Chinese trio join dollar bond rush

China National Bluestar, ICBC Leasing and Shui On Land collectively sell $2.75 billion of dollar debt ahead of the US presidential debate.

A trio of Chinese issuers jumped into the international bond markets on Monday, joining a fundraising rush in the region after the US Federal Reserve kept its interest rates unchanged last week.

Specialty chemical producer China National Bluestar, ICBC Leasing and property developer Shui On Land competed for investors' attention on Monday, but all managed to close successful deals.

The three issuers raised $2.75 billion between them even though the overall tone turned cautious as market watchers switched their attentions from last week's central bank meetings to this week's US presidential debate.

Sales desks reported signs of investor fatigue following more than $7 billion of issuance in Asia’s primary bond market last week. China Cinda's $3.2 billion perpetual bond deal, priced last Friday, was particularly badly hit, down one point from its issue price at the close of Asian trading on Monday.

However, one banker claimed, "the overall tone in the region remains pretty constructive. Issuers got the size they looked for at attractive pricings on the back of Fed's inaction."

China National Bluestar

China National Bluestar, which manufactures everything from high-performance polyester to vitamins through its various subsidiaries, returned to the international markets for the first time in over a year, raising $1.1 billion from a dual-tranche issue on Monday.

The company’s latest Reg-S deal — a mix of three-year and five-year bonds — proved to be a much smoother ride for the issuer than its debut sale last year, when it had to re-issue a $1 billion bond due to inaccuracies in its original offering documents.

This time around, the Baa2/BBB/BBB+ rated issuer built an impressive order book worth $5 billion at its peak. The strong demand was in part thanks to its acquisitive parent ChemChina, which agreed to buy Swiss agriculture company Syngentra for $43 billion, a record-breaking acquisition for Chinese companies offshore.

The high-profile takeover of Syngenta has boosted ChemChina’s strategic importance to the central government, prompting investors to pile into debt issued by this relatively new issuer, bankers said. 

The leads first gave out the initial guidance at 250bp and 260bp above three-year and five-year Treasuries, respectively, before tightening the shorter-dated tranche to 230bp and the longer-dated to 245bp.

Final pricing for the $500 million September 2019 note was fixed at 99.872% on a coupon of 3.125% to yield 3.17%, while the $600 million September 2021 bond was priced at 99.614% on a coupon of 3.5% to yield 3.585%, according to a term sheet seen by FinanceAsia

The obvious comparables were the company’s own outstanding bonds. China National Bluestar’s 3.5% June 2018 bond and 4.375% June 2020 bond were trading at Treasury yields of 205bp and 208bp, or G-spreads of 209bp and 224bp. That implied the issuer left something on the table for investors.

The joint global coordinators of the bond were Morgan StanleyBNP Paribas, CMB International. JP Morgan and Credit Agricole CIB were joint bookrunners.

ICBC Leasing

The aircraft leasing unit of China's largest commercial bank, ICBC, continued to refill its war chest, tapping global investors for a $1.4 billion two-part deal.

The A1/A/A rated company captured more than $2.6 billion of orders from both 144A and Reg-S investors, according to syndicate bankers running the deal.

“One of the biggest appeals to investors was the strong credit rating, which is on par with its parent ICBC,” one of them said.

Initial guidance for the three-year and five-year bonds was set at 155bp and 160bp over Treasuries, respectively. The leads then narrowed guidance to to 137.5-140bp for the shorter tranche and 145bp for the five year. 

The company’s $700m five year bond came at an issue price of 99.697%, closing at 145bp over Treasuries with a 2.5% coupon.

Pricing for the equally-sized 2019  bond was fixed at 99.694% on a coupon of 2.125% to yield 2.231%, according a term sheet seen by FinanceAsia.

The closest comparables were the issuer’s outstanding 2.375% May 2019 bond and its 2.75% May 2021 bond, which were trading at G-spreads of 129bp and 134bp last week.

The joint bookrunners were ICBC, Goldman Sachs Asia, JP Morgan, BNP Paribas, Shanghai Pudong Development Bank HK branch, and Bocom Hong Kong branch.

Shui On Land

The Hong Kong-listed mainland property developer, controlled by billionaire Vincent Lo, priced a $250 million three-year bond at a yield of 4.5%.

The unrated issuer initially went out to the market with an initial guidance around the 4.65% area, before tightening it to the 4.5% area. Final pricing of the Reg S deal was fixed at 99.653% on a coupon of 4.375% to yield 4.5%, a term sheet shows.

The nearest comparables were its two outstanding notes — a 9.625% 2019  and a 9.75% 2020 — which were trading at cash prices of 108.12 and 108, equivalent to yield-to-calls of 4.53% and 4.52%, respectively.

Unlike the other two Chinese bonds in the market, the new deal was priced in line with the secondary curve.

Syndicate bankers said they were competing for orders against Korea Air Lines' unrated transaction, which was in the market on the same day.

The global coordinator for the Shui On deal was Standard Chartered. Bank of America Merrill Lynch, BNP Paribas, Credit Suisse and UBS were joint bookrunners.

¬ Haymarket Media Limited. All rights reserved.

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