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L TInvestment Facility (CGIF) is likely to emerge over the next few months via HSBC, which ocal Markets he first bond issuance guaranteed by the Asian Development Bank’s Credit Guarantee and
has been mandated by a Thai corporate aiming at tapping the Singapore dollar market.to develop Asia’s local bond markets and will only guarantee ASEAN currency local debt.The CGIF, which is structured as a US$700m trust forms part of ADB’s mission statement
CGIF’s underwriting policy and fee structure is still being thrashed out, but is likely tomimic JBIC’s structure where around 80bp is charged for a 95% credit guarantee.CGIF intends to guarantee issuance in the US$50m–$75m-equivalent ballpark, targeting
companies in the MME sector which would be unable to get a sufficiently high rating fromthe main agencies to be able to issue in the offshore G3 public markets.The move to establish the fund forms party of the ASEAN +3 drive to deepen the region’s
bond markets and foster regional financial cooperation. In 2010 ASEAN +3 established theChiang Mai Initiative Multilateralization agreement by which US$120bn was set aside toprovide a facility that would address short-term liquidity shortages in ASEAN +3 member
countries.from its vast roster of commercial banking customers in Asia, to whom the UK bankThe Thai mandate is the fruit of HSBC’s cross-selling initiative to derive DCM business
provides FX, working capital and trade finance lines and which HSBC hopes to pushfurther out on the term funding curve.
S Itone and all minds focused on the European summit later this week for cues on the short- econdary t was a light trading day in Asian credit markets with little local input to set a definitive
term direction.2022s up at a 100.75 bid, versus the deal’s par reoffer last week and the Hang Lung 2017s atMeanwhile, recent new issuance has for the most part held in well, with the First Pacific
Treasuries plus 325bp bid versus a plus 335bp reoffer spread. An exception are the IOI2022s which are hanging at plus 283bp bid versus a plus 280bp reoffer.The attack on Evergrande’s paper following a “research report” from US-based Citron
research partially reversed, with the company’s due 2015s up a quarter to 93 bid, havingtanked to a low print of 89 soon after the report came out last Thursday.The rest of the China property sector had a mildly encouraging day of trading and was
up around a quarter on average. Bellwether Cogard 2018s are up a quarter at 99.625, whilethe recently issued Agile 2017s are up 0.375 at 98.75 bid.A regional syndicate head remained upbeat about the potential for the heavy Asian
pipeline to convert into a live deal, noting that in the US last week some US$2.5bn flowedinto high-grade bond funds, underscoring the bias away from risky equities and intoinvestment vehicles offering a pick-up to the scant yields available at the short end. About
US$553m went into EM bond funds too, another number that could support additionalactivity in Asia.
PIPELINE S KK Innovation –epco – BofA Merrill, Citi, HSBC, MS, UBS US$ BofA Merrill, BNP, Citi, MS
H Z S ABM InvestamaHK & Co –yundai Motor –hengTong –US$ StanChart, UBS^ JP Morgan^ – GS, MS US$ BofA Merrill, Barclays, DBBTianrui –aoxin – G XacBank (^) olomt – US$ MS, UBS US$ DB, MS, UBS– US$ ING, UBS US$ DB
HOB C Shinhan – Iongqiaooun – US$ Citi, HSBC, SCB, JPM, RBS, Barclays, try Garden – (^) US$ BofA Merrill, DB– US$ Barclays, DB, JPMUS$ GS, JPM DB
Gorea Telecom –S Caltex – Aluminum Corp of China – C Khina Cosco – US$ Citi, GSUS$2bn SFr CS, UBS US$1.2bn
C Q S Korea Midland Power –itic Bank International –tate Bank of India –uezon Power (Philippines) –^ US$500m Citi, HSBC^ US$ JPM, MS^ US$ HSBC, RBS US$ HSBC
I Aluco –ndian Bank – Bharti Airtel US$ BNP, DBS – US$300m–$500m Citi, HSBC, RBS, StanChart (^) US$1bn 10-year Reg S/144a. Barclays, DB, HSBC, StanChart, UBS
line wThe contents of th© Thomson Reuline witpermission of the line with the publ© Thommson Reuteon Reuters publishers. Actionis Briefing, eitherishing dates of IF 2012 in whole or in part, may not be reproduced, copied, o will be taken agaR and will not appinst companies whoear during national holidays and the ignore this warnir distributed with magazine's annualng. IFR Daily Briefings are produced inout prior written end of year break.
FFIINNNNNGGG PAGE 2
CGIF)by a Tce gTuaThThahais larararai iiaaliliiii ankelnteikncoorteeeedelyrporate aed by y to emerge over the Asian Deviming at tapping the Singathe next few elopment Bankmonths via HSBC, which’s Credit Guapore dollar mrantee andarket.
ing polocal bois struruolibolicyuctouolicyyndndy tutu add mmumaranndrreded d fee struarkets and as a US$7d will only guarantee ASEAN currency locture is stil00m trust forl being thrasms part of ADhed out, but B’s mission sis likely tocal debt.tatement
he MMucture to guarME sMEMEarare wwwhranwhnntntessecseheectheteeereotoe issuance in tir which woulde aaround 80bp is charged he US$50m–$75 be unable tofor a 95% cre get a sufficm-equivalent dit guaranteeiently high rballpark, tar.ating fromgeting
s o eand fcies to stabfofoo beo o bbblisfosstishshtertee e h er rh th aabhe reretheblee to issue igional financfund forms pan the offshorial cooperatirty of the ASEAN +3 drive e G3 public mon. In 2010 ASEAN +3 estabarkets.to deepen thelished the region’s
cnility titiatiththive ivtivhaate Mt wMuMMt wowooultltuuld address silateralization agreement hort-term liquidity shortages in ASEAN by which US$120bn was set +3 memberaside to
FX, asti mandwowo rosorkonddstststerdkinateeratkir r oteinnge of f cg ciscapitcos tthe frmmercial bankal and trade finance linesuit of HSBC’sing customers in Asia, to whom the UK b cross-selling initiative and which HSto derive DCMBC hopes to p businessankush
dary out on n ththeee teermrm funding curve.
and alldirecta lightht tiotitiot l l t trn.trannmnminmiinraadndds dins focusedingng day in Asian cr on the Europedit markets with little local input to set a definiean summit later this week for cues on the short-tive
eanwhasurie2s up es pesesahhat ahileleplpus uaaale, 110 , rs 3ree 00 0.75 bid, 325bp bid ccent new issuversus a plus 335bp reoffeversus the deance has for the most partal’s par reoffer last week and the Hangr spread. An exception are held in well, with the Fi Lung 2017s a the IOIrst Pacifict
esearc22s whThe awhchatchattaatch phichpappaacacartchckck oh ah chk onrtiaaonially reversere hanging atre Evergrande’sd, with the c plus 283bp b paper followompany’s due id versus a plus 280bp reoing a “research report” fr2015s up a quarter to 93 bid, havingffer.om US-based Citron
tankedup arThearhe e e reroudd todroununreundesestnd too o ast oa ld a a qlofow print of 8of tuarter on avehe China prop9 soon after rage. Bellwether Cogard 20erty sector had a mildly encouraging dathe report came out last T18s are up a hursday.quarter at 99.625, whiley of trading and was
the rpipAA ppeliA reAplinrrecrregne tneinceceeggioe toengionntnal syo ctlyly issued Agile onvert into andicate head live deal, n2017s are up remained upbeat about the oting that in0.375 at 98.7 the US last week some US$5 bid.potential for the heavy As2.5bn flowedian
UintinUntUS$UntnvenS$n$5$5to o h 553 eessthhihightm3m went gh-me3mh-graent vede bond fundshicles offering a pick-up into EM bond , underscorinfunds too, anto the scant g the bias away from riskyother number yields available at the shthat could support additio equities andort end. About intonal
aactactiPPPIPtivtivIPEvitELLINEityy in Asia.
S A S KeABepKpco –K InBM Investamannovation BofA Merrill,–US$ BofA Merrill, BNP, Citi, (^) – GS, MS Citi, HSBC, MS, UBS MS
SZZSB HH BH Zyundai Motor Haoxin –hengTong –HK & Co –y US$ MS, UBSUS$ StanChart^ JP Morgan– US$ BofA Merrill, Barclays, , UBS DB
XacBank HTianrui – G^ olomt –ongqiao^ US$ DB – US$ ING, UBUS$ DB, MS, U– US$ BarclaySBSs, DB, JPM
IOB S G CS Caltex –hinhan –oun – US$ Citi, Htry Garden – US$ BofA Merr US$ Citi, GSSBC, SCB, JPM, US$ GS, JPMill, DBRBS, Barclays, DB
C Korea Telecom Aluminum Corp Korea Midland hina Cosco – US$2bnPower –^ of China ––SFr CS, UBS US$ JPM, MSUS$1.2bn^
S Q C Iitic Bank Intate Bank of uezon Power (Philippines) –ndian Bank –ternational –India –US$300m–$500m US$500m Citi,^ US$ HSBC, RBS (^) US$ HSBC (^) Citi, HSBC, RB HSBCS, StanChart
Aluco – Bharti Airtel US$ BNP, DBS– US$1bn 10-year Reg S/144a. Barclays, DB, HSBC, StanChart, UBS
developments. If that is true, then Indian companies will soon have access to theinternational capital markets again.DCM bankers tend to say that credit markets are always the first to price in future
since they peaked in the beginning of June as credit investors seemed to be predicting thatNew Delhi would do something to stop the free-fall of the rupee and boost the economy atSpreads on the dollar bonds from India-based institutions have been tightening steadily
government announced plans to increase by US$5bn to US$20bn the total amount thatthe same time.They were right in expecting that, if this was the driver, as on Monday the Indian central
foreign investors can put into local government bonds.56.97/US$ after the announcement, close to its all-time high of 57.12 hit last Friday. TheForeign exchange markets greeted the measures with scepticism, pushing the rupee to
Sensex went into negative territory after the announcement. But In
dian dollar bonds did
2015 bonds of thenot give back what they had gained in recent weeks.More than that, one trader said he saw increased buying interest in Indian names. The
of May.2016s have been trading in the 420bp area, almost 30bp inside the wide they hit at the end55bp since June 15, when they hit this year’s wide of 392bp, mid-market. ICICI Bank’s STATE BANK OF INIDA^ , for instance, have seen their spread tighten by some
closely. The institution is said to have held informal talks with banks as iIt is no wonder, then, that the State Bank of India has been monitoring the market more
t plans to raise at
involved in the discussions. The bank has not handed out RFPs for this deal.least US$1bn through a Reg S/144a issue in August – or even earlier – according to bankersOne banker, though, was betting there may not even be an RFP for a transaction of SBI.
first out. “It will have to be SBI” to reopen the market for them, he said. He added, though,“They are getting daily updates from the banks and will probably just announce,” he said.He noted that Indian banks were looking at the market but that SBI was likely to be the
actively buying dollar-denominated loan portfolios from European banks, which arethat levels were not yet where the bank wanted them.This comes as Nomura circulated a note on Monday stating that Indian banks have been
exiting that market as they deleverage. Nomura noted that SBI in particular had boughtUS$500m in loans recently and hence may need to raise dollars to fund these acquisitions.
level of 350bp over Libor. Its 2015s are currently trading at a Z-spread of 347bp–327bp. If itpriced the new five-year flat to that, it might be able to achieve the Libor level it seNomura also said SBI was eyeing a five-year bond with a spread equivalent to a swapped
eks, but
any new issue premium could breach the threshold, so SBI is likely to wait for its bonds totighten a bit more.
these loan acquisitions. But corporates are also looking at dollar market more closely asdollar loans become scarcer.Other banks are likely to follow into the footsteps of SBI as they seek dollars to fund
looking at bonds, according to bankers.India’s Jindal Steel and Power could be looking to raise dollars to partly refinance its US$75m JNIDA SLTEEL AND POWER and Indian transmission utility Power Grid Corp are both
loan maturing in November 2012 in addition to fresh borrowing. On top of that, JSPL has aplanned capex of about Rs100bn (US$1.8bn) in the fiscal year that started in April which itmay look at funding through dollar bonds.
for investments of Rs200bn in 2012/13 to expand its capacity.All of the issuers, though, would like to see spreads tighten a bit further. However, credit POWER GRID CORP also aims to tap the dollar bond market as a new issuer as it seeks funding
investors have already predicted that Indian issuers are keen on the market, so they areholding back from buying massively in the secondary – even if some find the curren
t levels
attractive.tightened spreads. But there seems to be a floor, simply because of the pending supply.Again, investors have been nibbling on the Indian bonds and that alone has already
first.This suggests that a well-priced first deal may even reprice the outstanding bonds tighter.Now, though, as bankers like to say, it is just a matter of who will stick their head out
The contents of this Briefing, either in whole or in part, may not be reproduced, copied, or distributed without prior writtenpermission of the publishers. Action will be taken against companies who ignore this warning. IFR Daily Briefings are produced i
n
line with the publishing dates of IFR and will not appear during national holidays and the magazine's annual end of year break.
© Thomson Reuters 2012
IFR ASIA DCM BRIEFING JUNE 25 2012
PAGE 1
Follow us @IFRAsia
ASIA PAC G3 (EX JAP) DCM BOOKRUNNERS: 1/1/2012 TO 21/6/2012Managing bank
(^1) JP Morganor group No. ofissues 54 US$(m)TotalShare(%)
3 Citigroup2 HSBC Holdings 4058 12,735.612,528.29,292.511.511.7
6 Morgan Stanley4 Deutsche Bank5 Barclays 362643 9,208.37,698.28.57.18.6
7 Standard Chartered 8 Goldman Sachs (^3319) 6,802.45,892.77,294.56.76.3
10 UBS9 BofA Merrill LynchTotal 1722228 4,205.04,490.73.94.15.4
Source: Thomson Reuters (SDC code: AR1)ASIAN CURRENCIES DCM 108,588.8
BOOKRUNNERS: 1/1/2012 TO 21/6/2012Managing bank No. of
1 or groupHSBC Holdings issues 211 US$(m)11,842.0TotalShare(%)
2 Standard Chartered 3 CITIC4 China International Capital 11 (^19121) 11,383.69,240.45.94.86.1
5 Haitong Securities 6 Bank of China Ltd 224 6,523.26,448.68,905.84.63.4
7 China Construction Bank8 UBS9 Hana Financial Group (^1414) 6,059.35,490.12.83.33.1
Source: Thomson Reuters (SDC code: AS1)10 DBS Group HoldingsTo t a l 1,273 194,562.2^2837 5,358.64,295.12.82.2
HONG KONG DCM BOOKRUNNERS: 1/1/2012 TO 21/6/2012Managing bank
(^1) HSBC Holdings or group No. ofissuesUS$(m)TotalShare(%)
3 RBS2 Standard Chartered^73569 20,802.832,644.0 46.04,539.029.3
6 UBS4 BNP Paribas 5 National Australia Bank^144 4,260.01,543.62.26.46.0
7 Barclays8 Bank of Communications 232 1,400.01,190.0800.02.01.7
10 BofA Merrill Lynch9 Morgan StanleyTotal 17212 683.0772.01.11.01.1
analyse investment banking and deal trends take a Source: Thomson Reuters (SDC code: AS5a)To find out how you can generate league tables and71,025.4
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