COUNTRY REPORT CHINA6.5% for a new US dollar five-year non-call
two senior secured bond offering.
New investors were to buy the bonds at
par, while holders of H&H’s 2021 bonds
who are participating in a concurrent
exchange offer could switch at US$1,000 in
principal amount of the existing notes for
US$1,042.29 of the new notes.
The Chinese nutrition and baby care
products provider, formerly called Biostime
International Holdings, said bondholders
had tendered US$177.366m, or 29.56%, of
its outstanding 2021s in the exchange offer.
H&H earlier indicated a minimum
coupon of 6.5%, and said the exchange offer
would proceed if at least 20% of the 2021s
were tendered.
The new 144A/Reg S bonds were
expected to be rated Ba2/BB+ (Moody’s/S&P).
Goldman Sachs was dealer manager for the
exchange offer and sole bookrunner for the
proposed new issue.
› SPDB HK PRINTS FLOATERSHANGHAI PUDONG DEVELOPMENT BANK, HONG KONG
BRANCH, rated Baa2/BBB/BBB, last Monday
priced a US$500m three-year US dollar
bond at three-month Libor plus 84bp,
tighter than initial guidance of 110bp area.
The Reg S notes have expected ratings of
BBB by Fitch.
The joint global coordinators were
Shanghai Pudong Development Bank, Hong
Kong branch, Agricultural Bank of China, Bank
of Communications, Haitong International,
Industrial Bank, Hong Kong branch and
Standard Chartered Bank.
The JGCs were also joint bookrunners
and joint lead managers with AMTD, Bank
of China, Bank of China (Hong Kong), China
International Capital Corporation, China
Minsheng Banking Corp, Hong Kong branch,
Chiyu Banking Corp, Citigroup, CTBC Bank
(Hong Kong branch), GF Securities, Guotai JunanInternational, KGI Asia, SPDB International and
Wells Fargo.
When bookbuilding began, China
Minsheng was originally named as a joint
global coordinator, while Guotai Junan was
not in the syndicate.› YICHANG HIGH-TECH EYES US$ SENIORChinese local government financing vehicle
YICHANG HIGH-TECH INVESTMENT DEVELOPMENT,
rated BB+ by Fitch, has hired banks for
a proposed offering of US dollar senior
unsecured bonds and met investors in Hong
Kong and Singapore last week.
China Minsheng Banking Corp Hong Kong
branch is the global coordinator as well as
joint bookrunner and joint lead manager
with Societe Generale and Huatai Financial
Holdings (Hong Kong) on the Reg S issue.
The proposed notes have an expected
BB+ rating from Fitch.ADBC ploughs new offshore ground
Bonds Dual-currency issue expands international reach of quasi-sovereign Chinese creditPolicy bank AGRICULTURAL DEVELOPMENT BANK
OF CHINA issued its first US dollar bond last
Wednesday as part of a US$875m-equivalent
dual-currency senior print in the US currency
and offshore renminbi.
The deal further expanded the reach of
the A1/A+ (Moody’s/S&P) rated borrower in
the international capital market and offered
investors a new investment option for quasi-
sovereign China risk.
ADBC is considering a further offshore
foray later this year to issue euro-
denominated bonds, according to a source
close to the issuer.
ADBC last tapped the offshore bond
market in May 2014 with Rmb2bn of Dim
Sum bonds. It was also in the first batch of
Chinese issuers via the Bond Connect scheme
in July last year.
The Beijing-based lender has a US$1.5bn-
equivalent offshore debt issuance quota from the
National Development and Reform Commission.
“ADBC is a rare policy issuer in the offshore
market and the other two Chinese policy
banks (Export-Import Bank of China and
China Development Bank) haven’t issued
US dollar bonds so far this year. Technically,
there is scarcity value and strong demand
for ADBC’s bonds. The issue has attracted
demand from quality investors including
central banks,” a banker on the deal said.
A US$700m three-year US dollar floating-
rate tranche priced at three-month Libor plus
62bp, 23bp tighter than initial 85bp areaguidance. A Rmb1.2bn (US$175m) two-year
fixed-rate Dim Sum bond tranche priced at
par to yield 4.16%, 29bp tighter than initial
4.45% area guidance.ROBUST DEMAND
Final orders on the dollar tranche were over
US$2bn from 47 accounts. Of the notes,
97% went to Asia and 3% to EMEA. By
investor type, 67% went to banks, 20% to
central banks, sovereign wealth funds and
sovereigns, 12% to fund managers, and 1% to
private banks.
For the Dim Sum tranche, final orders
were over Rmb3bn from 42 accounts. Of the
notes, 99% went to Asia and 1% to EMEA.
By investor type, 76% went to banks, 23%
to fund managers and insurers, and 1% to
private banks.
Both tranches traded well in the
aftermarket, with the US dollar notes 7bp
tighter and the Dim Sum bonds quoted at
100.00/100.30 on Thursday morning.
The banker said the bonds were fairly
priced.
“The main purpose of the bond offering
is to diversify ADBC’s reach to international
investors. Hence, the issuer intentionally did
not price the bonds too aggressively at the
beginning,” the banker said.
In fact, ADBC does not have funding needs
in US dollars and can borrow more cheaply in
renminbi in the onshore market, where it would
currently pay around 3.7% for a two-year bond.Established in 1994, ADBC is a wholly
government-owned policy bank tasked with
supporting economic growth and structural
adjustments in agriculture, a mandate that
has contributed to poor financial metrics.
At end-2017, the capital adequacy ratio
was 4.12%. The non-performing loan ratio
stood at 0.81% as of end 2017 while the non-
performing loan provision coverage ratio
stood at 393.68%.
However, Nomura said ADBC’s relatively
weak financial metrics and limited business
diversification are more than offset by its
policy role. The State Council in April 2015
reinforced the bank’s role in supporting
China’s agricultural development and,
in November 2017, the China Banking
Regulatory Commission set up a standalone
supervisory framework for the bank.
The Reg S US dollar and Dim Sum bonds
have an expected A+ rating from S&P.
Proceeds will be used to fund the bank’s
credit business and for working capital and
corporate purposes.
Bank of China, Standard Chartered Bank
and Bank of Communications were joint
global coordinators for both tranches. They
were also joint bookrunners and joint lead
managers with Credit Agricole, BoCom
International, Agricultural Bank of China Hong
Kong branch, ABC International, ICBC (Asia),
HSBC, Mizuho Securities, Commerzbank,
Citigroup and JP Morgan.
CAROL CHAN