2011 off to a busy start in the debt markets

Asian debt markets are off to a brisk start in January with the Philippine sovereign and Stats ChipPac launching deals yesterday and several Chinese high-yield issuers lining up to tap investors.

January is off to a roaring start with the Republic of the Philippines and Stats ChipPac both launching bond deals yesterday, and a steadily growing number of high-yield debt deals in the market.

With the Lunar New Year lull expected in a month’s time and a heavy new issuance pipeline building, issuers are keen to push deals out the door and capture a window of opportunity as credit conditions have been relatively sanguine in the days leading up to January.

“It will be a busy start to the year. We expect that Asia ex-Japan G3 bonds could easily raise more than $60 billion this year, compared to the record amount raised last year,” said Scott Bennett, head of Asian credit at Aberdeen Asset Management. “We are seeing greater diversification within the high-yield bond market away from Chinese real estate and we think that high-yield issuance this year could exceed last year,” he added.

According to Dealogic data, $90 billion was raised in the Asia ex-Japan G3 market in 2010, while high-yield issuers sold $18.7 billion of G3 debt.

True to its usual style of being the first out the gate, the Republic of the Philippines (RoP) (Ba3/BB/BB) launched its second benchmark peso global bond yesterday in lightning fashion.

The sovereign was keen to push out its maturity profile with a 25-year benchmark, having priced its inaugural $1 billion-equivalent 10-year peso global last year.

The bonds are US SEC-registered and mature in January 2036. They are denominated in pesos and payable in US dollars.

Citi, Credit Suisse, Deutsche Bank, HSBC, J.P. Morgan and UBS are joint bookrunners. Citi and HSBC are the global co-ordinators.

Also yesterday, Temasek subsidiary Stats ChipPac launched a $200 million five-year non-call-three bond through Deutsche Bank as the sole bookrunner. The expected issue rating is Ba1 (stable) from Moody's and BB+ (stable) from S&P. The company is using the funds to repay an existing term loan facility.

Both the RoP and Stats ChipPac were expected to price late last night.

Meanwhile, a spate of issuance is building in the China high-yield market. This includes names outside the real estate sector, which investors will no doubt welcome. There is talk that a Chinese airline is planning to issue a US dollar bond.

Chinese cotton and spandex fabric supplier Texhong Textile kicked off a roadshow in Hong Kong yesterday for its debut five-year bond, which aims to raise about $200 million. The company will be in Singapore today, London on Friday and Boston/New York on Monday. Deutsche Bank is the sole bookrunner for the Reg-S/144a deal.

Two Chinese companies that completed non-deal roadshows last year are also back in the market with bonds.

The first is Hong Kong-listed China SCE Property, which is in the market with a synthetic offshore renminbi bond that could price today. The deal will be the second synthetic offshore renminbi bond after Shui On Land's Rmb3 billion ($450 million) three-year bond in December. The Fujian-headquartered company held a roadshow in Hong Kong yesterday and will be in Singapore today. The roadshow will also travel to Europe and the US.

The second is Hong Kong-listed China South City Holdings, which is in the market with a senior US dollar deal. The five-year bonds are callable after the third year and an unofficial price whisper yesterday pointed to a yield in the mid-14% range. The operator of integrated logistics and trade centres in China held investor meetings in Hong Kong, Singapore and London in late November but held off launching a transaction amid volatile market conditions. BOC International and UBS are the joint bookrunners. The deal is expected to price as early as this week.

Also in the first quarter, Korean issuers are expected come to market after the Lunar New Year, while Indian companies and banks, including the likes of Union Bank of India, could embark on another wave of US dollar bond issues to refinance debt or to fund acquisitions.

¬ Haymarket Media Limited. All rights reserved.
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