IFR Asia – February 10, 2018

News

Volatility sidelines Asian issuers

„ Bonds Handful of borrowers brave market, but investors demand high premium

BY CAROL CHAN, DANIEL STANTON

Global volatility meant only a

handful of Asian issuers dared

brave the offshore bond market

last week, and those who did

had to pay up.

Ten-year US Treasury yields

jumped 5bp on February 2 on

better-than-expected non-farm

payrolls and wage growth, then

tighened 13bp last Monday

before widening 10bp on

Tuesday. The iTraxx Asia ex-

Japan investment-grade CDS

index widened 4bp on Monday

and by the same amount on

Tuesday, as risk appetite fell.

The REPUBLIC OF INDONESIA was

forced to delay a planned US

dollar offering, and the only

Asian investment-grade issuer

to complete a trade last week

was South Korea’s DAEGU BANK

with a US$300m 5.5-year issue.

“We are still having calls on

other deals, and other issuers

are standing down,” said a DCM

banker.

The relatively short tenor and

capped size of Daegu Bank’s

deal helped draw demand of

more than US$2.3bn, but final

pricing of Treasuries plus 135bp

was estimated at 10bp–15bp

wide of fair value, and the

bonds tightened 17bp in

secondary trading on Thursday.

Final pricing was also around

20bp inside initial guidance,

fairly modest for an Asian

dollar transaction, but in line

with US investment-grade

deals that came to market the

same day. Daegu Bank has

a US$300m bond maturing

on April 29, giving it little

flexibility on timing.

On Thursday, Indonesia’s

Panda rulebook 06 Singapore stalls 07 Vietnamese privatisations 08

Haier mulls Frankfurt listing

„ Equities Home-appliance maker among first to study new D-share format

BY FIONA LAU, JULIE ZHU

Chinese home-appliance giant

QINGDAO HAIER is considering a

listing in Frankfurt that would

create a new class of stock for

PRC companies.

Haier said in a filing last

Friday that it was studying the

feasibility of issuing D-shares

in Germany, adding that it

had not yet decided on the

potential issuance or hired any

advisers.

Reuters and IFR first reported

the plans last Thursday, citing

people familiar with the move.

Shanghai-listed Haier is one

of a few Chinese companies

studying the D-share format,

a joint initiative of stock

exchanges in Shanghai and

Germany.

The size of the share sale,

which could take place as

early as this year, has not been

decided as the discussions are

still at an early stage, according

to sources.

“The stock exchange would

want the company to do a

landmark transaction with a

sizable offering, say around

US$1bn, while the company

may not want to sell a big

chunk of shares at a discount,”

said one of the sources.

As of last Thursday, Haier’s

market capitalisation stood

at Rmb117bn (US$18.7bn),

with the stock trading at a

forecast 2018 P/E of about

14.5. Generally, investors look

for a discount when a listed

company sells shares in a

follow-on offering.

D-shares, similar to Hong

Kong-listed H-shares, are a new

product being touted by the

China Europe International

Exchange (CEINEX), a joint-

venture trading platform that

the Shanghai Stock Exchange,

China Financial Futures

Exchange and Deutsche Boerse

created in November 2015.

CEINEX markets itself as

a gateway for Chinese firms

looking to access European

investors, offering renminbi-

denominated products

including stocks, bonds and

exchange-traded funds on the

Frankfurt Stock Exchange’s

existing infrastructure and

under German regulations.

CHINA SHOWCASE

The Shanghai Stock Exchange

and Frankfurt Stock Exchange

are looking for a well-known

Chinese company to launch

the D-share format through

a sizable deal to showcase

the German city’s appeal as

a listing venue for Chinese

companies, according to one of

4 International Financing Review Asia February 10 2018