Ping An, Dah Sing Bank tap dollar market

Ping An Real Estate's debut $300 million bond tests demand for unrated credit, alongside Hong Kong lender Dah Sing Bank's aggressively priced tier-2 bond.

Ping An Real Estate, the property investment arm of China's second-largest insurer by premiums, and Hong Kong lender Dah Sing Bank, tapped the international bond markets on Tuesday, taking advantage of a wane in US Treasury market volatility.

Unrated Ping An Real Estate issued its maiden US dollar-denominated bond, raising $300 million through a three-year Reg S deal. The sale came in the wake of high-yield developer Country Garden last week pulling its 10-year note due to averse market conditions. Hong Kong-listed Country Garden, which was seen as a bellwether of high-yield demand, had been marketing its dollar bond to yield at about 5.625%.

"Investors are beginning to bargain-hunt for investment-grade credits," said a Singapore-based fund manager told FinanceAsia, noting an uptick in activity this week.

Despite having no credit rating, Ping An Real Estate, which invests in both physical and securitised assets, priced the deal at three-year Treasury plus 235bp, the tight end of its final guidance of 235bp to 245bp. Final pricing of the fixed-rate note was fixed at 99.792% on a coupon of 3.625% to yield 3.699%.The deal was initially pitched at a 270bp spread to Treasuries.

The order book reached $1.4 billion at peak activity in the afternoon after getting more than $900 million of orders before lunch, according to a syndicate banker. "The debut sale has attracted a number of high-quality, long-only investors who prefer to stay with a high-grade issuer," the person commented.

Ping An Life, the life insurance unit of the group, captured more than $5.5 billion of orders for its dual-tranche deal in January, raising $1.2 billion from the sale of three-year and five-year bonds.

The apparent comparable is the outstanding Ping An Life's $700 million 2.375% 2019 note, which was trading on a cash price of 100.234, to yield 2.262% on Tuesday, or a G-spread of 107.3. The three-year bond is rated A3 by Moody's.

Syndicate bankers also named unrated water treatment firm Beijing Enterprise Water's 4.625% 2018 bond as a second reference. The bond was trading on a cash price of 102.976% to yield 2.517% on Tuesday, or a G-spread of 160bp.

That said, the final pricing of the new bond was inside the secondary curve of Beijing Enterprise Water but higher than Ping An Life to compensate investors for the risks to China's property sector and for its lack of a credit rating.

Standard Chartered is the sole global coordinator, while HSBC joined as a joint bookrunner.

Dah Sing Bank

The Hong Kong lender, rated A3/BBB+ by Moodys'/Fitch, returned to the international bond market, raising $250 million through a 10 year noncall-five tier-2 bond to yield 4.323%, or 255 bp over five-year Treasury yields.

The Basel III compliant bond was initially being marketed at Treasuries plus 275bp, before tightening to the range of 255bp to 260bp.

The Reg S deal captured $900 million worth of orders, mainly from Hong Kong and Singapore investors. "The issuer decided to launch the deal this week to capture the best market window and avoid the market turbulence of last week," a syndicate head told FinanceAsia.

The natural comparison is its outstanding 5.25% 2024 bond, which was trading at Treasuries plus 215 or G-spread of 210bp. The debt is callable in January 2019.

Meanwhile, Bank of East Asia's newly issued 4% November 2026 tier-2 bond provided the best gaugue of fair value. The $500 million bond was trading on a Treasury plus 269bp or a G-spread of 269bp.

At the tight end of the final pricing, the new deal priced inside the secondary curve of its larger rival Bank of East Asia, thanks in part due to its limited loan exposure to China, a syndicate banker said.

Some bankers said the deal should price wider than Bank of East Asia's, given its smaller scale. Others, however, said the deal should be priced inside its local counterpart, thanks to its limited credit exposure to the China market.

HSBC and OCBC are the lead managers of the new deal.

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