China Singyes Solar Technologies, a Guangdong-based manufacturer of solar energy products, made its first foray into the international bond markets on Thursday, raising $260 million from a two-year unrated deal.
The company tapped the market at a time when investors increasingly appear comfortable piling into high yield bonds. China Singyes, a Hong Kong-listed company currently eyeing the spin-off of its chemical production units, made the most of that sentiment. It generated $1.7 billion of demand from 139 different investors.
There is now more to come from sub-investment grade issuers. A heavy pipeline of deals across the credit spectrum will put investor appetite to the test this month, according to a syndicate banker on the deal.
But the signs, so far, are auspicious.
The bookrunners of China Singye’s bond initially approached investors with price guidance of the 8.5% area, but ended up pricing the deal at par with a 7.95% coupon — a sizeable tightening from initial guidance.
The closest comparable was United Photovoltaics’ recently-issued 8.25% $250 million January 2020 bond, which was yielding 8.05% on a yield-to-worst basis. On a yield to maturity basis, the bond was trading at a bid/offer spread of 100.75/101.125, giving the deal a yield of 7.957/7.813%, according to a syndicate banker.
The strong response to China Singye's debut continued in early trading on Thursday morning. The was trading at a bid price of 101.2 to yield 7.294%, according to market sources.
In January, sovereign and corporate borrowers in Asia sold more than $51 billion of bonds in the international bond markets, compared with $28 billion during the same period year last year, according to data compiled by Dealogic. Among those deals, Asian borrowers sold $1.55 billion of unrated bonds in January, on top of $5.135 billion worth of high yield debt.
About 70% of the new proceeds from the debt sale will be used to refinance existing debt, and the rest will be used for general corporate purposes.
By investor type, asset managers and fund managers were allocated 62% of the deal, private banks and corporations took 37% and the remaining 1% went to banks and other investors. Asian investors dominated the order book — just 1% was sold to accounts in Europe, the Middle East and Africa.
BOCI, Guotai Junan International and HSBC were the global coordinators of the bond. The bookrunners were SBI China Capital Financial Services, China Everbright Securities Hong Kong and Sun Hung Kai Financial.
