Wanda to repay 08 IPO supervision 09 Adani’s hard sell 10
have to plough through slower
markets and building pressure
from oversupply in secondary
trading.CHINA SUPPLY
While Western markets are
preparing to slow down, Asia’s
primary pipeline still has
over 20 publicly announced
deals waiting to issue this
year across sovereigns,
banks and corporates. On
top of that, dozens more
Chinese issuers have received
undisclosed approvals to
issue offshore bonds from
the National Development
and Reform Commission, the
main regulator of Chinese
international bonds.
“China has redrawn the
capital markets calendar,” said
an Asia syndicate head. “It’s a
new world, and China works on
a different timeline.”
The NDRC has approved
as many as 70 offshore issues
since the National Congress of
the Communist Party ended
late last month, according to
bankers, with jumbo US dollar
bond issuers such as Alibaba
and Tencent among them.
Some of those approvals expire
at the end of this year.
“With the recent surge
of China issuers havingannounced new mandates
and investors spoilt for
choice, coupled with a desire
to square-off books as year-
end approaches, market
participants are demanding
increased premiums for access
to liquidity which has led to
a recalibration of new issuepremiums required to clear the
markets,” said Ed Tsui, head of
Asia debt syndicate at Deutsche
Bank.
Annual issuance had reached
US$293bn by the end of last
week, according to Thomson
Reuters data, having broken
last year’s record within the
first three quarters of this year.SPOILED FOR CHOICE
Market liquidity was abundant
for rare blue-chip issuers
such as Indian refiner RELIANCE
INDUSTRIES, which priced the 10-year US dollar bond in its first
offshore visit since 2015, giving
the new issue some rarity
value.
Union Bank of the
Philippines also received
solid attention after offering
generous initial price guidance
in a shaky market, allowing thelender to tighten more than
30bp at final pricing. It priced
a US$400m issue, then tapped
the bonds on Friday for another
US$100m.
But supply pressure left
some investors more selective,
particularly for names that
were issuing at tight levels.
China State Construction’s
new five and 10-year bonds fell
about 5bp in the aftermarket.
“We have observed the
supply of HY corporate surging
up compared to the same
period last year which resultedin new issues underperforming,
albeit more so in HY than IG,”
said Wan Howe Chung, head of
Asian fixed income at Amundi
Singapore.
Wan noted that defensive
sectors, such as those with
scarcity value like Philippine,
Malaysian and Thai credits,
have done well, compared
with sectors where higher
supply is expected, like
less strategic Chinese state-
owned enterprises and local
government funding vehicles.
CHIYU BANKING CORP failed
to tighten guidance for its
targeted benchmark offering
of Additional Tier 1 securities,
eventually sizing the deal at
US$250m. Like some other
issuers last week, it did not
disclose the final book size.
Notably, some issuers -
among them TIMES PROPERTY
HOLDINGS, BINHAI INVESTMENT, and
TIANQI LITHIUM - came out last
week with capped deal sizes
to try to create some pricing
pressure.
“The market is volatile
and investors are looking for
quality names with decent
concessions,” said another
banker. “They don’t want to
put money to risk especially at
this time when things might be
volatile.” bookbuilding on November
28, with pricing slated for the
week of December 4.
Bankers on the deal said
they are closely monitoring
any potential new regulations
from the sector.
“We still have some time.
We will see how investors
digest the news before making
any decision,” said one of the
bankers.
In its SEC filing,
LexinFintech said it had all
the necessary licences to
operate an online microcredit
business, Ji’an Fenqile Network
Microcredit, based in Ji’an
municipality, Jiangxi province.
It warned, however, that it
could not predict the impactof future legislation, noting
that the growing popularity of
online consumer finance made
further regulation more likely.
“They [LexinFintech] will
have to sell shares at a price
that factors in the risk of the
potential regulations, which
are expected to be announced
soon,” said a banker away from
the deal.CHANGING THE RULES
Last Thursday, the People’s
Bank of China and the
China Banking Regulatory
Commission were reportedly
meeting local government
officials to study the operations
of micro-lenders in their areas.
International FinancialNews, a newspaper managed
by the People’s Daily, said
China would run a thorough
check and clean up 157
existing online micro-lenders,
citing an industry insider with
knowledge of the information
from the State Council. Only
large state-owned companies
and large internet companies
would keep their licenses after
the clean up, said the report.
Some companies quickly
cancelled plans to expand into
the microcredit sector.
Zhejiang Busen Garments,
a Shenzhen-listed men’s
apparel company, originally
proposed to set up a micro-
loan subsidiary in February,
according to a company filing.ChiNext-listed Nexgo, a
manufacturer of financial
point-of-sales terminal
software and hardware, last
month secured board approval
to set up a micro-loan
company with a registered
capital of Rmb7.59m
(US$1.15m).
Founded in 2013, Shenzhen-
based LexinFintech operates
online consumer finance
platform Fenqile, online
investment platform Juzi Licai
and fund-matching technology
platform Dingsheng.
Bank of America Merrill Lynch,
China Renaissance, Deutsche
Bank, Goldman Sachs and ICBC
International are underwriters
on the float. International Financing Review Asia November 25 2017 5For daily news stories
visit http://www.ifrasia.com“Market participants are demanding increased
premiums for access to liquidity which has led to
a recalibration of new issue premiums required to
clear the markets.”1019_04 News.indd 5 24/11/2017 21:53: