Asian dollar bonds; from zero to trio

After a dismal Wednesday, Chinese developer Jingrui Holdings, Indonesian ports operator Perlindo, and Korean energy firm Korea Resources collectively raise $2.1b worth of bonds.
Indonesian-based Perlindo markets its first dollar bond in 18 years
Indonesian-based Perlindo markets its first dollar bond in 18 years

After a dismal Wednesday in which there was zero greenback activity, Asian debt capital markets have sprung back to life on Thursday with a triple dollar helping worth $2.1 billion.

Chinese developer Jingrui Holdings sold a $150 million three-year bond at 13.25%, 25 basis points tighter than the initial yield guidance on Thursday night, while Indonesian ports operator Pelabuhan Indonesia II (Perlindo) priced $1.1 billion 10- and $500 million 30-year notes at 4.375% and 5.5% respectively, tighter than the 4.625% and 5.625% area, according to a sources close to the deals. 

Korean state-owned energy firm Korea Resources, meanwhile, raised a $350 million five-year bond at Treasuries plus 97.5bp, 17.5bp tighter than offering at initial price guidance area.

Asian debt capital markets have experienced sporadic bursts of activity and the occasional hiatus in recent weeks. That is because the issue pipeline has become increasingly sensitive to adverse headlines, not least because credit events are on the rise in China.

On Wednesday, Baoding Tianwei became China’s first state-owned enterprise to default on its onshore debt. The company produces transformers, a sector suffering from significant excess capacity.

Tianwei is the third Chinese company to default domestically, following solar panel maker Chaori in March 2014 and technology firm Cloud Live earlier this month.

In the offshore market, Shenzhen-based Kaisa said on Monday that it had missed two interest payments, becoming the first Chinese property developer to default on its overseas debt, which is estimated at about $2.5 billion.

Despite these head winds, syndicate bankers are expecting a busy week ahead of the Labour Day holidays on May 1, and an eventful May and June ahead of the summer lull.

Busy April

For the remainder of April, the pipeline of expected new debt issues certainly looks busy.

Rated Baa3/BBB-, Tianjin TEDA Investment is engaged in providing infrastructure and real estate development in the northern Chinese coastal city of Tianjin. The SOE is scheduled to begin investor meetings for a potential dollar bond in Singapore on April 24 and in Hong Kong on April 27, according to a source familiar with the matter.

Guotai Junan International and Standard Chartered are the global coordinators and bookrunners of the proposed instrument. Other bookrunners include Barclays and Wing Lung Bank.

India-based Bharat Petroleum is also mulling a Reg S-only dollar bond and will begin investor meetings in Singapore on Thursday, followed by Hong Kong on Friday and London next Monday. Citi, Deutsche Bank, HSBC and Standard Chartered have been mandated to arrange the roadshow.

Beijing Enterprises — the Hong Kong-based company used by the city’s government for investment — is planning to raise a euro-denominated bond. The proceeds will be used to refinance existing liabilities, for working capital, and general corporate purposes, according to a statement to the Hong Kong Stock Exchange.

Deutsche Bank and UBS are the global coordinators and book runners of Beijing Enterprises’s proposed offering. Other bookrunners include ANZ and DBS.

Jingrui Holdings

Rated B3/B, Jingrui Holdings priced the first single-B rated Chinese property deal since Times Property’s offering on March 2.

Credit analysts comment that an initial price guidance area of 13.5% for three-year notes is fair given where the company’s existing bonds are trading. The developer has outstanding five-year notes maturing in 2019 that traded at a cash price of 98.409, or a yield of 14.1%, in late Asian trade on Thursday.

Other comparables include B- rated Sunshine 100’s and B2 rated Modern Land’s outstanding 2017 bonds that traded at a cash price of 99.063 and 92.278, respectively, for yields of 13.2% and 16.226%, respectively, according to Bloomberg bond data.

The funds raised from Jingrui Holdings's planned Reg S-only deal will be used to refinance the property developer's outstanding debt.

"The proposed issuance is credit-positive as the proceeds will be used mainly to refinance higher-cost, short-term trust loans and [to] extend its debt maturity profile," Dylan Yeo, an analyst at Moody's, said in a note on Thursday.

Jingrui had a tight liquidity profile at end-2014 with limited cushions against market volatility. Its cash holdings, including restricted cash, of Rmb4.4 billion ($710 million) at end-2014 and projected operating cash flow is marginally sufficient to fund its committed land costs and debt servicing requirements.

Liquidity was largely constrained by the high level of short-term debt, which amounted to Rmb5.1 billion at end-2014, or 52.6% of total reported debt, according to Moody’s. 

BOSC International, BNP Paribas, Guotai Junan International, Haitong International and Qilu International were the joint bookrunners of Jingrui’s transaction.

Perlindo, Korea Resources

Rated Baa3/BB+/BBB-, state-owned Perlindo is keeping the multi-tranche fad alive, having sold a dual-tranche 144A/Reg S offering.

This is also the Indonesian port operator’s first dollar bond in 18 years. The last time it raised a greenback offering was in 1997, when it sold a $200 million 8.06% note that matured in 2002.

According to a Standard & Poor’s report dated April 14, the notes are unsecured and do not contain financial covenants. However, the terms and conditions of the bonds include a change-of-control clause that would be triggered if the government sold more than 50% of Pelindo II shares.

For the 10-year deal, order books reached $4 billion from 245 accounts, with Asian investors purchasing 46% of the notes, followed by US 36% and the rest to Europe. Asset and fund managers subscribed to 70% of the bond, followed by insurers, central banks and private funds 15%, banks 11% and private banks 5%.

The 30-year, on the other hand, received $1 billion from 80 accounts, with Asian investors subscribing to 46% of the notes, US 38% and Europe 16%, according to a source close to the deal. Asset and fund managers purchased 64% of the paper, insurers, central banks and private funds 21%, banks 10% and private banks 5%.

The 100% state-owned company controls Tanjung Priok, the busiest port in Indonesia, which is responsible for almost half of country’s yearly domestic container traffic by throughput capacity.

The proceeds of Perlindo’s 144A/Reg S deal will be used to fund expansion, refinance a dollar-denominated syndicate loan, and for general corporate purposes.

ANZ, BNP Paribas, Citi, Bahana Securities, and Danareksa Sekuritas are the joint global bookrunners of the transaction.

The new bond from Korea Resources, meanwhile, maintains the solid deal momentum already shown this month in Korea. Doosan Heavy Industries & Construction offered $500 million of five-year notes guaranteed by Kexim on April 7 while Shinhan Bank sold $600 million of five-year bonds on Monday. 

BNP Paribas, Citi and HSBC are the joint book runners of Korea Resources’ Aa3/A+ rated deal, which will be issued under its existing $3 billion global medium-term note programme. 

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