ASIA-PACIFIC
BANGLADESH
BANGLALINK SEEKS TO AMEND TERMSBANGLALINK DIGITAL COMMUNICATIONS is seeking
to amend certain terms of its US$300m
8.625% bonds due May 6 2019 to allow it to
increase its consolidated leverage ratio to
5.0x from 3.5x, among other things.
The Bangladeshi mobile operator is
offering bondholders a consent payment of
US$1.50 per US$1,000 in principal amount if
they agree to the changes.
Citigroup is consent solicitation agent for
the offer, which ends on September 11.CHINA
BOC REPRICES ONSHORE TIER 2 BONDSBANK OF CHINA has upended China’s onshore
Tier 2 market with its latest offering,
breaking with the long-standing pricing
conventions that China’s big four banks
have relied on for their subordinated debt.
Unusually in the domestic bond market,
where most bonds are priced in nominal
yield terms rather than against a
benchmark, the notes were marketed at a
spread over China Development Bank’s
bonds.
BOC sold Rmb40bn (US$5.85bn) of 10-year
non-call five notes at 90bp over the yield of
CDB’s five-year notes, or a yield of 4.86%.
The indicative price range was a spread of
60bp–120bp.
The yield – and implied spread – was
significantly higher than for the Tier 2 notes
several of the big four have issued over the
past year, all of which carried the same4.45% yield regardless of issue date or size.
For instance, when BOC sold Rmb30bn 10-
year non-call five notes in September 2017,
the nominal 4.45% yield represented a 20bp
spread over CDB’s comparable bonds. In
contrast, when Industrial and Commercial
Bank of China priced Rmb44bn notes two
months later, the 4.45% yield was 18bp
inside CDB.
BOC’s latest deal offers “a much fairer
pricing that reflects the current market
sentiment and investor appetite”, said a
syndicate banker away from the deal. “The
issuer did not squeeze the pricing
deliberately as the big four used to do.”
According to BOC, more than 100
institutions placed orders during
bookbuilding. Eventually, the offering,
which was also available to offshore
investors via the Bond Connect link, was 1.8
times covered.
Six offshore investors received
allocations, including central banks,
commercial banks and fund managers/asset
managers, BOC said.
It has long been an open secret in China’s
onshore market that the big four banks
cross-held each other’s Tier 2 notes and
agreed on identical pricing.
To avoid a capital charge on holding each
others’ Tier 2 paper, banks used to buy them
via off-balance-sheet wealth management
products, which are of fairly short duration.
However, as regulatory scrutiny of off-
balance-sheet activities has intensified,
many banks had to bring WMPs onto their
books, constraining their capital.
The China Banking and Insurance
Regulatory Commission released draft rules
on commercial banks’ WMPs in July, saying
that these should be managed based on their
net value and that maturity mismatches
should be banned.
“The traditional demand for Tier 2 has
declined as the growth of WMPs slowed and
the 10-year non-call five format became toolong for WMPs,” said another syndicate
banker familiar with BOC’s deal.
The banker said in order to diversify the
investor base for Tier 2 notes, lenders had to
price the notes in a way that respected
market dynamics.
He and some colleagues expected the
other big three to follow suit and adopt
market-oriented pricing as the supply of
Tier 2 paper is set to rise.
ICBC last month announced that it
planned to raise up to Rmb110bn-equivalent
from offerings of Tier 2 capital instruments.
China Construction Bank is also heard to be
planning a jumbo Tier 2 offering having last
sold Tier 2 securities in 2015, according to
market sources.
“BOC led the change in the segment of
Tier 2 notes that is being encouraged by
regulators,” said the banker.
Both BOC and the notes are rated AAA by
Golden Credit Rating International.
BOC International (China) was lead
underwriter and bookrunner on the offering
with Citic Securities, China Securities and China
Merchants Securities as joint lead
underwriters.
Following BOC’s deal, SHANGHAI PUDONG
DEVELOPMENT BANK later in the week priced its
first offering of Tier 2 notes in three years,
also on a spread relative to CDB. The
Rmb20bn 10-year non-call five notes offered
100bp over CDB, or a yield of 4.96%.CCB MANDATES FOR
SUSTAINABILITY BONDSCHINA CONSTRUCTION BANK CORPORATION has
mandated China Construction Bank, HSBC,
Credit Agricole, Citigroup, BNP Paribas and
Mizuho Securities as joint global coordinators
for a US dollar-denominated Sustainability
bond.
Fixed income investor meetings in Hong
Kong, Paris and London will start on Monday
for the proposed Reg S senior unsecured notes.
The notes will be issued by CCB Hong
Kong branch, while euro-denominated Reg S
Green bonds will be issued by CCB
Luxembourg branch.
Together, the notes are expected to be in
short-to-intermediate maturities.
HSBC and Credit Agricole are the joint
Sustainability and Green structuring
advisers.
The notes are expected to be rated A1 by
Moody’s.HUACHEN ENERGY SENT NOTICE
OF DEFAULTCiticorp International sent a notice of
default as trustee last week to investors
holding HUACHEN ENERGY’s 6.625% US$500m
notes due 2020.58 International Financing Review September 8 2018ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Asia-Pacific
Managing No of Total Share
bank or group issues US$(m) (%)
1 HSBC 152 16,338.59 7 .9
2 Citigroup 80 10,163.42 4 .9
3 Bank of China 106 9,404.63 4 .6
4 Standard Chartered 93 8,884.20 4 .3
5 Morgan Stanley 49 8,266. 17 4 .0
6 BAML 50 7 ,480.92 3.6
7 BNP Paribas 65 7 ,424.70 3.6
8 Goldman Sachs 37 6,708.77 3.3
9 UBS 68 6,298.36 3. 1
10 Credit Suisse 49 6,110.29 3. 0
Total 455 2 05,783.27
Excluding equity-related debt.
Source: Thomson Reuters SDC code: L4ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 164 38,046.57 9 .4
2 HSBC 207 32,449.60 8. 0
3 JP Morgan 103 2 4,182.14 6. 0
4 Standard Chartered 140 21,586.36 5.3
5 Deutsche Bank 80 2 0,822.27 5. 1
6 BNP Paribas 96 14,686. 25 3.6
7 BAML 75 13,736. 07 3. 4
8 Goldman Sachs 49 12,448.73 3. 1
9 Morgan Stanley 66 12,163.75 3. 0
10 Barclays 51 11,225.93 2.8
Total 689 404,926.19
Excluding equity-related debt.Source: Thomson Reuters SDC code: L18 Emerging 2250 p57-66.indd 58 07/09/2018 18:54:48