.9m during the 2019 gas services company had also applied
with lenders and potential strategic financial year with net current liabilities to extend a moratorium against legal
investor Yinson Holdings to restructure of US$1.54bn. If the restructuring is not proceedings, which expires on June 18.
certain secured bank loans. completed, management expects working The restructuring plans were to have
Although Ezion has outstanding loans capital and shareholders’ equity to remain been submitted to the court by June 5, but
and borrowings of US$1.58bn that have negative for at least the next 12 months. the company could not meet the deadline
been affected by breaches of financial Bank lenders have also not waived any of and asked for a four-week extension.
covenants, it has not received any statutory the breaches on the debt obligations, which The plans had to be revised because of
demand for repayment. means the company faces the threat that a collapse in US crude oil prices and the
Ezion also expects to generate positive the debt could be recalled at any time. Covid-19 pandemic.
cashflows from existing customer contracts “We have not been able to obtain Falcon Energy is restructuring debt
to meet its working capital needs and sufficient evidence to address these including S$50m of bonds due on
interest payments due on debt through the multiple uncertainties,” said KPMG. September 19. Under the current plan,
whole of this year. It is also counting on bondholders have been asked to swap half
support from its bank lenders. › FALCON SEEKS MORE TIME of their investments for equity and convert
Uncertainties remain, though. There the other half into convertible bonds.
are questions over whether the current The Singapore High Court held an online Rajah & Tann Singapore is Falcon’s
restructuring with lenders and Yinson will hearing last Thursday on an application legal adviser and KPMG Services is the
close over the next 12 months, how hard from FALCON ENERGY GROUP to be granted more independent financial adviser.

Lenders seek judicial management for Hyflux

„ Restructuring Utico extends deadline for revised offer as senior bondholders reject new terms

A group of unsecured bank lenders is seeking nine days then to accept an offer that was consultancy Longview International Holdings,
an exemption from a moratorium on legal changed substantially. Under the new offer, which has submitted an expression of
proceedings against HYFLUX to clear the way senior creditors would be paid in Utico stock. interest with an unidentified Chinese partner,
to place it under judicial management. Hyflux has total debt of S$2.8bn. and European water company FCC Aqualia,
The group – referred to as the unsecured In response to questions from Hyflux, which has submitted a letter of interest.
working group – was given clearance by the Utico said that holders of Hyflux’s S$900m The Securities Investors Association
Singapore High Court last week to serve an perpetual bonds and preference shares (P&P) (Singapore) announced on Tuesday that
affidavit on Hyflux by June 12 and a redacted would receive an upfront cash payment, but Aqua Munda is also willing to make an offer
version of the affidavit on other creditors by only if they are “small investors”. It did not for Hyflux’s P&Ps.
June 16. The affidavit will request to exclude give full details, but previously P&P holders “Although Aqua Munda did not provide
the UWG from the moratorium that protects were offered S$1,500 in cash or 50% of any details of their proposed offer to the
Hyflux until July 30. the face value of the bonds, up to a total of P&Ps at the meeting with SIAS, SIAS was
If the request is granted, the group of S$50m for all P&P holders. assured that Aqua Munda will provide, at the
banks will file an application to place the Utico also said that senior unsecured appropriate time, details of their offer and
beleaguered Singaporean water treatment creditors, P&P holders and advisers who are financial capability to meet the acquisition
company under judicial management, which assigned Utico shares under the proposed with also details of their business plans for
will then replace the current management restructuring would be given “recourse for Hyflux,” wrote SIAS.
led by Hyflux founder Olivia Lum. buyback through a call or put mechanism”, Perps and pref shares rank below unsecured
The UWG, owed a combined S$648.7m but gave no details of how this would work or creditors and are likely to receive nothing if
(US$466m), includes Bangkok Bank, BNP how it would be funded. the company is liquidated. However, many of
Paribas, KfW, Mizuho Bank and Standard In a letter written largely in bullet points, Hyflux’s P&Ps were sold to retail investors and
Chartered Bank. The group unsuccessfully it also said that the moratorium must not be it would be an extremely unpopular move with
filed for an exemption in April last year but extended. the Singapore public for an acquiring company
Justice Aedit Abdullah said they could revive Hyflux said that an informal steering to wipe them out in a restructuring.
the application if circumstances changed. committee of holders of its S$265m senior Earlier this month, the Commercial Affairs
Over the past few weeks, a rescue package unsecured bonds had rejected Utico’s revised Department of the Singapore Police Force,
with potential investor Utico lapsed, after proposal because they wanted cash instead the Monetary Authority of Singapore, and
which the United Arab Emirates-based of equity. the Accounting and Corporate Regulatory
company extended the deadline to June 30 In addition to Utico, Hyflux has also been Authority launched an investigation into
from June 4 for Hyflux to accept its revised holding discussions with other potential Hyflux over suspected false and misleading
takeover offer. investors. These are Singapore-based Aqua statements as well as breaches of disclosure
Uitco had changed the terms last month to Munda, which has made an offer to buy requirements and accounting standards.
remove the cash element, giving Hyflux just senior unsecured debt, Singapore-based DANIEL STANTON, KIT YIN BOEY

International Financing Review Asia June 13 2020 37

› MICLYN RESTRUCTURING GETS NOD preference shares will be issued either by Trading of EHT units was voluntarily
New Swiber or another new subsidiary suspended on March 24 after EH-REIT
The Singapore High Court has approved called Equatoriale Energy (EEPL). defaulted on a loan of US$341m. US-based
MICLYN EXPRESS OFFSHORE’s restructuring plans Swiber will need to complete an Urban Commons, the master lessee of EHT’s
under a scheme of arrangement. internal re-organisation of its assets and properties, failed to place security deposits
A moratorium against legal proceedings employees to New Swiber as part of the and make rental payments since December
has also been extended to the date when process towards a definitive agreement. 2019, according to a statement from MAS.
the court’s sanction and approval orders are The re-organisation involves the transfer Separately, EHT said MAS is reviewing
lodged with the Accounting and Corporate of four vessels, a piece of leasehold a proposal from Hong Kong-based FAR EAST
Regulatory Authority of Singapore. Once property, all issued shares in EEPL and CONSORTIUM INTERNATIONAL to take over as EH-
the sanction order is lodged with ACRA, the Pape Engineering, 25% of issued shares in REIT’s manager.
scheme becomes effective under Section Holmen Heavylift Offshore and certain Far East has also been planning a S$500m
210 of the Companies Act. contracts and intellectual property. (US$359m) hospitality REIT IPO on SGX,
In mid-May, Miclyn won majority In addition, Swiber will need to complete comprising hospitality assets in Australia,
consent from bondholders to restructure a restructuring of its debt. The proposal Singapore, Malaysia and the UK.
an outstanding US$150m 8.75% bond into calls for the issuance of redeemable DBS, HSBC and JP Morgan are working on
a US$12.5m 10-year zero-coupon note. convertible bonds to secured creditors, the transaction.
The investors also agreed to waive all which if converted into shares, will give
outstanding unpaid interest on the existing these lenders a 10% stake in New Swiber’s › SEMBCORP MARINE EYES RIGHTS
debt. enlarged total issued shares.
Bondholders will be given a 12.5% stake Unsecured creditors, including holders of Loss-making Singaporean rig builder
in Miclyn’s post-restructuring enlarged S$150m of Swiber’s 6.5% bonds, will swap SEMBCORP MARINE is launching a S$2.1bn
share capital. debt for equity and receive about 12.6% of rights issue backed by parent company
As part of the debt restructuring, a DBS New Swiber’s shares. Sembcorp Industries and state-owned
loan will also be converted into a US$217m The conversion of the RCBs will lower investment firm Temasek Holdings.
five-year loan with a 12-month moratorium Rawabi’s expected stake in New Swiber to The 5-for-1 issue is priced at S$0.20 per
on interest payments. The bank has also around 72%. rights share, or a 76% discount to the pre-
agreed to waive unpaid interest on the loan. deal close of S$0.85.
DBS Bank, which has first priority over Sembcorp Industries will subscribe to
secured assets, is owed US$297m in secured EQUITY CAPITAL MARKETS its S$1.27bn entitlement and an additional
principal amount and US$44.1m in interest. S$230m in case of undersubscription.
Holders of the 8.75% bonds are owed › EAGLE HOSPITALITY TRUST FACES PROBE Temasek is sub-underwriting S$600m of the
interest of US$32.7m. rights with no fee.
The cash-strapped service vessel provider Singapore’s central bank and police force The issuer has seen its business hit by the
was unable to repay the 8.75% senior have opened a joint investigation into EAGLE oil price crash and the Covid-19 pandemic.
secured bonds when they matured on HOSPITALITY TRUST for alleged breaches of This is the second time Temasek is
November 25 2018, or make repayments disclosure requirements. stepping up to back a local rights issue since
on certain senior secured loan facilities due The embattled US-focused REIT said its the coronavirus outbreak, following the
the same month. current directors have attended interviews S$15bn rights issue of Singapore Airlines.
with the Monetary Authority of Singapore In order to subscribe to the rights,
› RAWABI THROWS LIFELINE TO SWIBER as part of the joint investigation. It did not Sembcorp Industries will convert a S$1.5bn
provide further details. subordinated loan extended to Sembcorp
Beleaguered SWIBER HOLDINGS has been The MAS and the police force’s Marine in June 2019 into equity.
thrown a lifeline from Saudi Arabia’s Commercial Affairs Department Subsequent to these transactions,
Rawabi Holding after a binding term-sheet announced the probe on June 5 following Sembcorp Industries proposes to demerge
was signed Monday to pave the way for a a referral by Singapore Exchange Sembcorp Marine through a special share
US$200m investment. Regulation (SGX RegCo). In April, MAS distribution in order to focus on its energy
Under the agreement, Rawabi will and SGX RegCo said they were looking and urban development businesses.
subscribe to US$10m of new ordinary into possible breaches of laws, regulations Sembcorp Industries shareholders will
shares that will give it a 80% stake in New and listing rules by EHT. receive between 427 and 491 Sembcorp
Swiber, a subsidiary recently established by EHT is a stapled trust comprising EH- Marine shares for every 100 Sembcorp
the Singaporean offshore marine services Real Estate Investment Trust and Eagle Industries shares held, with no cash outlay.
company. Hospitality Business Trust, which was Following the rights and share dividend
The remaining US$190m will be in new listed on SGX on May 24 2019 following a issues, Temasek will hold over 29% of
preference shares via a series of tranches US$566m IPO at US$0.78 per unit. It last Sembcorp Marine and 49.3% of Sembcorp
as various milestones are reached. The traded at US$0.137 on March 19. Industries. Currently it has no direct stake

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38 International Financing Review Asia June 13 2020

 COUNTRY REPORT TAIWAN

in Sembcorp Marine and owns 49.45% of businesses shore up their working capital. MARINE CORPis also raising NT$8bn through a
Sembcorp Industries. ComBank is Sri Lanka’s largest private takeout loan with similar conditions.
Both companies will convene bank and has a strong presence in Mega International Commercial Bank,
shareholder meetings in August or wholesale funding and trade finance, which provided the same-sized bridge loan,
September to seek approval. handling approximately 18% of the is preparing to launch the takeout.
DBS Bank is the sole financial adviser to country’s exports and 11% of imports.
Sembcorp Marine for the rights issue and to IFC holds a 4.4% stake in the Colombo- › TEI KO RAISES NT$6.36BN REFI
Sembcorp Industries for the proposed share listed bank.
dividend distribution. Credit Suisse is sole Taiwan-based real estate investment firm
adviser to Temasek. TEI KO CO has raised a NT$6.36bn five-year
Sembcorp Marine shares closed at refinancing, returning to the loan markets
S$0.585 on Thursday and Sembcorp for the fourth time in as many years.
Industries at S$1.98. TAIWAN Taishin International Bank was the
mandated lead arranger and bookrunner
of the transaction, while three other banks
SYNDICATED LOANS joined as MLAs.
The bullet loan offers an interest
SRI LANKA › YANG MING LAUNCHES BRIDGE TAKEOUT margin of 205bp over the 90-day Taibir,
the Taiwan Bills Index Rate for short-term
YANG MING MARINE TRANSPORT has launched an bills compiled by the Taiwan Depository &
SYNDICATED LOANS NT$8bn (US$269m) loan to take out a same- Clearing Corp.
sized bridge financing put in place earlier According to one of the covenants, the
› IFC LENDS US$50M TO COMBANK to help the firm navigate the coronavirus loan-to-value ratio cannot exceed 60%.
environment. Funds are to refinance a NT$7.6bn five-
The International Finance Corp is providing Taiwan Cooperative Bank, which provided the year term loan completed in May 2019.
a US$50m loan to COMMERCIAL BANK OF CEYLON two-year bridge, is arranging the takeout and Taishin also led that borrowing, which
(ComBank) to help small and medium is seeking commitments by July 3. pays a margin of 225bp over Taibir.
businesses in Sri Lanka deal with the The takeout also has a two-year maturity For full allocations, see www.ifre.com.
economic impact of Covid-19, according to with a one-year extension option and offers
a press release on Monday. an interest rate of 29bp over the one-year › LEOFOO TOURISM SIGNS NT$4.25BN LOAN
The multilateral lender plans to lend a post office savings rate.
one-year facility renewable for a total tenor The government is providing credit Taiwan-listed LEOFOO TOURISM GROUP has
of up to two years, according to the IFC’s guarantees for over 80% of the loan size and signed a NT$4.25bn bilateral loan with
investment disclosure. interest subsidies to Yang Ming. Yuanta Commercial Bank.
The loan comes from a US$8bn global The bridge for partially state-owned The five-year facility is for refinancing,
Covid-19 fast-track financing facility Yang Ming Marine was part of a NT$30bn working capital and capital expenditure
under the IFC’s Working Capital Solutions government bailout for the shipping purposes, according to the conglomerate’s
Program, of which US$2bn is for emerging industry announced in late April. filing to the Taiwan Stock Exchange on
market banks to extend credit to help Private sector container shipper EVERGREEN Tuesday.

Chailease units on borrowing spree

„ Loans Cambodian, Singaporean, Thai subsidiaries follow affiliates

Taiwan-listed CHAILEASE HOLDING is on a and a US$100m tranche B. The two tranches Chailease Holding’s Vietnam-based unit
borrowing spree across South-East Asia cannot exceed a combined US$100m. CHAILEASE INTERNATIONAL LEASING has also
with its Cambodian and Thai subsidiaries Tranches A and B offer interest margins launched a three-year loan of up to US$70m
becoming the latest to tap the loan markets. of 120bp and 125bp over Libor, respectively. the week before last. Bank SinoPac is the sole
Mizuho Bank is the coordinator for a loan The borrower will pay any excess interest rate MLAB of the transaction, which has an initial
of around US$100m for Chailease Thailand beyond a 35bp difference between TAIFX and size of US$50m and a US$20m greenshoe.
and is reaching out to relationship banks. Libor. The deal offers a top-level all-in pricing
Chailease’s Cambodian unit is also MLAs joining with US$30m or above earn of 149.05bp based on an interest margin of
sounding the market for a US dollar loan. a top-level all-in pricing of 133.33bp and 130bp over Libor and an upfront fee of 50bp.
The terms of the two borrowings are yet to 138.33bp based on an upfront fee of 40bp for Earlier this month, Chailease International
be determined, but they follow close on the tranches A and B, respectively. Finance Corp, another unit of Chailease
heels of two other loans totalling US$150m Lead arrangers taking US$20m–$29m will Holding, obtained an increased Rmb3.79bn
for Chailease’s Singaporean and Vietnamese receive all-in pricing of 130bp and 135bp via (US$413m) three-year term loan.
units. a 30bp fee. Arrangers joining with US$10m– Mizuho Bank (China) was the sole MLAB of
Mizuho is also the sole mandated lead $19m earn all-in pricing of 126.67bp and that loan, which pays a margin of 85bp over
arranger and bookrunner of a US$100m 131.67bp via a 20bp fee. the one-year loan prime rate. Banks were
three-year bullet loan for the Singaporean Newly established CHAILEASE INTERNATIONAL offered a top-level participation fee of 30bp.
unit, which comprises a US$100m tranche A FINANCIAL SERVICES (SINGAPORE) is the borrower. EVELYNN LIN

International Financing Review Asia June 13 2020 39

 In May, the group closed its 48-year-old of guidance. Initial price guidance on the Thailand, Nomura Pattanasin Securities, RHB
Leofoo Hotel in Taipei’s Zhongshan district respective tranches was 2.8%–3%, 3.3%–3.5% Securities Thailand and Yuanta Securities are
to prepare for a regeneration project and and 3.6%–3.8%. joint lead managers and underwriters.
curb losses caused by the coronavirus Settlement was last Wednesday. Bank of TPI Polene plans to use the proceeds to
pandemic. Ayudhya and Government Savings Bank were refinance about Bt4.2bn of bonds maturing
Leofoo is now planning to convert the the joint lead managers. in July and August.
hotel into a serviced office building and The Thai mass rapid transit and highway
also expand the Leofoo Village Theme Park operator is rated A by Tris, but its outlook
in Hsinchu county. was recently lowered to negative from EQUITY CAPITAL MARKETS
The group, established in 1968, also stable to reflect the rating agency’s
owns the Courtyard by Marriott in Taipei, concerns over the coronavirus outbreak’s › CP FOODS EB RAISES US$275M
Leofoo Resort in Hsinchu county and other adverse impact on BEM’s already high
recreational facilities. leverage and weakening operating cashflow CP Foods Capital has raised US$275m from
in 2020. the sale of a bond exchangeable into shares
Part of the bond proceeds will refinance of CHAROEN POKPHAND FOODS.
a Bt2.5bn 2.62% bond maturing on October The five-year non-put two EB was
21. priced at investor-friendly terms. The
THAILAND coupon was set at the top of the 0%–0.5%
› TPI POLENE CEMENTS PRICING range, the yield-to-maturity at the top
of 1.5%–2.5% range and the exchange
DEBT CAPITAL MARKETS TPI POLENE, rated BBB+ by Tris, has set pricing premium at the bottom of the 15%–25%
on a three-year nine-month bond at par to range.
› BEM PRINTS TRIPLE-TRANCHER yield 4.25% ahead of a public offering at the There was a same-day upsize option of
end of June. US$25m but it was not exercised.
BANGKOK EXPRESSWAY AND METRO has raised The Thai petrochemical and cement The EB will be issued at par, with a put
Bt3bn (US$95m) from a triple-tranche bond producer is targeting a maximum issue size price of 104.08 and a redemption price of
offering after a two-day subscription. of Bt5bn. 110.58.
A four-year tranche, priced at par to The offering to retail and institutional Long-only investors took almost half
yield 2.88%, was set at Bt1bn, a 10-year investors will run from June 29 to July 1. of the deal. There was also support from
3.5% tranche at Bt1.3bn and a 12-year 3.78% Asia Plus Securities, Aira Securities, CIMB existing shareholders and European
piece at Bt700m. Thai Bank, KTB Securities Thailand, Krungthai convertible bond funds.
Pricing came near or at the wide ends Seamico Securities, Maybank Kim Eng Securities UBS was the sole bookrunner.

Thai Oil dual-trancher prices inside curve

„ Bonds Thai Oil sells inside curve despite last minute investor dropout

THAI OIL, rated Baa2/BBB+ (Moody’s/S&P), drastically to over US$2.4bn from 115 volatility has decreased since the end of April.
has raised US$1bn from a two-tranche bond accounts as the market backdrop suddenly In addition, there is limited supply from Thai
offering that priced inside its secondary curve worsened in late Asian hours and US equities issuers which appealed to asset managers
after tightening twice from initial guidance just took a tumble, according to bankers on looking for diversification.
before a sell-off in US markets on Thursday. the deal. The S&P 500 fell almost 6% on Demand was also seen for longer tenors
A 10-year US$400m 2.5% portion priced Thursday, the biggest drop in 12 weeks. than the seven-year bond Thailand’s PTT
at 99.859 to yield 2.516% or Treasuries plus The new 10-year and 30-year notes traded Exploration and Production priced last week.
185bp. Initial guidance had been set at plus wider in secondary on their first trading day PTT, in which the Thai government holds
245bp area and was later revised to 210bp last Friday, in line with the overall market a 51% stake, owns around 48% of Thai Oil. In
area. trading 5bp-10bp wider. The 2030s were the event of a change of control, the coupon
A 30-year US$600m tranche priced at par trading at Treasuries plus 192bp and the on the bonds will increase by 125bp.
to yield 3.75%, inside initial guidance that 2050s at 3.82%. Asia took 83% of the 10-year bond, the US
began at 4.3% area and was revised to 3.95% Subsidiary Thaioil Treasury Center will 9% and EMEA 8%. Asset managers and fund
area. issue the bonds with a guarantee from Thai managers bought 69%, banks 14%, insurers
The South-East Asian oil supplier’s dollar Oil. Issuing bonds through treasury centres and pension funds 14% and private banks,
bonds due 2028 were quoted at a G spread gives Thai companies an exemption on corporates and others 3%.
of 205bp and its 2049s at 3.85%, so leads withholding tax on interest payments. Asia took 73% of the 30-year note, the US
estimated that the final pricing levels of the The 144A/Reg S bonds have expected 14% and EMEA 13%. Asset managers and
new senior unsecured bonds were 10bp– ratings of Baa2/BBB+ (Moody’s/S&P). Both fund managers bought 88%, insurers and
20bp inside the issuer’s secondary curve. rating agencies have a negative outlook, pension funds 9% and banks, private banks
The guidance was revised twice on the due to reduced demand for oil as the global and others 3%.
back of strong orders, which exceeded economy slows because of the coronavirus Bank of America, Citigroup, Standard
US$2.5bn within the first 30 minutes and pandemic. Chartered, ANZ, BNP Paribas and Deutsche
peaked at more than US$7bn. However, one of the leads said there was Bank were joint bookrunners.
However, final combined orders dropped strong investor demand because oil price JIHYE HWANG

40 International Financing Review Asia June 13 2020

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