six-year MREL yen bonds priced
at 30bp a month ago.
Despite the tighter spreads,
BPCE continued to receive a
good response from Japanese
investors. Sub 30bp had been
thought to be insufficient to
draw demand, but the five-year
SNP attracted good interest
from trust banks and asset
managers at 22bp, while lifers
participated as well.
These investors were also
major buyers of the 10-year
SNP. The tranche also saw
foreign participation. Lifers
bought the 15-year SNP.
The preferred tranches also
priced tight. The spread of 10bp
on the seven-year SP compared
with 17bp on BPCE’s most
recent issue last June and on
Banque Fédérative du Crédit
Mutuel’s October offering.
The five-year notes drew
good demand from a city bank
and specialised lenders drawn
to the 0.20% plus coupon.
Regional investors bought the
other two senior tranches.
In order to draw as much
demand as possible and offset
the tighter spreads, the 10-year
SP and SNP were both offered
as social bonds. However,
leads said only a few investors
bought them for the social
bond feature in particular.POT SYSTEM
One key feature of the issue
was use of the pot system
during marketing, where
orders are compiled centrally
and shared with the syndicate,
rather than retained by
individual arrangers. The
retention system is traditionally
used in the Japanese domestic
market, and BPCE was only the
second to use the pot method
for a Samurai after a Shinhan
Bank trade in October.
Japanese investors have
traditionally resisted sharing
the details of their orders
with the entire bookrunning
syndicate, but most buyers
accepted it – to the surprise of
some leads.
“I thought there would be
many Account Xs, but there
were only a few,” said another
lead on the issue. “Less than
10%, so Japanese investors
are more familiar than we
thought.”
Daiwa , Mitsubishi UFJ Morgan
Stanley , Mizuno , Natixis , and
Nomura were the leads on the
issue, rated A2/A/A/A (Moody’s/
S&P/Fitch/R&I) for the SP pieces
and BBB+/A/A– (S&P/Fitch/R&I)
for the SNP portion. Country Garden taps
record HK market
Equities First blue-chip issuer to raise funds after HSI hits
record highBY FIONA LAUCOUNTRY GARDEN HOLDINGS raised a
combined HK$23.5bn (US$3bn)
from equity offerings last week
after the Hong Kong stock
market hit record highs.
The Chinese property
developer last Tuesday launched
a HK$7.88bn top-up share
placement and a HK$15.6bn
convertible bond through sole
bookrunner Goldman Sachs. On
the same day, Hong Kong’s
benchmark Hang Seng index
hit a record close of 31,904.75,
above the previous record close
set on October 30 2007.
The mammoth equity
raising came just a week
after Country Garden raised
US$850m from an issue of dual-
tranche US dollar senior notes
in the offshore bond market
on January 9. Last Friday, the
developer also opened books
for a Rmb1.8bn (US$280m)
Panda bond offering in the
domestic market.
“We are going to see more
and more such opportunistic
trades in the market,” said
an ECM banker away from
Country Garden’s equity
raising. “The Hang Seng Index
has now reached a level where
many issuers and shareholders
have started seriously
considering whether they
should raise some money.”
Chinese developers, which
have issued a huge amount of
debt in the past few years, are
particularly keen to sell some
equity now.
“Being the first to launch
such a big deal allows Country
Garden to have the first-mover
advantage,” said another ECM
banker.
A day after the Country
Garden deal, fellow Chinesedeveloper FUTURE LAND
DEVELOPMENT raised HK$1.56bn
(US$200m) from a top-up
placement last Wednesday.FULLY UNDERWRITTEN
In its fully underwritten top-up
placement, Country Garden
sold 460m shares, or 2.1% of
the enlarged share capital, at a
fixed price of HK$17.13 each or
a tight discount of 3.7% to the
pre-deal spot.
There is a 90-day lock-up for
the company.
Its HK$15.6bn convertible
bond, issued by Smart Insight
and guaranteed by Country
Garden, has a maturity of 363
days.
Bonds with maturities
under one year do not need
to be registered with China’s
National Development and
Reform Commission, allowing
the developer more flexibility
on timing the issuance.
The zero-coupon CB was sold
at a yield-to-maturity of 0.75%,
versus a marketed range of
0.00%–0.75%, and a conversion
premium of 20% over the price
of the top-up placement, from
a 20%–30% guidance range. The
conversion price is HK$20.556.
The bonds can be converted
into 759m shares, representing
about 3.4% of the company’s
enlarged share capital after
the conversion and share
placement.
Proceeds from the placement
and CB will be used for debt
repayment and for general
working capital.
Country Garden shares
traded below the placement
price the whole day last
Wednesday, ending the day
5.5% lower at HK$16.80. The
stock fell another 1.7% last
Thursday. For daily news stories
visit http://www.ifrasia.comThe long line of new
investments has made valuing
SoftBank difficult.
For instance, SoftBank owns
a 29.35% stake in Chinese
e-commerce giant Alibaba,
according to Thomson Reuters
data. As of January 17, the stake
was worth US$138bn, far more
than the US$91bn market cap
of SoftBank.
The US$100bn Vision
Fund that SoftBank set up
with others to invest in tech
companies makes valuing
the conglomerate even
harder as there is little public
information on the fund’s
investments. A research report
from Goldman Sachs, for
example, gave a 12-month
target price of ¥11,700 to
SoftBank after assigning zero
value to the Vision Fund.
Shares of SoftBank closed at
¥9,184 on Friday.
The other advantage of a
potential spin-off is that the
funds raised can be used to fund
SoftBank’s future investments in
tech companies without adding
to its financial leverage.
The Nikkei report said
SoftBank planned to sell about
30% of its mobile unit to
investors and the funds were
likely to be used for investment
in overseas information
technology companies rather
than paying down debt.
According to the Goldman
report, SoftBank’s net debt-
to-Ebidta ratio was at 10.1 for
the financial quarter ended
September 2017.
Its telecoms unit posted
a 4.5% increase in operating
profit to ¥720bn on sales of
¥3.2trn in the year ended
March 2017. Follow IFR Asia @IFRAsia