bank’s trade. All three issues
were unrated, yet they
managed to price inside some
higher-rated bank paper from
other regions.
Yields ranged from 4.5%
for Postal Savings Bank of
China’s US$7.25bn notes to
5.5% for both Bank of Qingdao’s
US$1.203bn print and Bank
of Zhengzhou’s US$1.191bn
trade a day before UOB came to
market.
“They have such a domestic
buyer base that it has very
little relevance to international
issuers,” said a source close to
the UOB trade.
Asia bought 72% of UOB’s Reg
S issue, Europe took 26% and
offshore US accounts booked
2%. By investor type, fund
managers bought 66%, private
banks took 16%, insurers
and pension funds booked a
combined 14%, and banks took
4%.
The last rated AT1 issue in
dollars from an Asian bank was
Westpac’s US$1.25bn perpetual
non-call 10, which priced at
5.0% in September. Those notes
are rated Baa2/BB+/BBB, six to
seven notches below Westpac’s
senior unsecured ratings of
Aa3/AA–/AA–.
Before that, Industrial Bank
of Korea printed in July a
US$300m perpetual non-call
five at a tight yield of 3.9%,
despite ratings of Ba2/BB+
(Moody’s/Fitch). Despite the
low rating of the securities,
investors felt it was unlikely
that the Korean government
would allow a policy bank to
miss coupons.
The AT1 transaction will
improve UOB’s total capital
adequacy ratio by 30bp. UOB’s
common equity Tier 1 CAR
stood at 13.8% as of the end of
June, and its total CAR at 17.8%.
Singapore requires its three
biggest banks to maintain a
minimum CET1 ratio of 6.5%
and total CAR of 10.0%, among
the highest levels in Asia.
UOB has a S$850m
(US$628m) AT1 callable on July
23 next year.
UOB, Credit Suisse, Deutsche
Bank and HSBC were joint
bookrunners. The bonds traded
up to 100.3 in the secondary
market on Thursday. Adani Abbot struggles
to find bookrunners
Bonds Leading banks wary of troubled Australian coal portBY JOHN WEAVERSADANI ABBOT POINT TERMINAL, a
subsidiary of India’s Adani
Group, has struggled to find
heavyweight bookrunners for a
planned benchmark US dollar
bond offering to refinance its
domestic Australian dollar
November 1 2018 MTN,
according to DCM bankers in
Sydney.
Australian investment banks
and international banks active
Down Under are wary of
reputational risks from having
close ties to the beleaguered
coal sector and the contentious
A$16.5bn (US$12.8bn) Carmichael
coal mine, in particular.
“While the coal industry is
not off limits – Citigroup and
JP Morgan led Newcastle Coal’s
recent debut US dollar bond- a new Adani Abbot bond,
which is likely to prove a hard
sell, may be a step too far for
many banks,” said one local
syndication manager.
Speculation centres on
Jefferies, a US high-yield market
specialist with scant presence
in Australia, winning a mandate
for the proposed trade, though
IFR could not confirm its
appointment.
A new benchmark bond in
Australia’s famously conservative
local bond market is no longer
feasible after Moody’s cut the
Queensland coal-port operator’s
rating two notches to Ba2 in
March 2016, citing the severe
pressure facing the coal sector
and an increased likelihood that
AAPT’s existing contracts would
either be terminated early or not
be renewed.
Things improved in recent
months with S&P and Moody’s
both revising their respective
BBB– and Ba2 AAPT ratings
outlooks to stable from negative.
However, ugly headlines
have dogged Adani Group
with thousands protesting on
a national day of action on
October 7 against its proposed
Carmichael coal mine in
Queensland’s Galilee Basin and
request for a A$900m taxpayer
loan to build a railway line to
Abbot Point coal port.
The November 1 2018 bond
has had a chequered history
since its launch in late October- It plunged below a cash
price of 90 after Moody’s
downgrade and although it has
subsequently stabilised around
par, indicating confidence
in a successful redemption,
some investors bailed out with
losses at buyback tenders that
have reduced the outstanding
amount to A$396m from an
initial A$500m. The Moody’s
downgrade triggered a 100bp
coupon step-up to 6.75% from
5.75%.
AAPT marketed Singapore
dollar and Swiss franc bonds
in April and May 2014, neither
of which saw the light of day,
before returning to Australia
for a A$100m six-year note in
May 2014 through arrangers
FIIG Securities, Australia’s
largest specialist fixed-income
broker. This bond’s coupon was
also increased 100bp to 7.1%
from 6.1%, after the Moody’s
downgrade.
Meanwhile, AAPT is formally
back in the loans market
after a four-year absence for
a refinancing loan of up to
A$500m. Financial adviser IDFC
Singapore is arranging the loan
on a best-efforts basis.
IDFC launched the loan at two
levels in August.
The five-year bullet loan
pays an interest margin in the
low 200s over BBSY with the
funds to be used to refinance
part of a A$750m five-year
borrowing closed in late 2013
with Commonwealth Bank of
Australia and Westpac.
The refinancing for AAPT is
not linked to the Carmichael coal
mine for which Adani is seeking
a multi-billion dollar funding.
For daily news stories
visit http://www.ifrasia.comCitigroup, which views Haier
as a weak Triple B credit, saw
fair value of the notes at around
4.1% after referencing tech and
manufacturing credits such as
Lenovo and Weichai Power, as
well as other perpetual notes
issued by other mainland
companies like Overseas
Chinese Town.
Haier’s notes were
underwater initially, bid at
99.875 when trading opened,
but managed to rebound to
100.00/100.125 Friday in late
morning, according to a trader.
The notes were issued
in the name of indirectly
held subsidiary Well Hope
Development, with Haier as
guarantor.
If the notes are not called
after five years, the distribution
rate will reset to the original
spread of 192.7bp over five-year
Treasuries and step up by 500bp.
Haier’s products are
sold in over 100 countries.
Euromonitor International
named the Qingdao, eastern
Shandong province-based
company as the top selling
household appliances brand
in the world in terms of total
global retail volume for eight
consecutive years from 2009 to
2016.
Proceeds from the bonds will
be used for debt refinancing
and general corporate
purposes. Another banker on
the issue said a major part of
the proceeds would be used
to refinance the debt related
to the acquisition of General
Electric’s appliance business.
Bank of China, BNP Paribas
and DBS Bank were joint global
coordinators on the transaction.
The three were also joint
bookrunners and joint lead
managers with BoCom, HK
branch, China Construction Bank,
HSBC, ICBC, Industrial Bank, Hong
Kong branch, UBS and Zhongtai
International.