celebrating excellence

FinanceAsia Country Awards 2020: why they won, part 4

The rationale for the winners in Singapore, South Korea and Sri Lanka.
In May, we named the winners of our annual Country Awards. Today, we present the rationale for our decisions covering Singapore, South Korea and Sri Lanka. 
The competition was as fierce as ever and took place against an unprecedented global backdrop thanks to COVID-19. As we went through the pitches, what stood out was all the firms' resilience and ability to adapt to fast-changing conditions. 
For the second year running, an editorial advisory board also aided the editors by providing a peer review across the region. So in addition to congratulating the winners, the editors would also like to thank the board members for their help and guidance on the banks, brokers, law firms and rating agencies that were shortlisted and selected. 
The members of the advisory board comprised: 
Terry Mahony - deputy chairman VinaCapital; former CIO emerging markets equities TCW and Indochina Capital, plus launch CIO of HSBC's GEM fund.
David Morton - advisor Helsinki Foundation Asia Pacific and chairman Yojee; former Asia Pacific head of corporate, financials and multinationals banking HSBC.
Susan Yuen - non-executive director Alliance Bank Malaysia; former regional CEO NBAD and CEO ANZ Hong Kong, plus head of corporate and institutional banking HSBC Malaysia and head of multinationals banking Maybank.
Sadly, due to the current global situation there will be no awards dinner this year. However, plaques are available and where possible, we would be more than happy to arrange individual ceremonies to present the awards.
You can find out more about our judging criteria for the domestic and international categories. 
If 2018 was the year that DBS marked its jubilee, then 2019 was the one when sustainability, in all its many hues, came to the forefront.
In November, DBS became the first bank from South East Asia to sign up to the Equator Principles. It has divided its ESG strategy into three main pillars: responsible business practices, responsible banking and social impact. 
Clearly 2019 was not the first year that DBS focused on ESG, but it was the one where there was a clear acceleration in its ambitions and scope to be a global leader. The bank has, for example, committed to ensure that it is wholly powered by renewable energy sources in all its markets, starting with Singapore by 2030.
It is making lots of small but cumulatively large changes. Pre-COVID, these included reducing food waste by collecting food that had not been eaten during internal meetings and leaving it on one floor where it was available to other staff members. Plastic bottles have gone too. 
Bringing ESG banking to its customers is particularly evident across two main business lines. The private bank has been especially ambitious, after signing an agreement with MSCI to use the latter’s ESG ratings criteria across its investment products, right down to individual stocks and bonds.  
The private bank estimates that the ratings criteria, which it is currently integrating into its IT systems, covers about 80% of its overall product offerings. 
On the financing side, the bank was also behind 35 sustainable transactions during 2019. These amounted to S$5 billion ($3.58 billion), an impressive 60% increase over 2018.
One of the most notable deals was a $325 million five-year bond for Vena Energy. This deal was just about as green as it gets given the issuer represents the first pure renewable energy provider with an HQ in Singapore to tap the market. 
It is typical of the type of deal that the DCM team excels at. During 2019, DBS remained completely dominant in the local bond market with a 33.3% market share and a force to be reckoned with in the G3 bond markets.
A similar story is evident in ECM too where DBS had a 30.8% market share during the awards period. The bank led 29 equity issues including four IPOs, 17 placements, seven preferential offerings and one rights issue.
As a city state, Singapore needs to continually attract new blood to its capital markets and DBS has done a very good job at persuading companies with US-listed Reits to complete a secondary market listing in its home market. Indeed, three of its four IPOs hailed from the US during 2019: Prime US Reit, Eagle Hospitality Trust and ARA US Hospitality Trust.
On the M&A front, the bank is across all the main trends driving the region and is particularly well-placed to take advantage to two very big ones: supply chain relocation and the transition to cleaner energy sources. The bank also identifies three other M&A trends underpinning its business: succession planning, the transition from old to new economy industries and the tendency for the latter to seek equity funding from private rather than public sources. 
The bank as a whole had a very good 2019 in Singapore, registering broad based growth. This enabled it to surpass its decade-high 12.1% ROAE in 2018 with an even higher 13.2% ratio in 2019.
Three main factors lie behind this achievement during the 2019 Financial Year. The bank’s balance sheet continued to grow, its fee income powered ahead and it also had a better 2019 in treasury and markets than in previous years.
As a result, net profit was up 14% year-on-year to S$6.39 billion ($4.57 billion). NPLs, meanwhile, remained unchanged at 1.5%. 
Underpinning all of this is the bank’s much talked-about digital transformation. It is an area where DBS leads the world. 
It is trying to nudge all customers to go cashless and online. This has reaped plenty of dividends. Even one in three mortgages are now originated digitally.
It has also been leading the charge where Singapore’s PayNow payments system is concerned. DBS has a 63% market share of the system, which uses QR codes for payment. 
The bank also wants to bring more wealth management products into its mass-market franchise. Last year, it took a big step in this direction with the launch of digiPortfolio, which uses robot technology allied to the bank’s wealth management expertise to provide entry-level investment opportunities.
On the broking side, DBS Vickers closed down its offline retail securities brokerage business last year. But this did not mean it was abandoning retail. 
Instead, it went online and noted a huge uptick in volumes as COVID-19 took hold in the spring. Retail underpinned the market at a time when institutions were just selling. 
When they return, institutional clients will notice a difference. The broking arm has re-configured its sales team along sector lines so they can work more closely with the research team to better understand clients’ needs.
And finally, no award write-up would be complete without underlining the growing importance of the private bank. Overall wealth management income rose 16% during the 2019 Financial Year to a new high of S$3.08 billion ($2.2 billion). AUM was up 11% to S$245 billion ($175.43 billion).
The bank’s famed digital footprint was very much in evidence at the private bank too. 
In December 2019, it launched its Portfolio Advisory Enablement Tool (PAET). This offers a level of portfolio granularity that no other Asian bank is able to match. The state-of-the-art analysis tool enables clients to easily see what their FX, sector and country exposure is across their entire portfolio. 
Another key step forward was also taken in Thailand where DBS Vickers became the first to provide each Thai wealth management client with a fully integrated onshore and offshore investment platform serviced by a single relationship manager.
This feeds into another trend. The private bank is making inroads right across the region. Its Taiwanese business volumes tripled in 2019, while its Indonesian ones doubled. And its long-standing business in Hong Kong registered 20% growth.
Many Hong Kong clients have taken to opening accounts in Singapore, a trend that seems likely to accelerate given the current geo-political climate. Bankers calculate that Singapore-based clients now account for about a quarter to a third of the private bank’s overall revenues, with the rest generated from the rest of Asia. 
BEST LAW FIRM: Allen & Gledhill
Allen & Gledhill (A&G) was some way ahead of all of its domestic rivals this year thanks to its broad spectrum of work across M&A, ECM and DCM.
The law firm has a clear strategy, which continues to serve it well. It aims to have a leading position across all product ranges and to be at the forefront of financial markets development in Singapore. It also wants to leverage that expertise to expand across the region.
It already has an associate firm in Malaysia (Rahmat Lim & Partners) and its own office in Myanmar. In 2019, it added Indonesia to the mix after forging a strategic alliance with Soemadipradja & Tahar. In 2020, its sights are set on Vietnam and the firm is actively looking for the right partner.
Back in Singapore, the big trend continues to be Reits and in particular the merger of existing players to create scale and size. A&G was in the thick of the action across a large number of the deals. 
This included the two largest during the awards period: the S$11 billion ($7.7 billion) sale of Ascendas-Singbridge’s real estate assets to CapitaLand, which closed in June and the roughly S$8.27 billion ($5.85 billion) merger between CapitaLand Mall Trust and CapitaLand Commercial Trust, which is ongoing. 
A&G was the sell-side advisor on the former and the advisor to CapitaLand Mall Trust on the latter. 
Away from Reits, A&G was also involved in the restructuring of Hyflux debt. One of its roles was lead counsel to the syndicate of lenders to TuasOne, one of Singapore’s most significant waste-to-energy facilities. 
It also has one eye firmly fixed on the future thanks to its work with the Monetary Authority of Singapore (MAS) developing a vibrant fintech space for the Lion City. It has participated in every round of legal clinics organised by Looking Glass @ MAS, the authority’s fintech innovation lab and collaborated on a series of joint seminars.

Citi was very keen to impress its handling of the COVID-19 pandemic, both for its clients, but also for its staff.  Not that it is unique in this area – many of its peer group were impressive in their management of this situation – but Citi was comprehensive in its coverage across all business divisions and client segments.

In the retail space, for example it has a programme that allows customers to convert outstanding unsecured balances from Citi credit cards into a five-years instalment term loan.

For small business owners, it is offering a special deferment on payments on secured SME loans.

For bigger clients, responses will naturally be more bespoke, but having pushed many of their treasury centres (located in Singapore) to digitise their interface with Citi, handling complex issues while not in person have been notably easier to manage. 

Citi’s commercial bank witnessed strong growth, with revenue increasing 8% year-on-year, translating to a 24% hike in profit on an EBIT basis. Cash revenue grew 20% year-on-year, also.

Keen to improve on client onboarding, the bank’s treasury and trade business scaled up its digital platform, launched last year, to help streamline processes. In a 12-month window, Citi added 276 clients with over 700 accounts made fully operational in an average two to five days.

This is the third year running that Credit Suisse has won Best International Investment Bank in Singapore. No other bank can really touch it, because while some are strong in ECM, M&A or DCM, none have the Swiss bank’s high league table ranking across all three.
According to Dealogic data, Credit Suisse completed five foreign currency bond issues, 12 equity issues and either announced or completed 15 M&A transactions during the awards period.
Reits activity dominates Singapore’s M&A and ECM deal flow so unsurprisingly they feature heavily in the Swiss bank’s pitch book. 
Top of the list is the S$11 billion ($7.7 billion) merger of CapitaLand Mall Trust with CapitaLand. Credit Suisse is advising CapitaLand in what will rank as Singapore’s largest-ever real estate transaction when it closes. 
Its other big Reit deal was the S$2.9 billion merger of OUE Commercial Reit with OUE Hospitality Trust. Credit Suisse was the buy side advisor for the deal, which closed in September.
The bank was also active outside the real estate sector. Other notable M&A deals it worked on include: the $647 million sale of Asia Capital Reinsurance to Catalina, the $1.2 billion acquisition of Columbia Asia Hospitals by TPG and the $850 million merger of 701Search with Carousell.
When it comes to IPOs, one of the big trends was the emergence of more foreign Reit owners on the Singapore Exchange (SGX). Credit Suisse was at the heart of this too, leading managing offerings for: United Hampshire, which raised $324 million in March 2020, Prime US Reit, which raised $632 million in July 2019 and ARA US Hospital Trust, which completed a $471 million IPO in May 2019. 
On the DCM side, Credit Suisse executed bond offerings in both Singapore and US dollars. The group has a long-standing relationship with Temasek and was one of the bookrunners for the sovereign agency’s return to the euro-denominated bond market for the first time since 2016. 
Another repeat client was United Overseas Banks. Its $500 million covered bond in August represented the 12th bond issue that Credit Suisse had managed since 2013. 
BEST BANK: Shinhan Bank
This is one of the more straightforward categories to judge. South Korea’s commercial banking sector is extremely competitive and far harder to earn higher returns than much of the rest of Asia. 
However, Shinhan is always there at the top of the pack in terms of profitability and more efficient metrics than its peers. 
When it comes to ROE, for example, Shinhan recorded 9.27% in the 2019 Financial Year compared to 8.83% for KB Kookin and 8.58% for KEB Hana according to S&P Global Market Intelligence data. Similarly its cost-to-income ratio was 53.44% compared to 59.31% for KB Kookmin and 56.54% for KEB Hana.
Since last spring, the bank’s future has been under the lead of a new CEO, Jin Ok-dong. One of his big strategic pushes is into Vietnam, Cambodia and Myanmar following many of the bank’s corporate and retail clients that have growing investments there. 
Shinhan already ranks as the largest non-local bank in Vietnam and has plans to solidify its presence as more of the South Korean electronics supply chain moves there from China. 
Slowing growth and a mature business environment in Korea is dictating this push, not to mention the threat from fintechs. However Shinhan continues to be the largest credit card issuer in its home market and the country’s resilience in battling COVID-19 should hold all the banks in much better stead during 2020 than other peers around the region.  
BEST INVESTMENT BANK, BEST ECM HOUSE: Korea Investment & Securities
This was another difficult award to judge because Korea Investment & Securities (KI&S) and NH Investment & Securities (NHI&S) were almost neck and neck in the league tables. 
When it came to ECM, the former had an 11.66% market share and the latter 11.86% according to Dealogic data. Where DCM was concerned, KI&S was on 12.38% and NHI&S 14.71%. 
What swung it was a transformational deal for South Korea’s equity markets: the W429.9 billion ($359 million) IPO of Lotte Reit. KI&S was one of three bookrunners alongside HSBC and Nomura.
It was not a particularly large deal, but that was one of its chief selling points. South Korea has tried and failed to get Reits off the ground for a number of years. 
Prior to Lotte, there were only a handful of tiny Reits with thin liquidity. One other company had also tried its luck earlier in the year, but the huge W1.7 trillion ($1.38 billion) deal size for Homeplus proved too much for the market to stomach and it was pulled. 
Lotte managed to overcome this negative overhang using its strong brand name as part of the Lotte Shopping group and attractive 6.37% yield to create a winning combination. It has continued to trade up in the secondary market. 
It says much about the state of South Korea’s primary markets, that this deal ranked fifth largest of the year. KI&S completed a total of 20 ECM offerings over the course of the awards period including one other W97.28 billion ($84 million) IPO for Pumtech on the Kosdaq. 
On the DCM side, it managed 61 deals according to Dealogic data. Its largest transaction was an asset securitization deal for Autopia, part of Hyundai Motor. This raised $503 million equivalent. 
It is a rare year when KB Financial does not win this award. It hogs the top of the domestic bond market league tables with a strong flow business and roster of tier 1 clients.
According to Dealogic data, it executed 78 transactions during the awards period with a 15.39% market share. It is rate to find a bond issue without KB Financial in the syndicate. 
One of its top clients is Korea Housing Finance Corp (KHFC), which dominates the domestic bond market league tables on the issuer side. 
South Korea has one of Asia’s biggest domestic bond markets, with W2,047 trillion ($2,083 billion) outstanding at the end of 2019. Issuance has continued strongly during 2020 despite COVID-19, with an influx of foreign money and a government bond market fund supporting issuance and pricing levels. 
KB Financial also continued to remain at the forefront of ESG bond market trends and this spring became the first South Korean bank to issue a COVID-19 bond. The $500 million 1.75% five-year deal for its parent will use proceeds to support SMEs, small offices and home businesses that have been impacted by the virus.
BEST BROKER: Mirae Asset Daewoo
Its tagline suggests that it can “create a better world through investment”. Over the past few years, it has certainly expanded its presence across it.
Mirae Asset Daewoo is now South Korea’s most geographically diversified securities house and this has helped it to boost profitability. In the 2019 Financial Year, there was a massive 102.2% leap to W170.9 billion ($133.82 million) in terms of its international income. 
This was a very similar increase to 2018. It means that international income accounts for roughly a third of the whole – W663.7 billion ($538.5 million) in 2019. 
This is also one of the main reasons why it has won the award. The South Korean brokerages all hope to expand their overseas presence to find new growth opportunities in the face of a mature market back home. 
Mirae Asset Daewoo currently has 11 branches across: Brazil, China, Hong Kong, India, Indonesia, Mongolia, Singapore, the US and Vietnam. It also hopes to open up in Japan. 
The strong trend continued in the first quarter of 2020. Its overall brokerage income was up 61% year-on-year, accounting for 44% of the overall securities business. 
For the second year running, FinanceAsia has decided to give the award to KEB Hana Private Bank, although the reality is that the competition is tight with Shinhan and KB Kookmin. 
In a developed market like Korea, it pays to be innovative and KEB Hana has long deserved its reputation for dynamism and ability to the stay at the forefront of new trends. It is particularly renowned for its Club1 premium private banking centres available to its Gold Club members. 
These are not so much private banking centres, but work and recreational spaces that do go for the heavy product sell. 
Each year the bank also releases its annual Korean Wealth Report. The most recent edition demonstrated that in addition to pursuing traditional real estate and securities investments, high net worth investors are also increasingly interested in private equity.
This reflects the private bank’s changing client mix, with a more determined drive to sign up a younger generation of entrepreneurs. 
It has been a good year for HSBC’s Korean business. An all-round strong player in the marketplace, the bank’s global footprint and notable strength in traditional commercial banking services gave it an edge over its peer group.

Strong in trade finance, HSBC delivered a series of important innovations in the country. It structured an interesting syndicated asset-based lending facility for an e-commerce company, which leveraged off its inventory of frozen, consumable, and hardline goods, believed to be a first in Korea. 

Keen to push its socially responsible investment credentials, HSBC was a lead manager for 11 out of 18 G3 bonds raised during the awards period. Notable transactions included: Shinhan Bank’s inaugural COVID-19 Impact Alleviation Bond, the first anti-epidemic social bond by a Korean issuer. 

In the equity capital markets space, HSBC worked on some key transactions too. For example, it led Lotte REITs KRX IPO, the largest in size in 2019 and the first Korean REIT listing marketed to foreign investors.

It was also an advisor on four cross-border M&A transactions, including MBK Partners consortium for the 28.6% stake acquisition of CGI Holdings from CJ CGV, and petrochemical company K.S.C  for the acquisition of a 49% stake in SKCPIC from SKC.

Christmas came early to Morgan Stanley in December last year. The US investment bank announced a string of landmark M&A deals that propelled it to the top of Dealogic’s league tables for announced and closed deals during the awards period. 
Morgan Stanley is an M&A powerhouse and it is this that clinched it the award over other banks that were higher up the ECM and DCM league tables. Dealogic counts a total of 10 deals during the awards period, with league table accreditation of $20.36 billion.
Deals announced in December included: the $23 billion business integration of Z Holdings and Naver Corp’s Japanese messaging app, Line Cop, plus the $4 billion strategic partnership between Woowa Brothers and Delivery Hero, which represented the country’s largest ever e-commerce M&A deal. 
These were the two largest deals, but there was also: MBK Partner’s $2.5 billion sale of Daesung Industrial Gases, which will mark the largest ever private equity exit from the basic materials sector in five years, Mirae Asset’s $690 million investment in Naver Financial and MIRA’s $804 million acquisition of a 35% equity interest in LG CNS, the country’s second largest IT services provider. Morgan Stanley is respectively advisor to: MBK, Mirae Asset and MIRA.
The bank may have advised MIRA on the LG CNS deal, but the LG group, as a whole, is one of its key clients: one that repeatedly awards it new mandates. As a result, Morgan Stanley executed a number of capital markets transactions for LG group entities during 2019.
These included a $688 million equity-linked deal for LG Display. This ranked as the largest dollar-denominated convertible deal from non-Japan Asia during the year.
It was also a bookrunner on LG Chemical’s $1 billion and €500 million ($561 million) debut green bond issue. This represented the largest green offering from South Korea of the year. 
BEST BANK: Commercial Bank
Commercial Bank is once again crowned the winner of this award, as it has been for many years running. It is Sri Lanka’s best-run private sector bank and it continues to forge ahead despite the difficult backdrop it has had to contend with recently.
The country was continually buffeted during the awards period. First there were the Easter bombings of 2019, which had terrible knock-on consequences for the all-important tourism industry. Then there were presidential elections at the end of the year, which put much-need foreign direct investment (FDI) decisions on hold. 
And just as the country appeared to be getting back on its feet again early in 2020, the COVID-19 virus materialised. Throughout it all, the banks have been under government pressure to support the economy through a series of loan moratoriums and a debt repayment levy, which took the form of a 7% hit on banks’ taxable profits. 
Commercial Bank was able to continue growing its deposit and loan base throughout all of this, but many of its other metrics took a hit. What stands out is just how well it did given the circumstances.
According to S&P Global Market Intelligence data, ROAE dropped from 15.48% in FY 18 to 13.71% in FY 19, while ROAA slid from 1.45% to 1.28% and NIM softened slightly from 3.82% to 3.68%. 
Nevertheless, the bank unveiled plenty of new initiatives over the course of the year.  On International Migrant Day, it launched ComBank RemitPlus, which allows remittance senders and receivers to track interactions via a mobile app.
Many of its other new launches had a China connection, which is also not surprising given the large numbers of tourists visiting the country and growing economic ties between the two nations. 
In 2019, Commercial Bank became the first bank to issue UnionPay debit and credit cards. It also facilitated WeChat Pay and joined with Alipay to make payments easier. 
On the surface, there is not much capital markets or M&A activity in Sri Lanka. But try telling that to NDB Investment Bank, which not only increased the amount of funds raised, but more cleverly turbo-charged its fee income.
Over the course of the year, the bank raised SLRs62 billion ($347 million) for its clients, an increase of 3.3% over the previous year. It did so against a very unpromising macro-economic and political backdrop.
But its fee income soared 69% year-on-year. A breakdown of how it made money shows that it accomplished this by prioritising securitizations and structured products.
In terms of revenue, it derived 48% from securitizations and structured products, 28% from ECM or M&A and the remaining 24% from loans and bonds. When it came to the amount raised, the ratios are the other way round: bonds and loans accounted for 52% of the total, followed by securitization and structured products on 31% and ECM, plus M&A 17%. 
Examples of successful structured deals include: a SLRs2 billion ($10.77 million) seven-year securitized loan for Nawaloka Hospitals and a $25 million securitized debt issue for Indocean Developers, which is responsible for the Altair Twin Tower residential project in Colombo. 
On the capital markets front, NDB was also the lead manager of another landmark IPO in the Maldives. This time it was for Maldives Islamic Bank, which raised $16 million and attracted participation from 5% of the country’s citizens. 
Another strong issuance stream is bank capital to meet Sri Lankan banks’ IFRS 19 needs. NDB helped Sanasa Development Bank to raise $18 million and boost its Tier 2 ratios. It also managed two Basel III compliant issues for National Development Bank and Hatton National Bank totalling SLRs15.5 billion ($86.7 million).
BEST BROKER: Asia Securities
One trend, which came up time and again during the awards process, was the absolute importance of developing a retail investor base that can provide a firm bedrock for a country’s stock market come rain or shine. This was once again underlined as COVID-19 gripped the world and foreign investors beat a retreat from many Asian markets, especially those out on the frontier like Sri Lanka. 
One of the main reasons why Asia Securities won this award is because of the work it has done to educate and expand the country’s retail investor base. It has even gone so far as launching a series of short videos.
These go back to basics, taking the view that where individuals are concerned, financial literacy starts with understanding how to budget and save. For SME’s, by contrast, it is about putting in place the right building blocks to create a thriving business. 
It is estimated that roughly 35% of the country’s population is financially literate, compared to a 65% average in developed countries. 
The securities house plans to publish 40 videos in total, half in English, the rest in Sinhalese and Tamil. It is also forging partnerships with local distributors to disseminate the message as widely as possible across the country.
Asia Securities other big strong point is its research. The broker covers 53 stocks, which represent 65% of the market cap. This is double its nearest competitor and the research is extremely well regarded.
Unlike many competitors, Asia Securities publishes regular quarterly corporate updates and has made a name for itself with its thematic pieces: most recently on oil and the e-commerce sector.
This effort is bolstered by research partnerships with leading frontier market specialists: Tellimer, Decker and Investec. 
Asia Securities is also very active on the corporate access front. It held four events during 2019, which were available online to foreign investors unable to attend in person. It was also the only local broker to provide virtual webinars for clients during the COVID-19 lockdown, when the country’s stock market was closed down.
HSBC has been in Sri Lanka for a very long time and weathered many difficult years. The one that spanned the latest awards period was one of the worst yet thanks to terrorist bombings, presidential elections and then COVID-19.
The bank did a good job to keep its financials stable and to continue innovating in a market that it has dominated for over a century. One area of particular focus was the apparel sector, one of the country’s key industries.
There were two notable developments. Firstly, HSBC partnered with the International Union for Conservation of Nature (ICUN) to educate the sector about sustainable financing and development. This will cover water, energy and chemicals.
Then the bank also launched its web-based supply chain financing platform for apparel exporters. This will help to inject more liquidity and depth into supply chains by enabling small and medium sized entities to make earlier payments, among other things. 
The technology was developed by HSBC’s fintech subsidiary, Serai, and launched globally in October. Sri Lanka, along with Bangladesh and Hong Kong are the first three jurisdictions with companies using it. 
HSBC also tapped into another key trend in 2019. Sri Lanka has a large 20,000-strong cohort of international students, in part because a lack of investment in higher education means there are limited places at home. 
Last May, the bank launched an international student proposition. This offers a number of privileges for account holders including preferential exchange rates, health insurance, an additional baggage allowance and priority consultations with 3GWE overseas education consultations who provide guidance and help to obtain visas. 
One thing, which did not change during 2019, was HSBC’s ongoing relationship with the government. The sovereign launched a $2 billion bond offering in June, its second of the year.
As usual, HSBC was one of the lead managers, the only bank that has been a continuous presence on all of the country’s international bond market outings since it entered the market in 2007.
International capital markets activity from Sri Lanka tends to be patchy at best and in many years, it is just the sovereign which taps the market. The only other entity that has an international presence is SriLankan Airlines.
In 2019, Standard Chartered was behind transactions for both of them, making it the most active international bank bringing local entities offshore.
Both transactions were initially extremely well-received coming in the summer of 2019 when the high yield markets were on fire and investors were still piling into single-B rated credits. The bank’s advice on market timing proved invaluable for both the B2/B+/B1 rated sovereign and its B/B- rated national airline. 
The sovereign was able to raise $2 billion in June through a $500 million five-year deal with a 6.35% coupon and a $1 billion long 10-year with a 7.55% coupon.
In many ways, SriLankan Airlines received an even stronger response for its $175 million five-year deal a few days earlier. Indicative pricing was tightened in 50bp and demand still closed at the $1 billion level. 
It was a great achievement given the airlines debt metrics and a looming $175 million maturity.
Of course the world has changed since then. As COVID-19 swept the world, frontier market debt took a pounding. The sovereign had dropped about 25 price points when FinanceAsia was judging the awards, while SriLankan Airlines was trading at 48 cents on the dollar. 
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