News
China hits pause on dollar debt
Bonds Record pace of offshore issues said to burn through full-year quotaBY INA ZHOU, CAROL CHANThe record run of offshore
bond issues from China is set
to come to an end in the fourth
quarter after a slowdown in
regulatory approvals.
Chinese issuers have so far
this year sold US$108bn of
overseas bonds in dollars, euros
and yen, already 24% above
2016’s annual record, according
to Thomson Reuters data.
The debt binge accelerated in
September with the US$7.25bn
Additional Tier 1 offering from
Postal Savings Bank of China,
Asia’s biggest single-tranche
issue, and bankers say the tally
for the second half of the year
is already within a whisker of
the National Development and
Reform Commission’s quota.
“Deal flow from Chinese
issuers in the coming months
will be very slow as the full-
year quota for NDRC has
been almost used up,” said a
DCM banker from a Chinese
investment bank.
Two bankers said the NDRC,the main regulator of Chinese
offshore debt, set a total quota
of US$40bn for the second half
of 2017.
From July to September 26,
bond issuance from Chinareached US$31.2bn, according
to Thomson Reuters data. With
other deals pending and already
approved, that leaves very little
space for more this year, unless
the NDRC reviews its quota.A slowdown in Chinese bond
sales would add some technical
support for the billions of
dollars of offshore debt already
outstanding, and could help
issuers push for better termsRBI’s Masala U-turn 06 Second time lucky for HY deals 06 Bondholder challenges Ezion 08
Sea tests US IPO market
Equities Gaming and e-commerce company premarkets US$1bn listingBY S ANURADHASingapore-based gaming and
e-commerce SEA , formerly
known as Garena, has
started premarketing a hotly
anticipated US listing that
looks set to cement its status as
South-East Asia’s most valuable
internet business.
Sea, whose shareholders
include Tencent Holdings
and Singapore state fund
Temasek, is betting that its
strong sponsorship and the
potential of South-East Asia’s
technology sector will allow it
to raise around US$1bn fromthe first US IPO of a Singapore
e-commerce company.
Talk of a valuation north
of US$7.5bn, however, poses
a number of challenges. Sea
is growing fast, but has yet to
turn a profit, and will need to
convince investors that it is
worth double the US$3.75bn
price tag implied in a March
2016 funding round. Bankers
working on the float refused
to comment on the targeted
valuation.
A successful IPO may well
pave the way for more listings
from the region in both the US
and respective domestic stockmarkets.
“The Sea IPO is a good sign
that the government and other
initiatives to make Singapore
a fertile ground for technology
companies is having some
success and that interest in the
South-East Asian e-commerce
market is growing,” said Ethan
Perry, counsel at law firm
Ashurst.
While numerous Chinese
companies are listed in the US,
South-East Asian entities have
not made much headway there.
Malaysia’s MOL Global was
the last company from the
region to float in the US with aUS$168.75m IPO in 2014. The
shares of the e-payment service
provider had a disastrous debut
and were delisted in 2016 on
poor trading.
The pipeline of US listings
looks thin for now, but may
pick up if Sea completes the
IPO and, subsequently, trades
well.
Earlier this year, Vietnamese
internet company VNG
announced plans for a US
listing, but did not provide any
details.
Sea’s biggest shareholders are
founder Forrest Li and Chinese
internet company Tencent. Li
has a 34.7% stake, split between
a 20% direct holding and 14.7%
in his Blue Dolphin Ventures
BVI vehicle. Tencent entities
hold 39.7%.