News
China Tower aims for broad base
Equities World’s largest IPO in four years comes with modest cornerstone trancheBY FIONA LAUCHINA TOWER has launched
its giant Hong Kong IPO
after lining up cornerstone
commitments for less than a
fifth of the up to HK$68.1bn
(US$8.7bn) base deal, gambling
that markets will hold firm
despite the summer lull.
The world’s largest telecoms
tower operator started
bookbuilding last Monday for
a float that is set to surpass the
HK$42.6bn listing of Xiaomi in
early July as the world’s largest
IPO since Chinese e-commerce
giant Alibaba’s US$25bn US
listing in 2014. Including the
greenshoe, China Tower could
raise up to US$10bn.
The company is selling about
43.1bn primary shares, or a
25% free float, at an indicative
price range of HK$1.26–$1.
each, valuing the company at
US$28bn–$35bn.The deal is seen as a key test
of the Hong Kong IPO market
given the around 6% slide in thebenchmark Hang Seng Index so
far this year.
It also comes as China’seconomy has begun to lose
momentum amid a government
push to reduce debt andKKR’s record Taiwan LBO 06 Pinduoduo pops 41% 06 LTA extends curve 07
China developers resume rush
Bonds Policy-driven rally spurs busiest week for dollar debt since AprilBY CAROL CHAN, INA ZHOUChinese property developers
scrambled to print US dollar
bonds last week, taking full
advantage of a policy-driven
rally that some investors
warned may be short-lived.
Six developers raised a
combined US$2.2bn, marking
the busiest week for new issues
from the sector in more than
three months.
In a reversal of the recent
trend, most of the deals drew
decent demand, closing 2-
times covered, and their
bonds traded firmer in the
secondary market. That was
a stark contrast to new issues
as recently as July 11, when a
US$200m offering from repeatissuer Agile Group struggled
to clear the market and
immediately traded wider.
Rather than a sustained
rebound, however, many
market participants saw the
rush of issuance as a sign the
renewed interest in the sector
may be temporary.
“Market sentiment is
definitely much better than in
June or early July. Developers
are rushing to launch their
deals as the window may
be short-lived in a volatile
market,” a DCM banker from a
Chinese bank said.
“Moreover, many developers
are set to announce their half-
year earnings in August. They
want to complete their bond
issuance ahead of the blackoutperiod,” the banker added.
The Chinese high-yield
bond market has rallied since
mid-July after authorities
provided more liquidity for the
domestic market and softened
the deleveraging push in the
financial sector. A surprise
liquidity injection into the
banking sector last Monday
added further confidence
that China would support the
economy amid an escalating
trade war with the US.
Still, despite an improvement
in sentiment, bankers and
issuers remain realistic. All six
developers structured their
deals to appeal to investors’
preferences, with short tenors
or floating-rate structures. And,
crucially, all of last week’s high-yield issuers provided 30bp–50bp
new issue concessions, according
to bankers.BIGGER SIZES
YUZHOU PROPERTIES, rated Ba3/
BB–/BB–, led the latest batch of
property names last Monday,
reopening its 7.90% May 2021
senior notes with a tap more
than double the original issue
size. (See China Debt capital
markets.)
The risk-on tone encouraged
others to rush out deals. On
Tuesday morning, SUNAC CHINA
HOLDINGS, rated B2/B+/BB–,
opened books for a two-year
new note and SINO-OCEAN GROUP
HOLDING, rated Baa3/BBB–
(Moody’s/Fitch), came out with
three-year floating-rate notes.
CHINA FORTUNE LAND DEVELOPMENT,
rated BB+ by Fitch, dashed out
with a print of three-year notes
with initial guidance of 9.5%
area on Tuesday afternoon after