Angola breaks US dollar drought
Sovereign brings first CEEMEA deal in the currency since early June
A remarkable event took place on Monday –
a CEEMEA bond deal.
It was only a tap, but still it gave bankers
covering the market a lift, proving that
demand is intact for the right name at the
right price.
The name in question was ANGOLA, which
tapped its US$1.25bn 9.375% May 2048s for a
further US$500m. The price in question was
102.76, or more clearly, a yield of 9.10% –
20bp back of where the bonds were bid at
the previous Friday’s close.
“This was an attractive opportunity to
increase their long-dated funding,” said a
banker close to the deal.
Angola (B3/–/B) has been one of the best
performers throughout the past few
turbulent months. The 2048s, for example,
HAVEûBRIEmYûDIPPEDûBELOWûPARûATûTIMESûBUTûONû
the whole have traded pretty well.
They peaked in the mid-108s in late
May and were still bid at 104.861 at the
close on July 13. The performance had
encouraged accounts to show interest in
more supply.
The bonds began marketing with a
healthy 40bp new issue premium at 9.30%
area. That helped build a book of US$3.25bn.
“It highlights there’s still decent liquidity,”
said the banker.
Despite the level of demand, the leads
were keen not to push too far on pricing.
“We could have been more aggressive
but it was important to maintain the
quality of the investor base,” said the
banker.As on the original offering, Deutsche Bank,
Goldman Sachs, and ICBC were the leads.
4HEû!NGOLAûTAPûWASûTHEûlRSTû53ûDOLLARû
issue from a CEEMEA borrower since
Romania’s on June 7 and the deal was only
the second by a sovereign from the region in
the greenback since mid-May.
Bankers are hopeful, though, there will be
at least a couple of more deals over the next
fortnight or so before the summer break
properly kicks in.
Nigeria has been touted as one possibility,
though bankers say they would not be
surprised if the West African country waited
until September.
Instead, others are expected to pick up the
baton, especially as credit markets appear to
be showing signs of recovery. The total
return for the emerging markets since the
beginning of the month, for example, is
2.05%, according to JP Morgan’s EMBI Global
$IVERSIlED ûWHICHûMEASURESû53ûDOLLARûDEBT
Sudip Roy FRONT STORY CHINA
SF reopens investment-grade market
Company delivers debut logstics bond as Chinese high-grade supply resumes
Delivery company SF HOLDING reopened the
US dollar market for Chinese investment-
grade new issues with a US$500m debut
that drew strong demand.
The A3/A–/A– issuer on Thursday priced
THEûûlVE
YEARûBONDSûATûûTOûYIELDû
4.173%, or Treasuries plus 140bp, well inside
initial 160bp area guidance.
4HEû2EGû3ûISSUE ûWHICHûDREWûlNALûORDERSû
of more than US$3.5bn from 155 accounts,
WASûALSOûTHEûlRSTûOFFSHOREûBONDûOFFERINGû
from China’s fast-growing express delivery
sector.
“SF is a household name with solid credit.
Investors’ interest in the name was strong.
When we announced the mandate [on July
13], some investors already made indications
of interest,” a banker on the deal said.
There were billions of dollars of IOIs on
THEûlRSTûDAYûOFûTHEûROADSHOWûONû-ONDAY û
WHICHûREmECTEDûINVESTORSûHUNGERûFORûDECENTû
names after a more than one-month
drought of new supply from Chinese
investment-grade corporate issuers,
according to the banker.
The window was also good as market
sentiment had improved since the previous
Friday.
A moderate issue size also helped in
marketing the deal. The company at the
beginning only applied for a US$500m
OFFSHOREûDEBTûISSUANCEûQUOTA ûWHICHûlTTEDû
with a benchmark deal and avoided
swamping the market with a big issue size.
SF, which completed a backdoor listing on
the Shenzhen Stock Exchange in 2017, is
China’s largest express delivery company by
revenue with a 14% market share in 2017,
based on industry data published by the
3TATEû0OSTû"UREAUûANDûCOMPANYûlLINGSLEADING PLAYER
Nomura’s trading desk put fair value for the
new issue at Treasuries plus 140bp–150bp. It
saw SF as a similar credit to Baidu, rated
A3/A (Moody’s/Fitch), as both of them are
leading players in their respective
industries with comparable credit metrics,
ANDûADDEDûBPnBPûASûAûlRST
TIMEûISSUERû
premium.
The banker on the deal did not give an
exact number on the new issue premium
that SF offered, but said the deal was not
tightly priced as the issuer was concerned
about the aftermarket performance of its
lRSTûINTERNATIONALûCAPITALûMARKETSûDEALThe newly priced notes traded 5bp–7bp
tighter in the secondary market on Friday
morning, according to a trader.
Nomura said it likes SF for its leading
position in the middle-to-high-end package
express delivery market in China, its
relatively high competitiveness due to its
self-owned business model versus the
franchise model adopted by most local
peers, and solid credit metrics.
“We also expect the company to maintain
its monopoly position in the high-end
market considering the relatively high
entry barrier (both capital intensive and
time consuming) for its competitors to adopt
this self-owned business model given they
have almost fully covered metropolitan
areas using the franchise model,” Nomura
added.
-OODYSûSAIDû3&SûSTRONGûlNANCIALûPROlLEû
ANDûmEXIBLEûCOSTûSTRUCTUREûPROVIDEDûITûWITHûAû
buffer to absorb its sizeable investment
needs amid a fragmented and competitive
operating environment.
Credit Suisse, HSBC and Morgan Stanley were
global coordinators and lead managers on
the deal.
Carol ChanEMERGING MARKETS
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