News
Rising yields hit Asian issuers
Bonds Two borrowers shelve 10-year tranches after Treasuries hit 3%BY FRANCES YOONRising long-term US Treasury
yields forced Asian issuers to
rethink their funding plans
last week, with two borrowers
dropping plans for 10-year
tranches rather than lock in
higher borrowing costs.
PELABUHAN INDONESIA III (Pelindo
III) scrapped a 10-year US dollar
tranche during marketing and
HUAWEI INVESTMENT & HOLDING said
it would target euros instead
after the yield on the 10-year
US Treasury hit 3% for the first
time since January 2014.
But Chinese SOE STATE GRID
still priced a US$800m 4.25%
10-year bond on the same day
as Pelindo III. Chinese oil major
CNOOC also printed a US$1bn 10-
year on Wednesday. ( See News .)
The yield on the 10-year
US benchmark crossed the
3% threshold and Wall Street
stocks sold off last Tuesday. This
dampened interest in Pelindo’s
deal, even though bankers said
there was real-money demand
at the start of marketing inHong Kong.
“The tone was cautious,”
said a banker on the deal. “It’s
affecting the whole market.
Duration is not really the
flavour of the month right now
with Treasuries performing as
such.”
Inflation concerns linked torising commodity prices, along
with worries about growing
Treasury supply, have stoked
selling in Treasuries, analysts
said.
Against that backdrop, state-
owned Pelindo was less keen
to press on with its 10-year,
having set its sights on tightpricing and a benchmark size,
said the banker.
Initial pricing was announced
at 4.85% area for a five-year
piece and 5.35% area for the
10-year last Tuesday morning.
Guidance tightened to a final
4.75% and 5.15% during New
York hours, with a combinedPicky Singapore investors 06 Weak market no problem for SOEs 07 Biotech IPOs 08
Health website stirs IPO fever
Equities Investors cheer Ping An Healthcare but volatile markets remain a concernBY FIONA LAUThe Hong Kong IPO of PING AN
HEALTHCARE AND TECHNOLOGY has
drawn an overwhelming response
from both institutional and
retail investors, setting a positive
backdrop for the long line of
forthcoming floats in the city.
The Ping An Insurance
unit, China’s largest online
healthcare and medical website
by user numbers, wrapped up
its HK$8.77bn (US$1.12bn) float
last Thursday, pricing it at the
top end of the HK$50.80–$54.
indicative range to value the
company at US$7.5bn pre-shoe.Demand was strong from
day one with the books heavily
oversubscribed after the first
day of bookbuilding. Margin
financing volumes soared at
the beginning but slowed down
afterwards when margin rates
shot up.
Still, more than 220,000 retail
investors pledged their money
for a piece of the deal, resulting
in an enormous HK$376bn
subscription and leaving
the tranche more than 658x
oversubscribed, according to
people close to the float.
Bankers working with Ping
An Healthcare said the line-upof strong cornerstone investors
gave investors confidence,
despite the recent market jitters.
“It’s a deal with rare support
from global top-tier investors. We
haven’t seen such cornerstone
line-up for a Hong Kong IPO for
quite some time,” said one of the
bankers.
Seven cornerstone investors
took up a combined US$550m
of shares. They are US asset
manager BlackRock (US$125m),
Singapore sovereign wealth
fund GIC (US$100m), Canada
Pension Plan Investment Board
(US$100m), Capital Research and
Management Company Funds(US$75m), Malaysian sovereign
wealth fund Khazanah Nasional
(US$50m), Thailand’s Charoen
Pokphand Group (US$50m) and
insurer Swiss Re (US$50m).
“Ping An Healthcare is the first
big Hong Kong IPO in some time.
Investors are hungry for good-
quality and sizable floats,” said
another banker on the deal.
Ping An Healthcare is the
largest Hong Kong IPO since
China Literature’s HK$9.6bn
listing in November last year.NOT CHEAP
Some investors reckon the
offering is not cheap as Ping
An Healthcare’s valuation has
jumped 39% in just four months
from US$5.4bn, when SoftBank
Vision Fund bought a 7.4% stake
for US$400m last December.