ASIA-PACIFIC
CHINA
GANSU LGFV PRINTS RARE BENCHMARKGANSU PROVINCIAL HIGHWAY AVIATION TOURISM
INVESTMENT GROUP, seizing upon improved
sentiment in Chinese credit, on Thursday
PRICEDû53MûOFûSENIORûNOTESûINûTHEûlRSTû
benchmark-sized US dollar bond from a
LOCALûGOVERNMENTûlNANCINGûVEHICLEûINû
months.
“The Chinese government’s recent shift
towards a more accommodative policy
stance was supportive for the LGFV sector
and gave room for us to launch the deal,”
said a banker on the transaction.
The 6.25% three-year notes were priced at
99.328 to yield 6.50%, unchanged from price
guidance.
The Reg S issue offered a moderate 10bp–
15bp new-issue concession, according to the
banker. The notes have expected ratings of
BBB–/BBB– (S&P/Fitch), in line with the
issuer.
LGFV bonds have been hit by heavy sell-
offs in the past few months as a number of
LGFVs and state-owned enterprises have
defaulted on asset-management products
and trust loans. New US dollar issuance of
LGFVs has been partly closed since late
April, with only a small number of private
placements taking place.
But China’s recent easing measures have
given impetus to the sector. LGFV bonds
have staged a broad-based rally because of
HOPESûTHATûlSCALûANDûMONETARY
POLICYû
adjustments will help ease the sector’s
lNANCIALûDIFlCULTIES
China’s State Council on Monday
unveiled plans to adopt a more vigorous
lSCALûPOLICYûTOûHELPûTACKLEûEXTERNALû
uncertainties, which include trade tensions
WITHûTHEû53û)NûPARTICULAR ûITûSAIDûlNANCIALû
institutions should be guided to ensure that
,'&6SûREASONABLEûlNANCINGûNEEDSûAREûMET
The People’s Bank of China has also
INJECTEDûSIGNIlCANTûLIQUIDITYûINTOûTHEû
lNANCIALûSYSTEMûANDûSAIDûITûWOULDûALLOWû
commercial banks to tap its medium-term
loans, helping them, among other things, to
increase investment in onshore bonds of
lower-rated companies.
In addition to better risk appetite, Gansu
Highway’s bookrunners also lined up
SIGNIlCANTûANCHORûINTERESTûBEFOREûSENDINGû
OUTûlNALûPRICEûGUIDANCEûONû4HURSDAYû
morning.
“Anchor interest covered 70%-80% of the
deal size before we pushed out the deal,”
said the banker, and the improved
sentiment also attracted other investors.
Another supporting factor was the relatively
sparse offshore bond supply from Gansu, a
north-central province, relative to other areas
such as Jiangsu, Yunnan and Tianjin.
“The issuer is the only LGFV in Gansu
province that has issued offshore bonds,
meaning that supply from Gansu is limited,”
the banker said. The importance of the
issuer to the provincial government also
GIVESûINVESTORSûCONlDENCE ûTHEûBANKERûSAID
Gansu Highway is the only enterprise
authorised by the provincial government to
manage and operate transport
infrastructure projects in the province.
)TûlRSTûTAPPEDûTHEûOFFSHOREûBONDûMARKETû
with US$500m three-year bonds in
November 2016. It then priced €410m
(US$480m) three-year bonds last November.
The banker said his bank was gauging
interest in other potential LGFV issuers
before investors headed off on holiday.
These include YIWU STATE-OWNED CAPITAL
OPERATION, rated Baa3 by Moody’s, and TIANJIN
FREE TRADE ZONE INVESTMENT HOLDING GROUP,
rated Baa2/BBB+ (Moody’s/Fitch), by end-July
or early August.“The outlook for the Asia credit market is
DIFlCULTûTOûPREDICTûAMIDûGLOBALûECONOMICû
uncertainties: it is important to grab the
window available for bond issuance,” the
banker said.
2ESEARCHûlRMû#REDIT3IGHTSûSAIDûTHATûMOSTûOFû
its clients remain wary of the LGFV sector,
preferring only to invest in higher-quality
credits such as larger LGFVs with strong
BUSINESSûPROlLESûATûHIGHERûGOVERNMENTûLEVELS
“Nobody seemed keen to invest in the
smaller LGFVs such as county-level entities.
Everyone admitted that the lack of visibility
INûTHEûlNANCIALûSTRENGTHûANDûVIABILITYûOFû
most LGFVs was a challenge to investors,”
CreditSights wrote in a note.
'ANSUû(IGHWAYSûDEALûDREWûAûlNALûBOOKû
of over US$475m from 35 accounts. By
investor type, 55% went to banks, 35% went
to fund managers, and 10% went to private
BANKS ûCORPORATESûANDûSECURITIESûlRMSû!û
geographical breakdown was not available.
The proceeds will be used for business
development, including general corporate
purposes and debt repayment.
Bank of China, Barclays and Citigroup were
global coordinators. They were also
bookrunners and lead managers along with
Industrial Bank Hong Kong branch, China
Construction Bank (Asia), Tensant Securities,
China Citic Bank International, China Everbright
Bank Hong Kong branch and Guotai Junan
International.GREENLAND TAPS 2021 FLOATERSGREENLAND HOLDING GROUP ûTHEûlRSTûHIGH
YIELDû
Chinese property developer to issue US
DOLLARûmOATING
RATEûBONDS ûHASûREOPENEDûTHEû
ûmOATERSûITûSOLDûLASTûMONTHûTOûRAISEûANû
extra US$300m.
The additional bonds were sold at 100.02,
or three-month US dollar Libor plus 485bp,
UNCHANGEDûFROMûlNALûPRICEûGUIDANCE
Following the tap, the outstanding size of
the September 2021 senior unsecured Reg S
notes, rated Ba2 by Moody’s, is US$550m.
4HEûTAPûATTRACTEDûlNALûORDERSûOFûMOREû
than US$800m from 62 accounts. Asia took
99% of the notes and Europe 1%. By investor
type, 53% went to fund managers and asset
managers, 33% went to banks and securities
lRMS ûûTOûSOVEREIGNûWEALTHûFUNDS ûANDûû
to private banks and corporates.
The Shanghai-based developer, rated Ba1/
BB/BB–, plans to use the proceeds mainly for
DEBTûRElNANCINGûANDûTHEûREMAINDERûFORû
general corporate purposes.
Greenland Global Investment is the issuer
and Greenland Holding Group the guarantor.
BOC International was sole global
coordinator as well as joint bookrunner and
joint lead manager with China Industrial
Securities International, Haitong International and
Orient Securities (Hong Kong) on the reopening.ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Asia-Pacific
Managing No of Total Share
bank or group issues US$(m) (%)
1 HSBC 131 14,334.15 8.0
2 Citigroup 74 9,329.02 5.2
3 Bank of China 98 8,835.66 4.9
4 Standard Chartered 81 7,989.32 4.4
5 Morgan Stanley 41 7,396.87 4.1
6 BNP Paribas 58 6,893.22 3.8
7 Credit Suisse 45 5,873.39 3.3
8 Citic 61 5,529.95 3.1
9 UBS 56 5,154.60 2.9
10 Credit Agricole 42 5,046.84 2.8
Total 402 180,074.98
Excluding equity-related debt.
Source: Thomson Reuters SDC code: L4
ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 155 36,498.93 9.8
2 HSBC 184 30,460.15 8.2
3 JP Morgan 95 22,927.00 6.2
4 Deutsche Bank 74 20,441.33 5.5
5 Standard Chartered 121 19,547.16 5.3
6 BNP Paribas 89 14,226.59 3.8
7 BAML 67 11,141.89 3.0
8 Morgan Stanley 56 10,750.63 2.9
9 Credit Suisse 63 10,315.38 2.8
10 Bank of China 102 10,295.56 2.8
Total 617 371,831.97
Excluding equity-related debt.Source: Thomson Reuters SDC code: L1