High-yield issuers stampede Asian bond market

Evergrande, Hopson, PT Sulfindo Adiusaha, SMC Global Power and Sinochem rush to the market with bond issues.

Five companies emerged yesterday with plans to tap the Asian bond market soon and the rush shows no sign of abating before the Lunar New Year. So far, the pipeline is dominated by high-yield issuers.

“There is a strong pipeline of high-yield names and they should get done. The question is how long the window will stay open. If Europe starts weakening, then the market could shut down completely. But, for now, we see good demand, given the strong growth in Asia-dedicated funds in recent years,” said one debt capital markets banker.

China property firm Evergrande Real Estate plans to issue a dual-tranche three- and five-year benchmark. The bonds will be denominated in renminbi and settled in US dollars. A benchmark is usually about $500 million.

The deal is the third synthetic offshore renminbi bond after Shui On Land and China SCE Property. Evergrande will also be the first major Chinese real estate company to tap the market in that format.

Roadshows will be held in Hong Kong today and two teams will move on to Singapore and London concurrently tomorrow. A Reg-S only deal is expected to price after that. Bank of America Merrill Lynch is the sole global coordinator. It is also a joint bookrunner together with BOC International, Citi and Deutsche Bank.

The funds raised will be used to fund existing and new projects and to repay a portion of the company’s onshore bank loans. Moody’s yesterday downgraded Evergrande’s senior unsecured bond rating to B2 from B1 and assigned a B2 rating to the proposed senior unsecured bond. The outlook for the senior unsecured debt rating is negative.

Going down a well-trodden path, Chinese property company Hopson Development Holdings plans to sell a five-year US dollar-denominated bond. The deal is expected to be a Reg-S five-year non-call-three deal and the size has yet to be determined.

Hopson will start an investor roadshow covering Asia and Europe today. The deal is expected to be launched in the near future, subject to market conditions. UBS is the sole bookrunner. The expected issue rating is B2/B (Moody’s/S&P).

Meanwhile, in the investment-grade market, Sinochem Hong Kong plans to issue a renminbi-denominated Reg-S bond. The three-year deal will mark the issuer’s first foray into the so-called dim sum bond market, which refers to the offshore renminbi market in Hong Kong.

Sinochem is expected to launch and price today, but the size has not yet been determined. As the name is already well-known in the US dollar market, the company will not be holding roadshows. Deutsche Bank is the global coordinator. It is also a joint bookrunner with Citic Securities. The company is rated Baa1/BBB+/BBB+ (Moody’s/S&P/Fitch).  

The first high-yield Indonesian company to tap the dollar bond market this year is expected to be chlor alkali producer PT Sulfindo Adiusaha. The privately held company plans to issue a five-year non-call-three US dollar bond.

PT Sulfindo Adiusaha will be starting investor meetings on January 12, covering Singapore, Hong Kong, London and the US. Barclays Capital and Standard Chartered Bank are joint bookrunners and joint lead managers.

Fitch has an expected B rating for the proposed senior secured Reg-S/144a bonds. PT Sulfindo Adiusaha was established in 1987.

Philippine-based SMC Global Power Holdings will also hold a series of bond investor meetings, starting today in Manila. The meetings will move on to Singapore tomorrow, Hong Kong on January 13 and London on January 14. A debut Reg-S bond is expected to follow.

ANZ, HSBC and Standard Chartered Bank are mandated for the deal. SMC Global Power is the holding company for the San Miguel group’s energy assets.

Also, two US dollar bonds that were previously announced – Texhong Textile and Energy Development Corp – are expected to price this week.

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