HY issuers win market reprieve
Bonds Improved conditions clear way for offerings stalled during the summerBY DANIEL STANTONThree Asian companies took
advantage of improved market
conditions in the past week to
revive high-yield bond offerings
that had stalled over the
summer, but another pulled
deal showed investors were still
cautious.
Indonesia’s GEO ENERGY
RESOURCES kicked things off on
Wednesday with a US$300m
five-year non-call three offering
that closed four times covered,
before China’s LIONBRIDGE CAPITAL
and Malaysia’s YINSON HOLDINGSpriced US$160m of three-
year non-call two bonds and
US$100m of perpetual non-call
five notes, respectively, on
Thursday.
It was not all plain sailing,
though. China’s NAN HAI , rated
B1 (Moody’s) and with business
lines including cinemas,
real estate and enterprise IT,
was forced to withdraw a US
dollar 3.5-year offering after
indicating final guidance of
8.125%.
Nan Hai had sold bonds as
recently as July, but that trade
benefited from a standby letterof credit from China Citic
Bank, which raised the rating
to Baa2 (Moody’s) and enabled
it to print a US$400m three-
year non-call two at 3.182%, or
Treasuries plus 165bp.
Lionbridge Capital had
pulled a US dollar offering on
July 25, while, the same week,
Geo Energy Resources had
announced it had decided not
to launch a planned offshore
issue. Yinson held investor
meetings in Singapore, Hong
Kong and London in the week
of July 17 ahead of a proposed
US dollar perpetual offering,but did not proceed at the time.
“The market has improved a
lot since then,” said a syndicate
head on one of the trades.
“The supply of decent high-
yield names has slowed and
investors are sitting on a lot
of cash, plus private banks
are still there for high-yield. It
feels like a risk-on mood that
encourages investors to go
down the credit curve.”LOWER YIELDS
Geo Energy made its US
dollar debut a little later than
expected, but it proved to be
the right decision as it achieved
a lower yield than it would
have done in the summer.
Investors were said in July
to have sought a yield of 9%RBI reversal revives Masalas
Bonds Rule change removes overseas rupee debt from foreign investment limitsBY KRISHNA MERCHANTThe Reserve Bank of India
has carved out offshore rupee
bonds from its corporate bond
quota for foreign investors,
allowing inflows into onshore
bonds to resume and reviving
the frozen Masala market.
The reversal of a decision
taken less than 18 months
ago frees up billions of dollars
under the existing foreign
investment limits, allowing
a resumption of investment
that is expected to support the
weakening rupee.
It also paves the way for
a rebound in offshore rupee
financings that had stalled as
foreign investment neared
the regulatory limit. National
Highways Authority of
India, which raised Rs30bn
(US$459m) on its Masala debut
in June, is already in talks with
bankers for a potential return,
according to market sources.
While some investors have
voiced concerns over the
frequent rule changes relating
to Masala bonds, bankers said
the latest revision removed
some of the uncertainty over
the format.“The current change in RBI
guidelines is more to do with
government pressure; they
want the Masala product to
succeed,” said a DCM banker.
“No one knew where the
product was heading before
this.”A test of appetite came
on Thursday, when INDIAN
RENEWABLE ENERGY DEVELOPMENT
AGENCY (Ireda) sold a Rs19.5bn
five-year Green Masala at 7.23%.
The debut issue was planned
before the new guidelines were
announced, and some of theinvestment quota was available,
but the offering still showed
the strength of appetite for
the bonds. The new rules take
effect on October 3.
The central bank limits total
foreign investment in rupee
corporate bonds to US$51bn,News