tender offer is part of its policy of managing
its balance sheet liabilities and optimising
its debt structure.
According to Fitch, the tender offer, if
fully taken, will result in an interest saving
of about Rmb38m (US$5.5m), or 9% of
forecast 2020 total interest payments, given
that the coupon of 9.75% on the 2020s is
much higher than the company’s current
funding cost.
Nomura and Admiralty Harbour are dealer-
managers on the tender offer and DF King is
information and tender agent.INDIA
MACROTECH SEALS LAST-MINUTE REFIIndia’s biggest homebuilder priced a rare
Triple C rated bond on Thursday, sealing a
LAST
DITCHûRElNANCINGûAMIDûAûRENEWEDûSELL
off in global markets.
LODHA DEVELOPERS INTERNATIONAL priced a
US$200m three-year non-call one senior
secured bond at par to yield 14% via
bookrunners JP Morgan, CLSA and UBS, asPARTûOFûAûMAKE
OR
BREAKûlNANCINGûDAYSû
before a bond maturity.
Initial guidance had been 13% area when
bookbuilding began on Wednesday. The
LEADS ûEXPECTINGûAûCHALLENGINGûEXECUTION û
had signalled that books might stay open for
two days.
Lodha Developers is a subsidiary of Indian
property company MACROTECH DEVELOPERS,
formerly known as Lodha Group.
The deal came as Treasury yields touched
record lows while risk assets sold off as the
coronavirus spread around the world.
“It’s really not bad for them to get
US$200m even when they had to pay up.
The Caa1 rating and being on negative
outlook is always challenging even during
normal times, but this is a secured deal so
it’s interesting for some investors,” said a
syndicate banker away from the transaction.
“The deal shows that the Asian high-yield
primary market isn’t shut and there’s a
price even for lowly-rated credits.”
Lodha Developers has a US$325m 12%
bond guaranteed by Macrotech due to
mature on March 13 and it needs US$343m
to repay the principal and interest. Thecompany said that it is “fully committed” to
redeeming its maturing bonds, citing
ADDITIONALûCASHmOWSûASûWELLûASûNEWûBONDû
issues.
“In addition to raising US$200m, the
company had earlier raised £86m in the
UK,” said Lodha Developers in a press
release on Thursday.International Financing Review March 7 2020 57EMERGING MARKETS ASIA-PACIFICALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L11 Citigroup 58 12,084.20 7.1
2 JP Morgan 57 11,411.48 6.7
3 Standard Chartered 55 10,358.49 6.1
4 HSBC 74 8,530.16 5.0
5 Deutsche Bank 37 8,215.69 4.8
6 BNP Paribas 35 7,615.14 4.5
7 BofA 33 7,180.10 4.2
8 Goldman Sachs 30 6,448.88 3.8
9 Credit Suisse 46 6,312.13 3.7
10 Morgan Stanley 25 6,199.46 3.6
Total 278 171,010.55High yields keep Asia credit open
JUNK BONDS Chinese developers print as plunging rates hold back high-grade dealsA flurry of deals from high-yield Chinese
property developers has kept the Asian credit
markets open, even as volatility keeps many
global funds and investment-grade issuers
sidelined.
Five of last week’s 10 US dollar issues from
Asia came from Chinese real estate firms, raising
a combined US$1.26bn. Among those, SINIC
HOLDINGS printed a US$280m 364-day debut
note on a final order book of more than US$1bn
and LVGEM (CHINA) REAL ESTATE INVESTMENT raised
US$450m from a new money issue alongside an
exchange offer.
“It was not as super hot as the trade we did for
a different Chinese property developer a couple
of weeks ago, but we felt confident that the deal
would be successful as seen from the exchange
success rate of over 50%,” said a banker on the
LVGEM deal.
The global spread of the coronavirus
prompted continued volatility in equities and
rates last week, with the yield on the benchmark
10-year Treasury dropping below 1% for the first
time after an emergency 50bp cut to the Federal
Reserve’s policy rate.
Asian credit spreads were not immune.
Having traded in a 10bp range for most
of February, the average spread on the JP
Morgan Asia Credit Index widened to 297bp on
Wednesday, 30bp wider in a week.Although facing elevated risks, investors
remain keen on the attractive premiums offered
by high-quality Asian credits.
“Chinese policy support has been strong and
determined. We believe Chinese US dollar bonds
are more resilient and can outperform their
Asian peers,” said Arthur Lau, head of Asian ex-
Japan fixed income at PineBridge Investments.
Investors also pointed to Asia’s relative
underperformance in the early weeks of the
coronavirus crisis, while Europe and the US are
now scrambling to contain the outbreak.
“China appears to have largely succeeded and
its policy focus is shifting to restarting its domestic
economy. While the rest of the world is dealing with
the initial shock and constraints resulting from the
outbreak, Asia could offer a relatively safe-haven
trade as it moves into a recovery mode,” said Paul
Lukaszewski, head of corporate debt for Asia and
Australia at Aberdeen Standard Investments.
Investors have not lost their appetite for risky
deals, as underlined by a US$200m Triple C
rated issue from Indian developer MACROTECH.
Some Chinese high-yield deals, however,
still rely on a narrow group of local buyers. In
the extreme case of JY GRANDMARK‘s US$100m
7.50% 364-day debut issue, 80% of the notes
went to relatives of the company’s chairman.
“There were not many real deals this week but
if there is a bit of stability in the next couple ofdays, we should see a flurry of deals next week,“
said a banker working on an investment-grade
offering.REAL DEALS WAITING
Deals in the pipeline include Indian public
infrastructure finance firm REC and SHUIFA
GROUP, which mandated banks in the last week
of February for proposed US dollar offerings, as
well as SAI GON HA NOI COMMERCIAL JOINT STOCK
BANK, which hired banks in January. PTT GLOBAL
CHEMICAL also mandated banks last week for a
long-dated US dollar note.
Given the further fall in interest rates
following last Tuesday’s cut by the US Federal
Reserve, more deals with riskier structures
and longer or perpetual tenors are expected,
although demand will still hinge on sector and
credit quality.
“We prefer, for example, sub debts/AT1 over
senior debt. We also like the longer part of the
credit curve as it is very steep,” said Lau.
Seasonal factors are also slowing down issuance,
as many companies are entering blackout periods
around earnings reports, ruling out new issues until
the numbers are published. As a result of travel
restrictions, some Hong Kong-listed companies may
struggle to meet the exchange’s March 31 deadline
to publish their annual reports.
Jihye Hwang8 IFR Emerging 2323 p 55 - 62 .indd 57 06 / 03 / 2020 19 : 04 : 33